December 22, 2014

Personal Property FF&E

Business equipment and fixtures are frequently over assessed by taxing agencies.

The primary source of excessive assessments is the result of property tax audits by the county assessor. If you have recently been audited, or have been notified of a property tax audit, it is important to take action immediately. The window period for correcting an audit is very short.

The second most common source of excessive assessments involves the annual Form 571 filed with the assessor. Assessors use a mass appraisal method that is generally based on the declarations on Form 571. Sometimes, an excessive assessment may occur because the depreciation tables used by the assessor do not reflect the actual equipment used in the business. Sometimes, the assessor includes values from a previous business at the same address. Usually, however, errors made by the taxpayer, when filing the Form 571, result in excessive tax assessments. The areas 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.
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  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.
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  4. Retrofits that do not add any value are in the records and also included in the assessment.

Personal Property Services Provided:

  • California Assessors Form 571-L Personal Property / Fixtures Declaration form preparation.
  • Personal / Business Property Tax Appeal Representation and Consulting.
  • Personal / Business Property County Assessor Audit Representation and Consulting.

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