In most cases involving Texas property tax, an under-assessment is a great thing. With business personal property (BPP), however, there are a lot of issues that you have to take into account. In general, a gross under-assessment of your BPP introduces a few options. A tax company provides the expertise you need to make sense of all your BPP issues. That being said, there are a few things you can do if you find out that your BPP value is grossly under-assessed.
What is BPP?
You may be wondering exactly what Business Personal Property is. It is, in effect, any property in a business that is used for the facilitation of creating income. It does not include buildings, land or other structures on a property. That falls within basic commercial property. Business personal property can be anything from machines and equipment to computers and furniture. Virtually, anything tangible within your business can be classified as BPP. Company automobiles, inventory and fixtures can all be considered BPP as well.
Filing a Rendition
Every business owner within a county must file a rendition of all BPP with the county appraisal district (CAD) between January 1 and April 1. This rendition effectively discloses all of your BPP and the estimated value of it. For instance, if you have 18 computers, 18 desks and 18 chairs, then you would report that information on your rendition. Filing fraudulent renditions can be considered a crime and may be punishable by stiff fines (up to 50% of the assessed value of your BPP). Likewise, missing the deadline for filing a rendition means that you will have to pay all property taxes on your BPP with an additional 10% penalty. So, a business owner with $10,000 of assessed BPP value would pay $300 in taxes at a tax rate of 3%, with an additional $30 penalty tacked on.
If you are in danger of missing the deadline, you can file for an automatic extension with the CAD. This will give you until May 15 to file your rendition. You can file for an additional extension to May 30 if you have good cause for doing so.
A Gross Under-Assessment
Finally, if you receive an assessment of your BPP value that is considerably lower than you might have imagined, you have a few options at your disposal. It is unlikely that you’ll be looking to make a property tax protest. While you might think that an under-assessment devalues your property, there is no reason to protest that.
Instead, you will have a decision to make in regard to filing your rendition. The law states that business owners must file a rendition or face a 10% penalty. With a gross under-assessment, however, a 10% penalty can be a relatively minor inconvenience. For instance, if you have $100,000 worth of BPP in your business and the assessed value of the previous year was only $10,000, then you stand to save a lot of money by not filing a rendition. Filing an updated rendition may alert the CAD that the value of your BPP has risen significantly. They will produce an appraisal that fits accordingly. If, however, you do not file a rendition, then they will use the most recent assessment of your BPP to tax you. In this case, it would result in a $330 tax bill instead of a $3,000 tax bill.
Many people might need the Texas property tax code explained to them, but there are a few intricacies that you can understand keenly. In this case, an assessed BPP value that is far lower than the actual value of your BPP may be a good thing.
If you have any question pertaining to Business Personal Property and would like the answers of property tax professionals, contact O’Connor today!