RPC Property Tax Advisors

FF&E Tax Review

Personal property and fixtures are frequently over assessed by taxing agencies. Assessors use a mass appraisal method that is generally based on the annual declaration on Form 571. Sometimes, the value is inflated because the appraisal tables used by the assessor do not reflect the actual equipment used in the business. The assessor may also use values from a previous business at the same address, thus creating an inflated assessment. Usually, however, errors made by the client result in excessive assessments. The errors include (but are not limited to):

1. Declarations on form 571 are based on financial/income reporting. The most common error is declaring abandoned fully depreciated equipment that has not been removed from the financial ledgers.

2. Misclassification of equipment on Form 571. Accounting records may have only 2 or 3 different categories so computer equipment, which loses value quickly, may be reported as office equipment, which retains value for a longer period.

3. Equipment located in other states or countries (especially Mexico) may be on the ledgers, and reported to assessors.

4. Retrofits that do not add any value are in the records and also included in the assessment.

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