Chris Tracy

Director, State & Local Tax

Business Personal Property Taxes – Are You Overpaying?

As with many state & local taxes, Business Personal Property (BPP) taxes can account for a significant portion of a company’s overall tax burden. Due to the potential impact on profitability and working capital, it’s critically important that proper care is given to managing the reporting, processing and mitigating issues that may cause overpayments.

What is Business Personal Property?

In its simplest form, BPP is property owned by the business which is movable (not affixed) and consists of items including, but not limited to, desks, chairs, computers, machinery, etc. Inventory is also considered BPP and is taxed by some jurisdictions.

How is BPP Reported?

Not all state and local jurisdictions impose a tax on BPP, but many do. Returns are typically filed on an annual basis to the jurisdiction where the property was located as of a certain reporting date, which is set by the jurisdiction. This reporting date is typically January 1st but could vary depending on the jurisdiction. The format of BPP Returns vary greatly by jurisdiction, but they all typically require a taxpayer to report asset costs by year and by predefined groups or categories.

How is BPP Taxed?

The taxing jurisdictions use the returns submitted by the taxpayers to calculate an overall assessed value for the reported property. The assessments are calculated by assigning predefined fair market value ratios to the costs reported by year in the various asset groups/categories. Once the assessments are calculated, an assessment notice is sent to the taxpayer. Taxpayers typically have 30 to 45 days to contest the validity of the assessment by filing an appeal. Once the appeal deadline has passed, the taxing jurisdiction issues a tax bill based on the assessed value. Tax rates vary greatly by jurisdiction but could range from 1% to 5% or more.

HOW CAN CLEARVIEW GROUP HELP?

Business Personal Property Tax Returns are deceptively simple and often lead to overpayments. Below is a list of the services that Clearview provides which are designed to recover personal property tax overpayments and ensure only the lowest amount of taxes legally due are being paid going forward.

  • Contingent Fee Refund Recovery* – Clearview Group’s State & Local Tax team will review previously filed business personal property tax returns (usually 3 or 4 years depending on the taxing jurisdiction) to determine if refund opportunities exist. If refunds exist, we will secure the refunds from the taxing jurisdictions and transfer our knowledge and alternative reporting methodologies to the company to ensure the organization realizes the benefit of our work well into the future.
  • Contingent Fee Appeals* – Our specialists will review current year Assessment Notices to determine if there are reduction opportunities. If assessment reduction opportunities exist, we will represent the Company during the appeals process.
  • Compliance – We currently file business personal property tax returns on behalf of our clients throughout the country. Our compliance process involves gaining a deep understanding of the company’s fixed asset records to ensure assets are properly reported and the lowest amount of tax legally due is being paid.
  • Audit Defense – If you’re under audit your organization should have someone knowledgeable with the audit process represent you, so you don’t get hit with an unnecessary audit liability.

*Our consultants perform these services on a contingent fee basis, which means if you don’t see financial results, there is no cost to you.

HOW HAS CLEARVIEW GROUP ASSISTED A PREVIOUS BUSINESS PERSONAL PROPERTY TAX CLIENT?

Clearview Group’s State & Local Tax Team recently secured approximately $200,000 in personal property tax refunds for an engineering and technology solutions firm. The refunds resulted from conducting a thorough analysis of the organization’s historical filings and identifying alternative methodologies for reporting assets. Our Team was also able to identify additional saving opportunities in connection with the sale of a related entity.

For more information on potential Business Personal Property tax savings, contact Clearview Group at: content@cviewllc.com.

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