Personal Property Tax Changes: Get Ready for Complications

January 8, 2015

Personal property tax reform was assured with last August’s state-wide referendum. Now that the political campaign is over, the sound-bite style of describing the new law has died down.  

You will soon need to apply this complicated set of new rules to your company’s tax filings.  Let’s see how the reality of this new law differs from the sound bites you’ve heard this year.

Sound bite #1: All personal property will be exempt from tax.

Reality: Only some personal property will be exempt, even after the seven-year phase-in begins in 2016. During the phase-in, exemption will depend on several tests that consider the use and age of your personal property. Depending on location, for example, office furniture may be exempt and some manufacturing equipment may never be exempt.

Sound bite #2: Manufacturing equipment will be exempt from tax.

Reality: Manufacturing equipment will not necessarily be exempt. Exemption will depend on that equipment's age, value, use, and even on how you use other personal property at that location. Some manufacturing equipment may never be exempt, even after the 7-year phase-in.

Sound bite #3: Office furniture will continue to be taxed.

Reality: Some office furniture may be exempt. Like manufacturing equipment taxation, office furniture taxation will depend on the age, value, and use of that furniture and of other property at that location.

Sound bite #4: All personal property owned by manufacturers will be exempt.

Reality: The owner's industry designation is irrelevant to the exemption. Exemption depends on a combination of the individual values, uses, and ages of the personal property items at each location.

Contributed by Jeffrey S. Ammon, attorney with Miller Johnson.

View the on-demand webinar “Personal Property Tax: The New PPT Rules” with Jeffrey Ammon.