Authored by: Brittany Whitmer, MAcc Brittany has worked and CMP for 3 years and specializes in new business setup and consultation. In addition, she is the firm expert in personal property taxation, and sales tax. Brittany also provides compliance services in business and personal taxation.
Each year, businesses in Utah are required by law to file a Personal Property Tax Statement. The statement includes information regarding the personal property items purchased, or disposed of by the business during the calendar year. Utah law requires that business personal property is reported to the county assessor where the property is located. Each January the county in which the property resides sends out the statements which contain the necessary forms. If your business is new you will need to contact the appropriate county to obtain the required forms.
Purpose of Personal Property Tax Statement
Utah Code requires the taxation of property for the funding of local government and Utah schools. The purpose of the Personal Property Tax Statement is to assess the tax on the personal property items owned or leased by businesses operating in Utah. Personal property is taxed based on taxable values determined each year by schedules provided to the counties by the Utah State Tax Commission.
Definition of Personal Property Tax
It is important to understand the definition of personal property in order to correctly complete the return. Personal property is defined as any asset other than real property (real estate). Personal property is movable, meaning that is it not permanently attached to a building or land. A few examples of personal property include furniture, computer hardware, equipment, and machinery.
Items Not Included in the Personal Property Tax Statement
You do not need to include any items that are registered with motor vehicles, such as delivery vans, work trucks, etc. These items are subject to state wide uniform fees and the property tax is paid when the item is registered.
Farm machinery and equipment are exempt from personal property tax. This includes items such as tractors, milking equipment, feed handling equipment, harvesters, choppers, grain drills and planters, tillage tools, scales, combines, seeders, sprayers, haying equipment, and other machinery used primarily for agricultural purposes.
Understanding the Different Parts of the Statement
At first glance, the statement appears difficult and confusing, but once all the parts are understood the report is actually fairly easy.
The items purchased and owned by the business are categorized into different property codes based on the type of item. For example, there is a code for furniture and fixtures, one for medical and dental equipment, one for computer hardware, etc. The county will provide a list of the codes each year and examples of types or items that are included in each code or you can view at complete classification guide at: http://www.propertytax.utah.gov/schedules/classifications.html
Item Description: This is the area where the item purchased is described. It is important to be as specific as you can. For example, if a new laptop was purchased you would not want to just describe the item as a computer; you would want to list the brand and a little more information regarding it. A more appropriate description would be, HP Pavilion 15 Inch Laptop. The purpose for describing the item in detail is to make it easier to remove the item from the personal property tax statement once it is sold or not in use by the business anymore. Be sure to include all items that were purchased. An easy way to determine this is to match the personal property tax statement to the depreciation schedule filed with the income tax return each year.
Year Acquired: Indicates the year in which the item was placed into service by the business.
Cost of Purchase Price: List the full price that was paid for the item in use.
Quantity: The total number of identical items purchased. You can only list more than one item purchased if the description and price is exactly the same on all items. For example, you bought six new chairs for the lobby of your office. You would list the quantity as six.
Percent Good (or Depreciation Rate):
This rate is provided to you by the county in the packet they send out each year. The rate corresponds with the different property codes, and the correct rate can be found by using the valuation tables provided. As mentioned before, the item is taxed based on the item’s value. Each year an item is in use, its taxable base decreases. The depreciation rate decreases the taxable value rate that the county assigns to certain items bought in various years.
Taxable Value: The taxable value is calculated by multiplying the above numbers together.
Cost or Purchase Price x Quantity x Percent Good (or Depreciation Rate) = Taxable Value
Steps to Completing the Return The forms for the Personal Property Statement are not the same from county to county in Utah. Each county varies a little bit from the other, but the main idea and steps are the same from county to county.
Step 1: Enter the total cost of the supplies on hand as of January 1st. Supplies on hand include all office supplies, shipping supplies, maintenance supplies, replacement parts, and any consumable item not held for sale in the ordinary course of business.
Step 2: Enter the grand total of equipment already indicated on the report from the county (this is the taxable values of items already owned from prior years).
Step 3: Complete the section for personal property acquired during the year.
Step 4: Complete the section for personal property disposed of during the year.
Step 5: Take the total taxable value of items acquired and subtract the taxable value of items disposed of during the year. The difference will carry over to the first page of the statement.
Step 6: Using the tax rate provided by the county, multiply the total equipment and the total from the items acquired and disposed of by the tax rate provided. The product of this will be the amount of tax that is owed to the county.
Step 7: Sign the statement and mail the necessary pages and schedules along with a check for the amount due to the county.
More information can be found on the State of Utah’s website: http://www.propertytax.utah.gov/personal.html