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Business Personal Property – Frequently Asked Questions
BUSINESS PERSONAL PROPERTY AND FILING 571L
Completing the Business Property Statement (Form 571L)
Appealing an Assessment
Out of Business, Sold Business, or Do Not Own a Business
Business Personal Property and Filing 571L
Why do I have to pay taxes on my Business Personal Property?
The California Constitution states in part that, ‘Unless otherwise provided by this Constitution or the laws of the United States, (a) All property is taxable….’ In other words, unless otherwise exempted by law, all tangible property is taxable in California and the Assessor has the legal responsibility to assess it.
What is the definition of "Business Personal Property"?
Tangible property owned, claimed, possessed or controlled in the conduct of a profession, trade or business may be subject to property tax. Business property includes such items as supplies, machinery, equipment, furnishing, and computers. Business inventory and vehicles owned by the business and licensed with the Dept. of Motor Vehicles are not subject to business personal property tax.
Why did I receive a "Notice to File the Business Property Statement"?
You received a “Notice to File” letter because our records indicate that you were in business on or before the lien date, January 1st. Property in your possession on January 1st must be reported on the Business Property Statement (BPS). This year some business owners will receive a BPS in the mail, others will not. In an on-going effort to increase efficiency, reduce costs, and be environmentally responsible, we have begun phasing out mailing of statements. All business owners, regardless of size, are encouraged to take full advantage of electronic filing by using SDR or e-SDR.
To learn more about SDR and e-SDR, go to Filing Form 571L Business Property Statement. If you are unable to file electronically, please call our office at (510) 272-3848 and a BPS will be mailed to you.
Who must file the Form 571L, Business Property Statement (BPS)?
If the Assessor sends a “Notice to File”, then you are required to file the BPS for the current year. However, any business that owns business personal property with a combined cost or current fair market value of $100,000 or more must file annually, even if the Assessor does not make a formal request to do so.
How is the assessed value of my property determined?
The Assessor is required to annually assess most taxable business personal property at 100% of fair market value. In order to determine fair market value, the assessor employs a number of methodologies. For example:
• The Assessor often relies on various trade publications and ‘Blue Books’ that provide current, open market sales price and/or cost data for various types of both new and used equipment, non-licensed vehicles, aircraft and boats.
• The Assessor trends actual owner-reported costs to a present replacement cost estimate using trending tables provided by the State Board of Equalization (or developed in-house). We then reduce the trended costs to reflect normal or actual depreciation and derive a market value estimate.
Unlike real property, which is assessed under Proposition 13, most personal property does not fall under Prop 13’s umbrella (although it does enjoy the same, maximum 1% tax rate).
Is my Business Property Statement (BPS) a confidential document?
Yes, it is confidential and not open to public inspection.
What is the filing deadline?
The BPS is due on April 1st and is considered delinquent if it is postmarked after 5:00 P.M on May 8th, 2023.
Can I amend a filing after it is mailed?
Yes. You can amend your property statement until May 31st of the year in which the property statement is due to correct errors and omissions, as long as the original BPS was filed timely. Be sure to contact our office and discuss your situation with a supervisor.
What would happen if I didn't file the BPS or I filed after the deadline?
Failure to File: If the BPS is not filed as required by law or requested by the Assessor, the Assessor must rely on the best information available in order to estimate the value of any business personal property owned by the non-reporting business. In the absence of a BPS, an ‘average’ assessed value (based upon businesses of a similar size and use) may be used to derive such an estimate. Our office may also perform a field inspection of your business property, during which an estimate of the lien date, fair market value of the business personal property discovered will be made. Additionally, a 10% penalty must also be added to any assessment made as a result of a failure to file the BPS.
Incomplete Filing: It is important that you complete each section of the BPS, and properly sign and date it. If you file an incomplete BPS before May 7th, and the Assessor returns it to you for completion, you must file the corrected BPS on or before May 31s to avoid the 10% penalty. If the completed or corrected BPS is not filed by May 31st, it is treated the same as a ‘failure to file’ and the 10% penalty must be added in that circumstance. The penalty is prescribed by law and the Assessor is statutorily required to apply it.