Rendition And Discovery To Facilitate Valuing Personal Property
Tax assessors first must learn what property you own before they can attempt to value it. Most states have a process requiring property owners to self-report the personal property they own. The tax assessors’ objective is to obtain information in a consistent format so they may value the property. This is understandable since there are only 2,850 personal property appraisers at appraisal districts to value $3.5 trillion of personal property annually, based on our estimate.
The first steps in rendition are to understand: 1) what is taxable, 2) what exemptions, if any, are available, 3) the requirements to render, 4) the options for rendering and 5) the penalty for not rendering.
The purpose of including the State of Oregon discovery process is to document how appraisal districts are diligently attempting to locate and tax personal property. They have many sources to obtain information, including other government offices.
Oregon Discovery Instructions
Appraisal districts have many options for discovering property that is not reported, as indicated by the following excerpt on how to locate and discover personal property from Methods for Valuing Personal Property published by the state of Oregon:
“All taxable personal property is assessed as of the January 1 assessment date in the county where it’s located. Taxable personal property is to be reported by March 15 each year.
This includes machinery, furniture, equipment, etc., used previously or presently in a business, including items that have been fully depreciated or expensed for income tax purposes. Individuals, partnerships, firms, and corporations that fail to file a return are subject to assessment through the discovery process.
Complete discovery depends upon county funding, cooperation of the taxpayer (owner, lessee, or lessor), and the resources available. Basic office policies and procedures should be developed that govern the discovery of personal property. Two of the most common methods of discovering personal property are the self-reporting by the taxpayer and field research by county staff members.
A taxpayer who has taxable personal property must report it to the county in which the property has situs. Situs is its location on the assessment date (January 1 of any year). The property is taxable for the entire year at its situs. As county staff does appraisals in the field, they should watch for new businesses and relay that information to the personal property personnel. The following lists are the most usable and proven methods; however, this list isn’t inclusive. At the local level, information may be obtained from numerous sources.
- Aerial photographs: Aerial photos, if available, can show the location of equipment and new business construction.
- Building permits: Local cities and counties can often provide lists of permits for new commercial construction and remodeling.
- Bulletin boards in stores, cafes, and other places of business: Bulletin boards can be a good source of information on “repair,” “maintenance,” and “personal services” types of companies.
- Business directories: Commercially produced directories can provide listings of businesses by address, business name, telephone number, and “doing business as” (dba). A reverse telephone directory also can be useful.
- Business vehicles: Business names and telephone numbers on vehicles can be a starting point for discovering new businesses.
- Chambers of commerce: Local chambers of commerce can supply names of member businesses or provide membership listings for a specific geographic location.
- City and county business license listings: Local business license listings are one of the most efficient and effective ways to find new businesses.
- Local newspapers: In addition to news stories, some papers publish lists of new businesses and commercial leases. When you scan the newspaper advertisements, play special attention to “Grand Opening” sales and other indicators of change.
- Public health department: A municipal health department may have lists of registered restaurants, hotels/motels, adult foster care homes, and day care centers with the current operators.
- Publications: Phone books, newspapers ads, television, trade journals, and the Contractor’s Board directory provide useful information.
- Small business associations: Like chambers of commerce and business associations may be able to provide lists of member businesses.
- Tenant lists: Shopping mall or commercial building managers can supply a listing of the tenants, when the businesses started operating, what the lease covers, and who owns what fixtures in the building. These listings can be used in conjunction with the directories in building lobbies and hallways. Sometimes tenants in sublet space don’t appear on the tenant listing, but are shown on building directory.
- Trade directory and reports: Professional directories, if available, can help in identifying certain types of businesses.
- Utility companies: Natural gas, electric, cable television, and other utilities may provide business names, owners, and addresses of businesses.
There are also a number of sources at the state level. Many business activities require state licensing or registration (see Section 9, Licensing/Registration, page 9-1).
Other departments with information include:
- Construction Contractor’s Board: The CCB has telephone access for information on builders and landscapers.
- Forestry Department: The Forestry Department can provide information on timber sales. They tell who the purchasers are and where the logging operations are conducting business.
- Marine Board: The Marine Board can provide a list of registered boats. Information includes the name and address of any business that has boats in the state and a description of the property. The Department of Fish and Wildlife can provide information on commercial fishing vessels.
- Oregon Liquor Control Commission: The OLCC can provide license lists and ownership information for businesses over which they have jurisdiction.
- Secretary of State’s office—corporate charters: New corporate charters are recorded with the Secretary of State’s office in Salem. Lists of new and existing businesses may be requested.
- Secretary of State’s office—Uniform Commercial Code (UCC) forms: A UCC form is filed when a piece of equipment is encumbered with a commercial lien. These forms are filed with the Secretary of State’s office in Salem.
- State Lottery: The Lottery office can tell you what equipment is being leased and who is the lessor. See the Appendix for the names and addresses of providers of leased lottery equipment to the state. The lottery equipment leased by the state from a taxable entity is taxable.
Other methods of discovery:
- Drive the county with a tape recorder dictating every business name. Transcribe the information and cross check it with the assessment roll.
- DexKnows.com. This site will list all like businesses, including names, addresses, and telephone numbers. This can also be cross-checked with the assessment roll. Once the property has been discovered and the owner or person with control identified, the assessor should establish an account for the business and add the account to the assessment roll. If the discovery occurs after the tax roll is certified in October, the property is added to the assessment and tax rolls using the statutory methods described in the section, “Corrections to the roll.” The assessor determines the value to be added from the best available information. Under ideal conditions, appraisers would physically list individual personal property items. Time and personnel constraints, however, usually dictate the use of a reporting system on a form completed by the taxpayer or agent, and supplemented by periodic audits. A vast amount of information is available on the Internet. The state of Oregon has a website, www.oregon.gov; the available information is intended to inform the public about state programs and regulations and may be useful for discovery purposes. Commercial online services have been created to promote local businesses and may be useful for discovery.”
Oregon has many options to learn about personal property ownership. And Oregon, like other states, has consequences for not rendering. The penalty is 5 percent of the tax owed if the return is filed after March 15, but on or before June 1. The penalty increases to 25 percent of the tax owed if the return is filed after June 1, but on or before August 1. After August 1, the penalty is 50 percent of the tax owed (ORS 308.296).
Consequences Of Property Not Rendered Being Discovered
The discovery process available to most tax assessors or appraisers is extensive, particularly as data becomes more widely available. Further, most states allow appraisal districts (aka assessors or appraisers) to back assess personal property not taxed for two to five years. In addition, interest and penalties typically apply if property that was not rendered is discovered.