If you live in a state where business personal property is taxed, you know how important it is to stay compliant. But because keeping up with your personal property taxes is so complex, crossing your i’s and dotting your t’s is often easier said than done.
This process involves more than just filling out a form. Find out the eight steps you should take to stay compliant when it comes to your personal property taxes.
8 Steps That Ensure Personal Property Tax Compliance
- Properly classify your taxable and nontaxable property. For many businesses, it’s easy to confuse what’s taxable by your jurisdiction and what isn’t. Not every state taxes personal property. Even if that’s the case, you still need to track these distinctions. Determine what falls under your real estate property and what is categorized under your personal property (all of your assets within the walls of your building, like inventory, fixtures, equipment, etc.) Tracking this information is key, because it’s presented to your jurisdiction and must be accurate.
- Clean up your asset list. You need to review your asset list critically every year. Make sure you only report assets still in use, and regularly remove “ghost assets” (assets that are no longer in your possession). This ensures your list is accurate, so you aren’t being taxed on property that was sold or put out of commission.
- Attach the correct data. Every jurisdiction is different. States make the laws that apply to your commercial property taxes and personal property taxes, and its up to your jurisdiction to implement those laws. This leaves the door open for variations in interpretation of the law. Make sure you research your jurisdiction, talk to those in charge and find out all the data you’re required to file. If you miss anything at all, you could face noncompliance penalties.
- Never miss a deadline. Commercial property tax deadlines are firm. When you miss them, you miss your chance at filing. Identify when these deadlines are and don’t wait until the last minute to compiles your personal property tax information. Have it preemptively lined up to ensure the deadlines are easily met.
- Always submit the correct information. If you fail to submit the right information, it’s not an easy mistakes to correct. Make sure all the records of your personal property are up-to-date and complete. When you submit this information, check and double check to make sure you have everything in order and you’re not missing any pieces.
- Understand what you’re filing. Not everyone is an expert on personal property taxes. So, there are some pieces you must file that you may not fully understand. Research the topics or seek expert guidance. If you don’t understand something, there is room for error.
- Tap into all the abatements and exemptions available. In some states where personal property is taxed, there are a number of exemptions available for businesses. Sometime your inventory is exempt from taxation, so you would be required to file additional paperwork to receive that benefit. Research exemptions and identify the ones that apply to you. While this may be a little extra work, the tax savings is worth the effort.
- Seek expert advice. Because there are so many moving pieces when it comes to personal property tax compliance, many businesses outsource this responsibility to property tax experts. They have all the knowledge needed to ensure that you’re compliant and reap the benefits of tax exemptions. Take the responsibility off your plate, and let experts help. You’ll be better positioned to achieve tax savings and you’ll rest easy knowing they’re met all your jurisdiction’s requirements.
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