The priority deadline for filing a Schedule B has passed. Any business that has not submitted a Schedule B will have another opportunity to file via online, in person or by mail beginning May 22, 2017 after receipt of the green Schedule B.
Tangible Personal Property
Tangible personal property is defined as assets owned by the taxpayer and used or held for use in such business or profession, including, but not limited to, furniture, fixtures, machinery and equipment, all raw materials, supplies, but excluding all finished goods in the hands of the manufacturer and the inventories of merchandise held for sale or exchange
In Tennessee, personal property is assessed at 30% of its value for commercial and industrial property and 55% of its value for public utility property.
One of the most common components used to differentiate “personal property” from “real property” is whether it is moveable (personal) or affixed (real).
Not later that February 1 each year, the Assessor is required to furnish each applicable business in the county with a Schedule B for listing all of their tangible personal property. Those business owners (or agents) must then complete and return those forms to the Assessor’s Office on or before March 1.
For many existing businesses, this simply involves listing the equipment acquired or disposed of during the previous year, so that it may be added or removed from the schedule already on file. It is basically a “self declaring” system, which is subject to audit for verification.
Unlike the system for assessing real property: where the appraisal is based on fair market value and equalized across the entire jurisdiction, the appraisal of personal property is based on the actual cost of the property less depreciation. Personal property is categorized in 10 groups for reporting. Each group has its own depreciation schedule that is outlined in state statutes.
In Tennessee, leased personal property used by a business is assessed to the lessee (user) and must be reported on the company’s reporting schedule. For smaller accounts, the system allows an alternate method for reporting personal property. If the depreciated value of the business’s personal property is $1,000 or less, the owner can declare such in the reporting schedule and he/she does not have to itemize or report detailed costs. With this certification, subject to audit, the assessment will be set at $300.
Again, the deadline for filing Personal Property Reporting Schedules is March 1 each year. Failure to return the schedule by that date will result in a forced assessment of the business’s personal property using information about the quantity and value of personal property held for use by businesses of similar size and function.
Prorate Roll – Business Tangible Personal Property
Proration may be required when commercial or industrial tangible personal property is “destroyed, demolished or substantially damaged by fire, flood, wind or any disaster certified by the federal emergency management agency (FEMA), and is not restored and no commercial and industrial tangible personal property is operated in its place before September 1 of that year.” (TCA § 67-5-606)
Proration of Business Tangible Personal Property
A considerable amount of real and tangible personal property was damaged or destroyed in the May 2010 flood, which was estimated around $2 billion in damages. Our office inspected all county parcels to determine the flooded areas and grade them as to the extent of damage.
The Assessor’s Office worked closely with state and local officials to identify damaged properties and the extent of damage which qualified for a FEMA disaster declaration by President Obama. The office also advocated the successful effort to change the law to make it easier for damaged businesses to report and receive proration of tax assessments for tangible personal property. The office provided a special online reporting system for owners of damaged property to report losses before deadlines expired and expedite the recovery of qualified damages.
Intangible Personal Property
Intangible personal property is defined by statute to include “money, any evidence of debt owed to a taxpayer, any evidence of ownership in a corporation or other business organization having multiple owners, and all other forms of property whose value is expressed in terms of what the property represents rather than its own intrinsic worth.” Included is all personal property not classified as tangible personal property. The assessment level is 40% for this classification.
The state constitution gives the legislature power to establish subclasses and assessed value percentages for intangible personal property, but currently the statutes impose the assessment only on intangible personal property of certain insurance companies. Provisions for assessing bank-owned intangible property were struck down by the U.S. Supreme Court in 1983 and an excise tax is now imposed in lieu of the property tax on intangible personal property of banks.
The Davidson County Assessor’s office provides a schedule for reporting intangible personalty. Certain Insurance companies are provided a Tax Schedule “D” to be completed and returned in the same manner.