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10 / 15 / 2019 by Greg Freyman, CPA in Business Tax

Tangible Personal Property Tax

Some great lines from the 1980 movie Popeye with some of my favorite actors, Robin Williams and Shelley Duvall

The Tax Man:
You just docked?

Popeye:
I has.

The Tax Man:
Ah ha, let’s see here, that’ll be 25¢ docking tax.

Popeye:
What for?

The Tax Man:
Where’s your sea craft?

Popeye:
It ain’t no sea craft, it’s me dinghy and it’s under the wharf.

The Tax Man:
Ah ha. ahh-ha. This your goods?

Popeye:
They is.

The Tax Man:
Yeah. You’re new in town right?

Popeye:
If you call this a town, yes.

The Tax Man:
Well, first of all, there’s 17¢ new-in-town tax, and there’s 45¢ rowboat-under-the-wharf tax, and one dollar leaving-your-junk-lying-around-the-wharf tax, so all together, you owe the Commodore $1.87.

Popeye:
Uh, who’s this Commodore?

The Tax Man:
Is that the nature of question? There’s a nickel question tax.

 

 

As far as this article is concerned, we will discuss tangible personal property tax (TPPT) as it pertains to Florida resident business owners.

The world of taxation in a few words

Most are fully aware that states like Florida and Texas do not extend an income tax to its domiciled residents.

Taxes help pay for just about everything, from the roads to the schools. The money to build and maintain the infrastructure has to come from somewhere.

If the state has no major source of revenue from one area of taxation, then the state will balance out the budget by extending or increasing some other source of taxation. For example, Texas has a unique sales tax on services, and Florida has high accommodation taxes for tourism. Other states with low income taxes, like NJ, will have very high property taxes.

All a balancing act.

DETAILS ON THE TAX

Q. What is the Tangible Personal Property Tax (TPPT)?

A. A tax imposed on the value of a personal piece of property.

Tax based on a property’s worth is considered an ad valorem tax. Ad valorem is a Latin phrase that means according to value.

You have seen the phrase ad valorem before. Property taxes are also assessed on the worth of the real estate.

Q. Is The TPPT imposed only in income tax-free states?

A. No, many states have adopted this type of tax.

For more details, please see the following article from the Tax Foundation:

Q. My business is located in Florida, where may I find a list of all counties that impose this tax? Do you have a resource?

A. No one specific site or resource would point to all the Florida counties that impose this tax. You would need to investigate on your own and look into the specific county where the business property is situated. Then contact the county property appraiser office.

Q. Do I have to pay the TPPT on everything I own?

A. This particular tax applies only to tangible personal property placed into service in a business establishment.

Q. What types of property are subject to tax?

A. Examples would include furniture, fixtures, peripheral equipment, and just about anything you may take with you if you left your business premises.

Q. What is not considered personal property for TPPT?

A. Examples would include items such as perishables, supplies, and inventory. If in doubt, check with the appraiser office.

Q. How is the TPPT tax assessed?

A. Each county that extends the tax will have a slightly different rate. In Florida, the tax starts after a business has personal property worth over the $25,000 mark with a valid exemption.

Q. Who needs to file? What if I have little to no property in my business?

A. Anyone that runs a business in a county that imposes this type of tax should file regardless of actual tax liability. A filing will offer the taxpayer an annual exemption of $25,000 (for Florida) worth of property. If the first applicable filing does not take place, the business would lose the exemption amount and would be subject to penalties every year until brought in full compliance.

Q. When is the filing and tax due?

A. The filing is due by April 1st each year for assets held in service as of January 1st of the same year. Once the filing is complete, and the tax assessed, expect a bill issued on or before November 1st.

Q. How is this tax enforced?

A. Penalties are imposed for late or no filing — also, on-site inspection appraisals are conducted by the county appraiser office for those who did not file the form.

Q. How do I prepare?

A. You need a detailed list of the purchased assets described below:

Date of the asset purchased
Amount of purchase (includes sales taxes and freight charges)
Description of asset (computer, desk, furnishing, etc)
Leased assets details
Depreciation and asset sale schedule
Assessment of asset condition
An estimate of the fair market value of each asset listed

Q. I have a rental property, is that considered a business for this tax?

A. The answer is yes. For the TPPT, rental property is considered a business, which means that items inside the rental, like the furnishing and staging components, are up for exposure.

Most landlords will never meet the threshold as they do not have tangible property more significant than the exemption amount of $25,000.

Q. I have closed my business, now what?

A. Contact the property appraiser office and complete a final form marking the business sold area as applicable.

Q. I have moved business locations, do I need to make any changes to the reporting?

A. It is your responsibility to communicate any changes to the appraiser office. Not contacting the department with any changes made may result in penalties assessed.

What does Freyman CPA think about this tax?

Much like NYC’s General Corporate Tax, Unincorporated Business Tax, or the MTA Tax, we see this TPPT as a blatant double tax. Some view the TPPT as a triple tax. Why triple? Because to buy the property you first need to earn money from a taxable source, then you would pay a sales tax on the purchase of said property, and after, a potential TPPT.

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