Personal Property Assessment FAQ including Boats & Aircraft
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Personal Property Assessment FAQ including Boats & Aircraft
Business Personal Property
Business personal property is all property owned or leased by a business except real property. Business inventory is personal property but is 100 percent exempt from taxation. Tangible personal property owned, claimed, possessed, or controlled in the conduct of a profession, trade, or business may be subject to property taxes. Business personal property and fixtures are valued annually as of the January 1 lien date.
Examples of business personal property include equipment, furniture, fixtures, and supplies.
Inventory is exempt from taxation and includes items of personalty that become part of the product or are themselves a product that is held for sale or lease in the ordinary course of business.
Examples of inventories are as follows:
1. Manufacturing supplies such as bolts, nuts and screws that are incorporated in a product to the sold.
2. Used farm or construction equipment consigned to a dealer or auctioneer on or before lien date of January 1.
3. Animals used in the production of food or fiber.
4. Personal property held for sale or lease in the ordinary course of business on the lien date of Jan 1.
Supplies are properties used up in the normal operation of a business, but which are not intended for sale or lease.
Examples of supplies are as follows:
1. Stationery and office supplies.
2. Janitorial and lavatory supplies.
3. Fuels used in the normal operation of a business.
4. Chemicals and precious metals used to produce a chemical or physical reaction.
When equipment is leased, the law states that the county assessor may assess leased property to either the lessee or the lessor, or both, whether or not there is a private agreement between the parties to the lease. However, property is not normally assessed jointly, and county requirements for the filing of a Business Property Statement vary with respect to leased equipment. Therefore, you should contact your county assessor for further information about Business Property Statement filing requirements. A listing of county assessors is available at
www.boe.ca.gov/proptaxes/assessors.htm.
It will be mailed out in January and is due back by April 1.
Taxes on the unsecured roll as of July 31 are delinquent if the payment is not received by 5:00 p.m. or postmarked by August 31 of the tax year, and thereafter is subject to a delinquent penalty of 10 percent. If August 31 falls on a Saturday, Sunday or a legal holiday, the delinquent date becomes the next business day. {R & T Code 2922 (a)}.
Generally, the county assessor uses the historical cost reported by the current owner and applies reproduction cost new and normal depreciation factors to estimate fair market value. For a further discussion on the index factors, see pages 1 to 10, and percent good factors, see pages 11 to 16, in the Assessors’ Handbook Section 581, Equipment and Fixtures Index, Percent Good and Valuation Factors, at
www.boe.ca.gov/proptaxes/prioryrs.htm.
Sales tax and freight and installation costs are part of the total cost of purchasing assets for business use. These costs are components of asset value and, therefore, must be reported as part of your total reported cost.
Your question is a sales or use tax question that deals with a tax on the property tax component of the leased equipment rental payments. Any lease of tangible personal property that transfers title or possession is a sale or purchase. In this case, the sales or use tax is measured by the rentals paid by the lessee. The rental payments are subject to sales or use tax which includes any payments required by the lease. This includes amounts paid for personal property taxes on the leased property per Sales and Use Tax Regulation 1660 (c) (1). You may view Sales and Use Tax Regulation 1660 at
www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/1660.htmlNo. The county assessor must annually assess all property in the county to the person owning, possessing, or controlling it on the lien date. There is no provision in the law that allows the county assessor to prorate assessments between the buyer and seller of taxable personal property that is sold in the ensuing fiscal year.
Storage media for computer programs is to be valued as if there were no computer programs on such media except basic operational programs. Basic operational programs are those programs that are “fundamental and necessary to the functioning of a computer.” Thus, while basic operational programs are taxable, application programs are exempt unless included as part of an unitemized package sale. Property Tax Rule 152, Computer Program Storage Media, explains how to properly determine the classification of computer software. You may view this rule at
www.boe.ca.gov/lawguides/property/current/ptlg/rule/152.htmlImportant Assessment Notices are sent out in lieu of a Business Property Statement for smaller businesses in which the values remain constant. This form needs to be returned only if there has been a change in value or ownership.
The statement should be returned to the Assessor’s Office with an explanation that you no longer own the business, when it was sold, and to whom. This will enable the assessor to properly assess the new business owner.
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If a statement is not received by beginning of March, a business should immediately contact the assessor’s office. Failure to receive this statement does not relieve the business from the requirement to annually file with the County Assessor’s Office.
No. Even though you may no longer own the property, you are still liable for the taxes because you owned it on the January 1 lien date. When taxable personal property is sold subsequent to the lien date, it is the duty of the seller to pay the taxes on the property for the ensuing fiscal year.
County records indicate that you were doing business at this location on January 1.
All businesses with an aggregate cost of assets of $100,000 or more or any business requested to file by the Assessor must file.(R&T Code 441) (Revenue Taxation Code, Section 441)
All individual and/or business entities must file. e-Filing allows businesses to file electronically to fulfill this legal obligation. (R&T Code 441)
Yes. Failure to complete and file this form (571-L) will result in the Assessor estimating the value of your business property and adding a 10% penalty to the assessment. (R&T Code 441, 463 & 501)
Yes. There is a four (4) year statute of limitations, within which you can file an amended return subject to audit. Be sure to contact the Assessor’s office and discuss your case with a deputy.
No. Any arrangement regarding property tax liability must be worked out contractually, between the buyer and seller.
Between the time you submit your property’s cost information on the form 571-L, and July 1st, you will normally receive a tax statement from the Tax Collector which includes a notation of the amount of value calculated by the Assessor. If you disagree with this value, you are encouraged to file an appeal.
Boat and Airplane Assessments
Boats and aircraft are taxable and are subject to annual appraisal. Their values are determined by reviewing sales of comparable boats and aircraft. Information on their locations and ownerships is obtained from the Department of Motor Vehicles, the United States Coast Guard, the Federal Aviation Administration, on-site inspections, and other public and private sources.
State law requires that boats and airplanes will be assessed on January 1, starting 1997 and for each year thereafter, at the site where they are regularly or routinely located. All boats and airplanes are assessed in the county where they are regularly located, regardless of where they are registered.
Temporary removal of a boat or airplane from the county on January 1 does not exempt it from property taxes if it is routinely located in the county on a regular basis.
Values are established by reviewing sales of comparable boats and airplanes on an annual basis. If a boat or airplane is built by the owner, the cost of construction is then used as the basis for determining its value.
The assessor’s office receives registration and documentation information on boats from the Department of Motor Vehicles and the United States Coast Guard.
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The assessor’s office receives airplane ownership information from the State Board of Equalization and the Federal Aviation Administration. We also receive annual reports from airport operators and make periodic reviews of all airports.”‹
Yes. Only boats and airplanes owned and held in inventory for sale by a licensed dealer are exempt from property taxes.”‹
The Assessor Department receives boat registration and documentation information from the Department of Motor Vehicles, the U. S. Coast Guard, and marinas operating within the county. We also perform annual on-site inspections of all marinas and moorings in the county.”‹
Yes. Only boats owned and held in inventory for sale by a licensed dealer are exempt from property taxes.”‹
State law requires that boats be assessed on January 1 of every year, at the site where they are regularly or routinely located. Boats regularly located in your county are assessed there, regardless of where they are registered.”‹
No. Any arrangement regarding property tax liability must be worked out by the buyer and seller.”‹
No, the new owner will be responsible for paying the taxes. However, you may receive a Notice of Pending Assessment if we do not receive the necessary information from the Department of Motor Vehicles, etc. If you receive a notice, you should return the notice and provide the new owner’s name and address, date of sale, and CF or documentation number.”‹
The value of the vessel will determine which form will be mailed to the owner. Generally, in Orange County, only boats valued over $100,000 receive a Vessel Property Statement.”‹
Boats and aircraft are eligible for the inventory exemption if they are not out on rent on January 1.”‹
Yes. Until such time as a vessel’s habitual place of mooring has been established elsewhere, a vessel documented in California continues to be taxable in California. That is, if the vessel is not in California, but is traveling from one place to another and has not become permanently situated in one place outside of California, the vessel is still assessable in California.
The boat may have a tax lien filed on it by the county tax collector for failure to pay outstanding property taxes. The county tax collector can put a hold on the registration of the boat with DMV until the taxes are paid. We suggest that you contact both the county tax collector and the county assessor where the boat was previously located for further information on how to resolve the tax problem. A listing of county treasurers/tax collectors is posted on the SBOE website at
www.boe.ca.gov/proptaxes/taxcol.htm , and a listing of county assessors is posted on the SBOE website at
www.boe.ca.gov/proptaxes/assessors.htm.
Aircraft are taxable and are appraised annually at current market value as of the January 1 lien date. Values are determined by reviewing purchase prices, sales of comparable aircraft and other market data. In addition, information reported on BOE Form 577, Aircraft Property Statement, by the aircraft owner is used in appraising the aircraft. Other sources of information are the BOE, the Federal Aviation Administration, airport operator’s report, and on site inspections.
Aircraft on consignment that is held in inventory for sale by a licensed dealer on January 1 qualifies for the business inventory exemption and, therefore, is not subject to property taxes.
State law requires that aircraft be assessed on the January 1 lien date annually at the tax situs where they are regularly or habitually situated in California.
The new owner will be responsible for paying the taxes for the new tax year. If the county assessor has not received the necessary sales information from the FAA, you may receive an assessment notice informing you of the assessed value of the aircraft. If you receive this notice, you should contact the county assessor with the new owner’s name and address, date of sale, location of the aircraft, and FAA assigned “N” number.
The Historical Aircraft Exemption provides a property tax exemption for aircraft of historical significance. For property tax purposes, “Aircraft of Historical Significance” means any aircraft which is an original, restored, or a replica of a heavier than air powered aircraft which is 35 years or older; or any aircraft of a type or model of which there are fewer than five in number known to exist worldwide. The requirements for the exemption are in Revenue and Taxation Code section 220.5. To apply for the Historical Aircraft Exemption, BOE-260-B form, Claim for Exemption from Property Taxes of Aircraft of Historical Significance, must be filed each year with the county assessor. A listing of county assessors is available on SBOE website at www.boe.ca.gov/proptaxes/assessors.htm.
Yes. Unsecured property taxes are not prorated for the affected fiscal year. Sales, ownership changes, and boat/vessel relocations occurring after the lien date will become effective (for property tax purposes) on the following lien date.
Yes. This information will help prevent you from receiving a tax bill for property you no longer own (effective the next lien date) and/or having the boat/vessel assessed at the wrong location.[/toggle
If a boat/vessel has taxable situs in Riverside County, it is subject to assessment by this office. Inaccurate DMV information is often the cause of non-discovery, or the boat/vessel may not be assessed due to the county’s low value resolution (85-65).
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