Personal Property Information
Personal Property
One of the most common questions regarding personal property tax is whom or what is taxable. In Massachusetts, all tangible personal property is taxable unless expressly exempted by state statutes. To further determine what is taxable, it is essential to first determine the type of ownership. The Department of Revenue has assigned Tax Status Codes to the various types of ownership that exist. They are as follows:
501 Individuals, partnerships, associations, trusts and limited partnerships
Businesses are taxable for all tangible personal property as of January 1st. The exception to this is cash on hand, wearing apparel and household furniture and fixtures at the owners domicile, providing that it is not used for business purposes. An example of this: if a person has a desk that they use for the business and are writing it off on their income tax, and their children also use it to do their homework on, then it is subject to taxation. Also, any other tangible property that is subject to another tax, i.e. registered automobiles, which pay auto excise tax, is not further subject to a personal property tax.
502 Domestic Business Corporations or Foreign Corporations
Domestic and Foreign Corporations are subject to taxation on poles, underground conduits, wires, pipes and machinery and equipment used in the conduct of business. The machinery and equipment is not meant to include inventory (stock & trade), machinery used in the laundering or dry cleaning process, machinery used in the refrigeration of goods or in the air conditioning of premises, or in the buying, selling, accounting or administrative function of the business.
An example of machinery not meant as inventory is in the situation of a retail equipment business. The machines are for sale or lease and are not being used by the corporation, they are exempt from taxation. It is important to also realize, machinery used in the accounting or administrative function is only for the corporations own administrative function. For example, if a corporation has a computer system and they charge municipalities to print the tax bills for them, then the machine or computer is fully taxable. Even though the printing of tax bills is an administrative function for the municipalities, it is an operation of the business for the corporation and thus fully taxable.
Public service corporations, such as insurance companies, utilities, and savings and cooperative banks are subject to taxation on poles, wires, pipes, and machinery and equipment used in the manufacture or in the supplying and distribution of water. It should be noted that foreign insurance companies are taxed differently depending on the state the company is incorporated in.
503 Domestic and Foreign Corporations classified Manufacturing
Manufacturing Corporations are subject to taxation on poles, wires, pipes and underground conduits. For a corporation to be deemed manufacturing, they must have a completed and accepted 355Q Form from the Commissioner of Revenue.
504 Locally assessed Public Utilities including Electric, Gas and Water Companies
Locally assessed Public Utilities are rate regulated by the rate setting commission within the Department of Public Utilities. Because of rate regulation, great emphasis is placed on the net book value, which can be obtained from any of the utility companies located within your jurisdiction. Any values over net book must be accompanied by an appraisal of the plant showing the economic depreciation caused by the rate regulation.
505 Telephone and Telegraph Companies as valued by the Department of Revenue
506 Pipelines of 20 miles or more as valued by the Department of Revenue
Telephone & Telegraph Companies as well as Pipeline companies are also rate regulated, but are valued by the Department of Revenue. These values are sent to all Municipalities by May 15th. If a community wishes to contest these values, they may appeal them to the Appellate Tax Board.
Gathering Information & Data
The most reliable way of obtaining data is by a 100% site inspection of all businesses in town. We either do this in house or with the help of an outside vendor. The actual physical listing of all taxable tangible items will be listed. The items will fall into one of four categories, inventory or stock & trade, furniture & fixtures, machinery & equipment or poles, wires, pipes and conduits. The quantity, age, condition and description with model # will be listed so an accurate value can be applied.
The Form of List is another means of gathering data and is required by law (MGL Ch.59 S 29) to be filed on or before March 1. We do an annual mailing to each business in town. Failure to file the Form of List will result in an estimate of the personal property (MGL Ch59 S 36).
We also gather information on second homes in Fairhaven. Annual Form 2HF are mailed to all owners of second homes. This form is specifically for tangible household personal property of non-domiciliary.
Only those items that are located at the business as of January 1 are taxable with the exception of equipment that is moved from site to site.
Both Forms of List can be downloaded below or are available in the Assessors Office.