Why Is Personal Property Tax Assessed?
Personal property tax is assessed on business machinery, equipment, furniture, and fixtures by more than 30 states. State statutes provide for assessments and taxation of business personal property.
How Is Personal Property Tax Assessed?
Personal property tax is assessed when the taxpayer renders an annual return, which list business personal property assets that are considered to be furniture, fixtures, machinery, and equipment. It is an annual compliance requirement in the states that levy and assess personal property. Assessments are based on the assets’ fair market value.
What Is Considered Taxable Personal Property?
In a manufacturing facility, the equipment that’s used in the manufacturing process is taxable personal property. In a retail property, it is shelving and refrigeration equipment. In a warehouse, an automated retrieval system is considered to be assessable personal property.
Is Personal Property Tax Separate From And In Addition To Real Property Tax In New Jersey?
There is no personal property tax in New Jersey. The personal property tax assessment was eliminated in the 1970s. Some assessors attempt to assess some assets considered by taxpayers to be personally. What can determine assess-ability is how the asset may be affixed to the underlying property. Where there is process piping, such as in chemical plants or larger industrial manufacturing facilities where the equipment is physically integrated within the actual building itself, we often see assessors attempting to assess that.
The counterargument to not assessing it is – can it be removed without the equipment itself possibly being damaged? Or, can it be removed without any damage to the underlying real estate property? If so, it would be considered to be nontaxable personal property in New Jersey. Many states, other than the ones that don’t assess personal property, have separate assessments for real estate and personal property.
How Often Do Taxing Authorities Miscalculate Or Make Other Mistakes When It Comes To Assessing Personal Property Tax?
The frequency in which taxing authorities miscalculate or make mistakes when assessing personal property tax will vary. They may over-assess for a variety of reasons. It’s possible they haven’t applied a market value assessment to the property, and/or they haven’t given an acceptable useful life, and/or they haven’t depreciated it adequately. There are many instances where the jurisdiction may overvalue personal property, and if that’s the case, that over-assessment should be appealed.
What Are Possible Remedies If My Personal Property Tax Assessment Is Incorrect?
The first remedy would be to discuss the over-assessment with the assessor. If you’re unable to convince the assessor that they’ve made a mistake, or that they’ve over-valued it, then an annual appeals process is always available. In a state like New Jersey, if they assess machinery or equipment as real estate, then you would appeal that assessment to the county tax board or the state tax courts depending on the assessment value. Other states that assess personal property will have a similar process. But, always talk to the assessor first. If the result is unsatisfactory, then the appeal gets filed to the board of appeals at the county level. If there is no relief there, a remedy can be sought at the state level.
What Can Your Firm Do To Assist Me In My Personal Property Tax Assessment In Terms Of Correcting It Or Challenging It?
To correct or challenge a personal property tax assessment, we review the onerous personal property filing very closely to determine several things. For instance, has the owner possibly over-reported? For example, are all the assets that have been listed on the return physically on the site? Have they been removed? Are they in service? Do they function? We review this information first to determine whether or not: 1) That it should be assessed in the first place; and then, 2) Has it been properly assessed?
Proper assessment is often related to classification issues. Is the item in a proper class for assessment purposes? For example, if it’s been misclassified, then perhaps it’s going to be assessed at a longer life, and therefore, has a longer value and a higher value according to the assessor. Appropriate and proper classification may very well result in a minimum property tax assessment and tax levied against the property.
For more information on Personal Property Tax Assessment, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (973) 869-5550 today.
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