Business Personal Property Tax – Looking Forward

It’s that time of year again, Business Personal Property Tax Returns are quickly approaching! Take a look below at some of the things to start thinking about in the coming weeks.

What is the Business Personal Property Tax (Ad Valorem)?

Business Personal Property tax is an Ad Valorem tax that is assessed at the county level in Alabama. An Ad valorem tax is based on the assessed value of an item (the personal property) and, in this case, is calculated annually. You report the assets you own as of the beginning of the tax year (Oct 1 in Alabama), and the county takes the cost basis of the asset (what you paid for it originally) and its age (when you bought it), and uses this information in conjunction with the personal property tax rates to determine the amount of Business Personal Property Tax owed for that tax year.

Key dates

October 1: Assessment date (first date of the new tax year)

December 31: Tax returns are due for the next year, tax payments are due for the current year

January-October: Tax notices are mailed at various times, appeals are due 30 days from the notice date

What should I do right now?

The Business Personal Property Tax Year ends September 30, so now is the time to start looking around at your personal property assets. Did you replace some furniture in your office, but you haven’t quite gotten the old stuff out of the storage closet yet? Do you have an old printer you replaced and haven’t gotten around to disposing of the old one yet? If you have any business personal property you sell or dispose of before September 30, 2023, you will be able to mark it as sold/disposed of on your 2024 Business Personal Property Return, and the county will not assess tax on its value.

Bills for returns that were due December 31, 2022 should be arriving in the coming weeks, along with the blank return for the 2024 tax year.

Now is also a great time to look back on the past year. Did you make any equipment purchases? Did you buy extra monitors for your staff to support work from home or a hybrid work environment? Did your employees all go to work remotely and your business went fully virtual, so you sold off your lobby furniture?

Don’t forget!

Remember, even items below your capitalization policy threshold for depreciation must be included on this return. Common items below the IRS threshold include desks, furniture, monitors, computers, small electronics, and even the art on your walls! It may seem small compared to your IRS Capitalization Policy, but the county still wants you to report it.

BMSS can help!

Do you have questions about your Business Personal Property Tax Return, or want help with filing? Give us a call. Each of our offices can file Business Personal Property Tax Returns in a variety of counties, and we’d love to work with you! If you don’t have a capitalization policy in place, we can help with that too. Reach out to your BMSS professional at (833) CPA-BMSS or visit our website for contact information.