Michigan House Repeals Personal Property Tax

Business personal property taxes will go the way of the dinosaur within the next ten years.  While this is great news for business and industry, local governments WILL raise taxes on businesses and homeowners to replace this lost revenue.  Be prepared for increasing millage rates...

Michigan Personal Property Tax Repeal

Georgia Freeport Exemption Article Update

I revised my original article regarding the Georgia Freeport Exemption to include the recent passage of HB 48.  Check out the link:

http://ezinearticles.com/?Georgia-Freeport-Exemption---Dont-Leave-Money-on-the-Table!&id=7245099

Gwinnett County Property Taxes Stay the Same

7/24/2012
The Gwinnett Board of Commissioners decided on Tuesday to keep tax rate at 13.02, but Peachtree Corners property owners will see a slight increase as city taxes kick in for 2012.

July 23, 2012



There's good news for Gwinnett County propertery owners, come August when property tax bills arrive, homeowners won't see a tax increase. At least on the county's portion.

However, Peachtree Corners property owners will see a slight uptick on their bills. The new city established its millage rate at .85 mills for 2012.

On Tuesday the Board of Commissioners set the 2012 millage rate at 13.02 mills which is the same rate as last year. In 2013 commissioners had lowered the rate by .23 mills. That reduction came after the county had payed off a 1986 bond issue for roads and libraries.

In a press release Commission Chairman Charlotte Nash said, “We’re not out of the woods yet from a general economic standpoint, but I’m proud of County elected officials and staff for working so hard to balance the 2012 budget with the same millage rate as last year without any major reductions in services.”

Property tax bills will go out in mid–August, with payment due in mid-October. The bills can be paid by:

Phone
At the main tax office in person
Or at one of the special drop boxes at the tax and tag office

If you'd like to see how your tax money is allocated, the county's website has an interactive feature that allows homeowners to enter a property address (or fair market value) and the calculator will return an estimate of taxes for the county, schools, state and city that bill through the tax commissioner.


Because the tax digest is 5 percent lower than last year, there's about $14.8 million less revenue for the county's general fund this year. According to the county "nearly 26,000 property owners appealed their assessments in 2012, which is one of the factors that contributed to the loss in the tax digest."





http://peachtreecorners.patch.com/articles/county-s-millage-rate-unchanged-for-2012

More Business Personal Property Tax Tips...

Hang on to asset receipts!  Business personal property is usually valued at original purchase cost.

If there is no “ready market” for the sale of equipment, machinery, and fixtures, the fair market value may be determined by resorting to any reasonable and relevant information available.

• ·         Original/historic cost
• ·         Depreciation
• ·         Obsolescence

Receipts, sales listings, online ads, catalogs, etc. may the best available resources to determine fair market value of fixed assets.   Most assessors use the original cost as the basis of value, and then apply a depreciation factor based on the purchase date of the asset. 

Selected for a Business Personal Property Tax Audit...Now What?

Many prospective clients call me in a panic regarding an ominous business personal property audit notice.  This article is a synopsis of the basic steps one should take if ever selected for audit.  


http://goarticles.com/article/Selected-for-a-Business-Personal-Property-Tax-Audit-Now-What/6655808/

Kennesaw State University SBDC ABC's Fair 2012

Equity Tax Consultants will be participating in the ABC's Fair sponsored by Kennesaw State University's Cole College of Business on June 28, 2012 from 4-7 p.m.  ABC stands for Attorneys, Bankers, and CPA's.  Come join us for light refreshments, information, and door prizes!

http://coles.kennesaw.edu/centers/small-business-development/ABCsFair.htm

Business Personal Property 101

Tip #2:  Software is NOT taxable as business personal property unless it is inventory.

The Official Code of Georgia (48-1-8) defines computer software as:

“ any program or routine, or any set of one or more programs or routines, which are used or intended for use to cause one or more computers or pieces of computer relate peripheral equipment, or any combination thereof, to perform a task or set of tasks.  Computer software shall include operating and application programs and all related documentation.”

Software is only considered taxable if it is held as inventory ready for sale at retail.

Taxable?

NO      Microsoft Office software is purchased and installed on company computers for work
             purposes.

YES     Wal-Mart sells Microsoft Office software in its retail stores for consumers.*

*With the passage of HB 41, retail inventory may no longer be taxable in the near future.

HB 48-Freeport Expansion and Elimination of Local Inventory Tax

Georgia Governor Nathan Deal signed HB 48-Freeport Expansion and Elimination of Local Inventory Tax on April 17, 2012.  This measure creates a Level 2 Freeport Exemption that applies to all business inventories that did not qualify for the Level 1 Exemption.  However, local governments must first call for a referendum to approve of the Level 2 Exemption and to determine the exemption rates.   Counties can implement the Level Two Freeport Exemption at the following rates:

• 20%, 
• 40%, 
• 60%, 
• 80%, 
• 100% 

This bill is great news for Georgia retail businesses that maintain inventory in the state.  Neighboring states such as Alabama, Florida, North Carolina, South Carolina and Tennessee have no personal property tax on business inventories.  Many proponents of the bill believe that this type of economic legislation can help Georgia businesses dig out of the current economic recession.  Advocates purport that the elimination of this tax will entice new businesses to reside in Georgia and will encourage existing business to reinvest in plant, equipment, and human resources.  

For better or worse, inventory tax in Georgia may be a thing of the past.  Many local governments knew this day was quickly approaching when the Georgia Business Inventory Exemption, Referendum A on the November 2, 2010 ballot was approved.  That referendum exempted the state’s portion of business inventory tax.  Local governments depend heavily on property tax revenue for their operating budget.  Any revenue lost to this exemption will most likely be made up in higher millage rates, user fees, or decreased services on the local level. Call me crazy but I like living in good school districts, having clean parks, and having the medians mowed...

ttp://www.legis.ga.gov/legislation/en-US/Display/20112012/HB/48

“The referendum ballot shall specify retail business inventory as the types of property as defined in this Code section which are being proposed to be exempted from taxation. The election superintendent shall issue the call and shall conduct the election on a date and in the manner authorized under Code Section 21-2-540.”

Business Personal Property 101

Tip #1: Determine the type of business personal property assets that your company owns.

What is Georgia's definition of personal property?

Personal property is all tangible and intangible personal property. 

Tangible personal property can be seen, weighed, measured, felt, touched, or which is in any other manner perceptible to the senses.

• ·         Furniture and fixtures
• ·         Computers
• ·         Machinery and equipment
• ·         Security systems
• ·         Communication towers
• ·         Signs

Intangible personal property is:

• ·         Capital stock of corporations
• ·         Annuities
• ·         Money
• ·         Notes
• ·         Bonds
• ·         Patent rights
• ·         Copyrights
• ·         Franchises

Only tangible business personal property is taxable and returnable on the Georgia PT50P-Business Personal Property form.

Georgia 2012 Manufacturing Appreciation Awards Luncheon

Manufacturing Appreciation Week 2012 (April 16-20) http://www.georgiamaw.org/ celebrates the economic contributions that manufacturers make to the state of Georgia.  The Technical College System of Georgia and the Georgia Department of Economic Development founded this event and it has grown to quite a large affair. The Luncheon was held today at the Georgia International Convention Center and awards were given to the "best" Georgia small, medium, and large manufacturing company.  

With all the doom and gloom about manufacturing jobs being sent overseas, it was such a pleasure to see Georgia manufacturers not just surviving, but thriving!  The awards luncheon was excellently done.  Kudos and congratulations to all the winners.

• Manufacturer of the Year (Small):  Applied Thermoplastic Resources
• Manufacturer of the Year (Medium):  Quad Graphics
• Manufacturer of the Year (Large):  KIA Motors

Governor Nathan Deal presented the award recipients with their trophies.  He also spoke about the aggressive tax incentive packages that Georgia is using to attract and keep manufacturers.  The repeal on the energy sales tax got plenty of cheers from the audience.  Governor Deal then whipped out his pen and signed HB 386, the Georgia Jobs and Family Tax Reform Plan.  However, he made no mention of HB 48, also recently signed, which expands the Freeport Exemption to all types of inventory.  I am researching this as we speak for an upcoming article... 

I was the invited guest of Jonathan Warner, Chattahoochee Technical Director of Economic Development.  Thanks again Johnathan!

Georgia Freeport Exemption: Don't Leave Money on the Table!

The Freeport Exemption is an exemption on the inventory of Georgia manufacturers, wholesalers, and distributors.  This valuable exemption encourages manufacturing and other base industries to locate, invest, and/or stay in Georgia.  The citizens of each Georgia County vote on whether the rate of the exemption is 20, 40, 60, 80 or 100 percent of the inventory value.   Georgia fiercely competes with states such as Alabama and South Carolina that exempt ALL inventories.  Make Georgia earn your tax dollars and your business!

Inventory Eligible for Freeport Exemption

1.                  Raw materials and work-in-progress inventory of Georgia manufacturers
Raw materials are components that significantly change during manufacturing or processing to create a new product.  Raw materials can be grains, minerals, and petroleum or items such as casters, nuts, bolts, or wheels. 

2.                   Finished goods inventory of Georgia manufacturers that are held for less than 12 months
Most manufacturers do have some stock inventory on hand longer than 12 months from the manufacturing date.  Possible exceptions include companies that manufacture to order or use a just-in-time inventory system.

3.                  Finished goods inventory stored for less than 12 months in a warehouse, dock, or wharf, with a final destination outside of Georgia
Drop shippers, distributors, and wholesalers usually qualify for the exemption based on this stipulation.

4.                   Retail inventory does not qualify for this exemption!
Other ineligible items are fuel, packaging supplies, office supplies, spare parts, retailer stock-in-trade, and unrecovered or unextracted natural resources.

Freeport Exemption Process

The first step in qualifying for the exemption is to complete the Freeport Exemption application (PT-50PF).  Many Georgia companies lose out on Freeport because they are unaware of the exemption or they miss the deadlines.  Please note that the burden of obtaining, completing, and filing the Freeport application form is entirely upon the taxpayer.

An appraiser from the Tax Assessors Office will usually schedule a site visit for first time applicants to confirm the business purpose and location.  This necessary second step allows the county appraiser to gather firsthand information about the business.  The site visit can be an excellent opportunity to ask questions about the exemption, to clarify any issues, or to have your tax consultant meet with the appraiser. 

Lastly, the Tax Assessors Office will notify you once the Freeport application submitted is approved by the Board of Tax Assessors.  This approval does not mean that the Freeport return will be accepted as filed.  If there are any errors, inconsistencies, or insufficient documentation on the form, the exemption can be reduced or eliminated. 

As Georgia recovers from the economic recession, business owners are looking for ways to reinvest in their companies and to minimize taxes.  The Freeport Exemption is an incentive that can complement your overall business tax strategy.   Don’t leave money on the table! 

Snapshot

n   Form:  PT-50PF

n   Who Should File:  Businesses desiring Freeport Exemption in the counties and municipalities where available.

n   When to File: 

n   April 1st (100% of the full exemption),

n   April 2- April 30 (66.67%),

n   May 1- May 31 (58.33%),

n   June 1 (50%),

n   Failure to file by June 1 shall constitute a waiver of the entire exemption for the year (0.0%).

Let's Talk Personal Property!

In my other life as a personal property auditor, I was constantly amazed that few business owners and even fewer CPA's had ever heard of business personal property tax.  Most of the business owners I spoke with felt that since they paid sales tax on their assets at the time of purchase, that any additional taxation was essentially government greed.  Soapbox alert:  Business personal property taxes contribute to the bottom line of your local government(s).  Unlike the complicated federal budget, local government budgets are much simpler to understand and to determine how money was allocated.  It is also easier to hold local governments accountable for your tax dollars.

Have I lessened the blow yet?  Good!  This blog is all about personal property education, solutions, and strategies.  We at Equity Tax Consultants appreciate all questions, feedback, or topic suggestions.