Business Personal Property - Frequently Asked Questions

Index of Topics:

• Business Personal Property and Filing Form 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 Form 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 1^st. Property in your possession on January 1^st 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 June 1st, 2020.
  • 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.

• Completing the Business Property Statement (Form 571L)
  
  
  • What if the printed information on the BPS is incorrect?
    • If your business has moved or changed its mailing address, then draw a single line through the incorrect information (Please DO NOT make the preprinted information unreadable). Then legibly print or type the new information on the form and also indicate the effective date of the move or when the change became effective. When reporting a sale, include the new owner's name and mailing address. When reporting that the business has been closed, provide the date(s) and information relating to the disposition of any taxable personal property. Complete the BPS, sign and return it to the Assessor's Office.
  • What records do I need to complete the BPS?
    • The most useful item to aid in completing the form is an accurate and up to date asset listing. This list should include:
      
      • The date of acquisition of the equipment
      • The total cost (purchase price plus sales tax, freight and installation charges)
      • Location of the equipment if you have multiple locations
      • Disposal dates of equipment removed
      
      Other records that could be helpful in completing the Business Property Statement are the Federal Income Tax Depreciation Form 4562 with depreciation schedule, and/or California State Tax Depreciation Form FTB 3885A, General Ledger or Trial Balance, Balance Sheet and Income Statement. Some business owners may have purchased an existing business. The information needed in that situation would be the purchase agreement or the escrow papers that would show the breakdown of the equipment, fixtures and leasehold improvements acquired through the purchase of the business.
  • All the equipment I use is my own personal equipment; must I report it?
    • If you are using any 'personal' equipment in your business, then yes, it must be reported. For example, persons working out of their homes must report personal desks, computers, etc.
  • I have a business in my home. Do I still have to complete the BPS?
    • Yes. Any equipment used for a home business is considered to be business personal property and must be reported on the BPS.
  • All the equipment I use was given to me. What should I report on the BPS?
    • Where the equipment you use in your business was acquired as a gift, you may report your estimate of its current market value on the BPS (that is, what you think it would sell for in the open market). Enter that estimated value in the most current year's cost line and add a note indicating that the entry is a value estimate.
  • What is the difference between inventory and supplies?
    • Basically, inventory is an item subject to sale, rent or lease. If you are manufacturing a product, then the parts that go into the product are also inventory items. Supplies are things consumed in your normal course of business.
  • Should sales tax be included in the reported cost?
    • Sales tax is part of the original cost to the buyer, just like freight and installation costs, and must be reported as part of your total cost.
  • Can I just write 'Same as Last Year' on the BPS and return it?
    • No. You must report personal property holdings in detail as requested or mandated. If nothing has changed from the prior year (no equipment was purchased or sold), then you should refer to your prior year's BPS filing in order to be consistent in completing the current BPS. If you electronically filed using SDR or e-SDR last year, and choose to file electronically this year, all the prior year’s entries will be carried forward, saving you extra time and effort.
  • My business is a 501(c)(3) exempt organization. Do I still need to complete the BPS?
    • Yes. You still are required to complete the BPS even if you are an exempt organization. You should contact the Exemption Section at (510) 272-6587 to verify your exempt status or to file an exemption claim.
  • Is the BPS form subject to audit?
    • Yes, the statement is subject to audit by the Assessor as provided by the statutes and regulations set forth in the California Revenue and Taxation Code. To encourage accurate reporting of business personal property, the Assessor is required to audit a significant number of all businesses who own, claim, possess, or control assessable trade fixtures and business personal property.
  • How can I obtain assistance in completing the BPS?
    • You may obtain assistance in the following ways:
      Telephone: Call (510) 272-3848, Monday through Friday, 8:30am to 5:00pm, except holidays.
      In Person: 125 12th Street, Suite 320, Oakland. We’re located on the corner of Oak St and 12th St., across from the County Administration Building.

• Appealing an Assessment
  
  
  • What if I disagree with my assessment?
    • If, after receiving your tax bill, you have questions about your business personal property assessment, we recommend that you call our office and speak with an auditor-appraiser. Staff is available Monday through Friday, 8:30 a.m. to 5 p.m. at (510) 272-3848, or in person at 125 12th Street, Suite 320, Oakland. However, if you are dissatisfied with the assessed value and believe it is incorrect, you must file a timely 'Application for Changed Assessment' (assessment appeal) with the Assessment Appeals Board (AAB) to have the value reconsidered. The AAB is an independent agency representing the Board of Supervisors and is not connected with, nor is it under the control of, the Assessor's Office.
  • Can the Assessor review the value informally, without an Assessment Appeal?
    • No. Once the assessed value is established and surrendered to the Auditor-Controller’s Office the Assessor has no legal jurisdiction to change the value without a timely assessment appeal filed.
  • How do I file an Assessment Appeal?
    • All appeal applications must be filed with the Clerk of the Board, Administration Bldg. 5th Floor, 1221 Oak Street, Oakland, 94612. Filing information and the form may be obtained by calling (510) 272-6352 or visiting the Clerk of the Board’s website www.acgov.org/clerk/assessment.htm.

• Out of Business, Sold Business, or Do Not Own a Business
  
  
  • I was not yet open for business on January 1. Do I still have to complete the BPS?
    • Yes. A business does not have to be open for its taxable personal property to be subject to assessment. For example, let's presume that on the lien date, January 1, a new pizza parlor is under construction and nearly ready for its grand opening. Even though the pizza parlor was not open for business on the lien date, taxable business personal property (such as furniture, ovens and supplies) was in the owner's possession on the lien date and the Assessor is required to assess it.
  • All I have is a fictitious name and business phone number. I haven't purchased any equipment or conducted any business as yet in Alameda County. Must I still file the BPS?
    • Yes, if you received a "Notice to File." Please note those facts on the BPS and return the signed BPS to the Assessor's Office. The Assessor needs to know these facts in order to prevent an improper assessment from being issued to you.
  • I went out of business prior to January 1. Do I still have to complete the BPS?
    • Yes. Anytime a person receives a "Notice to File" or a BPS from the Assessor and their business is no longer in operation, the BPS must still be signed and returned to the Assessor. You should also include a note on the BPS indicating that the business has closed. If you don't, the Assessor will not be aware of that fact and may continue to assess the property despite its true circumstance.
      
      On the BPS or an attachment to it, please write a note that includes the date you went out of business, as well as the status and disposition of any equipment owned or used by you at the time the business closed. If any of the property was sold to another person or business, please indicate the buyer's name and address. If any of the property reverted to your own personal use as household personal property, we need to know what property did that as well. Then sign and return the BPS to the Assessor's Office.
      
      Note: Where a business has closed but you still own equipment previously used in the business, it may still be taxable despite the fact the business is closed. If the equipment you still own can be converted to household uses (that is, could become your personal effects), then it may not be assessable.
  • I closed my business on February 1st. Do I have to complete the BPS and pay taxes for the entire next fiscal year?
    • Yes. The law specifies that all taxable business personal property must be assessed as of a specific point in time, and the point is precisely at 12:01 a.m. January 1^s (lien date), regardless of what transpires afterwards. Even if closed shortly after the January 1^st, a business must still file a BPS and pay taxes for the coming fiscal year on any property owned on the lien date.
  • I sold my business between January 1^st and July 1st. Will the Tax Collector prorate the taxes between the buyer and the seller?
    • No. Any arrangement to share the property tax liability should be worked out between the buyer and seller. The County does not prorate the taxes.