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Text File | 1996-11-20 | 10KB | 247 lines

@053 CHAP 11

                  ┌───────────────────────────┐
                  │       PROPERTY TAXES      │
                  └───────────────────────────┘

Each of the 50 states imposes property taxes on the real
property (real estate) located within its borders.  There
is usually no need to contact the local city or county tax
assessor's office regarding payment of any real property
taxes on real estate owned by your business.  They will
generally send you a bill each year for the taxes due on
your property, based on its assessed value.

Most states also have property taxes on tangible personal
property (although many states exempt business inventories),
and some have taxes on intangible personal property, such as
stocks, bonds, promissory notes, patent rights, & so forth.
@CODE: HI
Unlike many states, Hawaii does not impose property taxes
on any kind of business personal property.

All real estate within the state of Hawaii is subject to
property tax unless specifically exempted by state law.
Real property taxes are assessed by the four counties of
Honolulu, Maui, Hawaii and Kauai.  Cities are not separate
taxing bodies, since in Hawaii the city and county government
functions are merged.  A mayor and council is elected for
each county and act as such for all cities within the county.

@CODE:OF
@CODE: CA

In California, you will generally receive a bill for real
property taxes, which is mailed by the county assessor to
the owner of record.  However, if you acquire real estate,
you should notify the county assessor of the change in
ownership, since, under the Proposition 13 limits on real
property taxes, such a change in ownership permits the
county to reassess the property at its current fair market
value, which is usually much higher than its old Proposition
13 value, which can only be increased 2% a year, unless
there is a change in ownership.  Real property taxes are due
in two installments each year, on April 10 and December 10.

A business that owns $100,000 or more (at cost) of taxable
personal property must file a business personal property
tax statement each year, based on the personal property it
owns, claims, possesses, controls or manages within the
county as of 12:01 a.m. on the first day of March.  The
tax applies to most types of tangible personal property of
a business, except inventory, which is exempt.  California
does not impose a property tax on intangible property.

Persons with less than $100,000 of taxable personal property
must file a business personal property statement only if
requested by the county assessor.  The statement is due
between April 1 and the last Friday in May each year,
depending upon the deadline adopted by the particular county.
California law provides for a 10% penalty assessment on the
unreported property for failure to file a required business
personal property tax statement.

(Previously, business personal property tax statements had
to be filed if the value of such property exceeded $30,000
for the initial statement, or $100,000 in subsequent years.)

@CODE:EN
@CODE: DC IN OK RI TN VT VA
As is true in most states, personal property is subject to
property tax in @STATE.
@CODE:OF
@CODE: TN

However, inventories of businesses subject to the Tennessee
business and occupations tax are exempt from property tax.
@CODE:OF
@CODE: RI

Business inventories are generally subject to tax. However,
manufacturing machinery and equipment and manufacturing
inventories are generally exempt from the property tax.
@CODE:OF
@CODE: AL AZ CO CT FL ID KS ME MI MO MT NB NM NV OR SC UT WA WY
While business personal property is mostly subject to the
property tax, business inventories are generally exempted
from the property tax in @STATE.
@IF143xx]
@IF143xx]This may be an important tax break for your business, since
@IF143xx]@NAME has significant inventories.
@CODE:OF
@CODE: MO

(Note, however, that Missouri does not exempt raw materials
inventories.)
@CODE:OF
@CODE: AR GA KY LA MA MD MS NC OH TX

Personal property is made subject to the property tax in
@STATE, and, unlike many states, there's no general
exemption for inventories in @STATE.
@CODE:OF
@CODE: MD

However, Maryland counties are allowed to exempt business
inventory from the property tax and a number of counties
do so.
@CODE:OF
@CODE: MA

However, note that corporations subject to the corporation
excise tax are largely exempt from personal property taxes
in Massachusetts.
@CODE:OF
@CODE: PA
The state of Pennsylvania does not impose a property tax on
inventory or other TANGIBLE personal property, and generally
does not tax INTANGIBLE property.
@CODE:OF
@CODE: AL FL GA KS KY MT NC TN WV

Businesses in @STATE are subject to tax on most
intangible personal property.
@CODE:OF
@CODE: GA

The Georgia Dept. of Revenue has recently stepped up its
enforcement of this tax, which applies to assets such as
stocks, bonds, mutual funds, cash and savings accounts.  An
annual form (Form FP-159) must be filed by April 15 each
year.  Nonfilers will be assessed a 25% penalty for each
year they have failed to file and pay the intangibles tax.
However, effective for all tax years beginning on or after
January 1, 1996, the intangibles tax is repealed in Georgia.
@CODE:OF
@CODE: NC

North Carolina is one of the few states still imposing a
state wide tax on financial intangibles.

Counties in North Carolina have not, until recently,
exercised their power to also tax intangibles. Unfortunately,
Wake County, in which Raleigh and part of the Research
Triangle Park are located, issued listing forms for 1993
that, for the first time, included intangible personal
property as a category, including such items as patents,
copyrights, and franchises (but not financial intangibles).
Taxpayers with their main North Carolina office in Wake
County may want to move such office to another county that
does not seek to tax intangibles.  Cumberland County also
is actively pursuing collection of ad valorem tax on
non-financial intangibles, such as franchises, goodwill,
and the like.

Legislation pending in the North Carolina Senate would
repeal the state wide intangibles tax, in light of a 1993
court case holding the tax to be unconstitutional.  The
legislation would still permit counties to tax nonfinancial
intangibles, however.
@CODE:OF
@CODE: IN

Indiana has an intangible property tax, but at present it
is in limbo while the courts and legislature decide whether
it is unconstitutional or should be repealed.

Indiana has enacted a state "fair property tax" at the rate
of $0.0035 per $100 of assessed valuation.  This new tax is
collected by the county treasurers, in the same manner that
property taxes of political subdivisions are collected.
@CODE:OF
@CODE: DE IA IL NY ND
There is no property tax on personal property in @STATE.
@CODE:OF
@CODE: MN SD
Tangible personal property is generally exempt from tax in
@STATE.
@CODE:OF
@CODE: NY

However, New York City imposes a Commercial Rent and
Occupancy Tax based on the amount of rent paid by a commercial
tenant in the City.
@CODE:OF
@CODE: AK AZ AR CO CT DC ID OK ME MA MN MO NB NH NJ NM OR RI SC SD UT VA WA WS

There is no property tax on intangibles in @STATE.
@CODE:OF
@CODE: MD MS NV ND TX

Most kinds of intangible property are exempt from property
tax in @STATE.
@CODE:OF
@CODE: RI

Note that a 1992 Rhode Island Supreme Court decision held
that CUSTOM computer software is intangible property, and
thus it is not subject to personal property taxes imposed
by local governments.
@CODE:OF
@CODE: MI

Michigan has a tax on intangible property, but it does not
apply to intangible property used in a trade or business
subject to the Michigan Single Business Tax.  In 1995, the
legislature, at the urging of Governor Engler, voted to
phase out the intangibles tax rates by 25% for both 1994
and 1995, by 50% in 1996, by 75% in 1997, with complete
repeal of the tax as of January 1, 1998.

NOTE that the state of Michigan has practically abolished
its local property tax system for funding of local and
intermediate schools, effective after December 31, 1993.
In a special election held March 15, 1994, voters in the
state approved an increase in the sales tax rate from 4%
to 6%, in order to pay for the sharp cuts in property tax
rates.

In addition, the state of Michigan recently enacted a real
estate transfer tax of 0.75% on the sale of real property,
which took effect on January 1, 1995.  This state tax is in
addition to the existing county real property transfer tax.
@CODE:OF
@CODE: LA

Louisiana voters, on September 21, 1996, amended the state
constitution to eliminate property taxes on nearly all types
of intangible property, except for a few limited classes of
assets such as property of public service companies, bank
stocks, and certain insurance industry assets.

This exemption went into effect on November 5, 1996.

In Louisiana, property taxes are assessed at the parish and
city level.  (Unlike other states, Louisiana has parishes
rather than counties as the intermediate level of government
between cities and the state.)
@CODE:OF
@CODE: AR

Arkansas voters, on November 5, 1996, voted in a referendum
to establish a statewide property tax rate for maintenance
and operation of schools, replacing a part of the school
district property tax.
@CODE:OF