How Can A Machinery & Equipment Appraisal Help Your Tangible Personal Property Ad Valorem Tax Appeal Case?

What is an Ad Valorem Tax?

An ad valorem tax is based on the assessed value of an item such as real estate or personal property. The most common ad valorem taxes are property taxes levied on real estate; however, ad valorem taxes may extend to a number of tax applications, such as import duty taxes on goods from abroad. Ad valorem property taxes are typically a major, if not the major, revenue source for both state and municipal governments, and municipal property ad valorem taxes are commonly referred to as simply “property taxes.”

The Latin phrase, ad valorem, means “according to value.” In short, all ad valorem taxes are levied based on the determined value of the item being taxed. In the most common application of ad valorem taxes, municipal property taxes, the real estate of property owners is periodically assessed by a public tax assessor to determine its current value. The assessed value of the property is used to compute a tax annually levied on the property owner by a municipality or other government entity.

Ad valorem taxes, which are based on ownership of a real asset, can be looked at in contrast to transactional taxes, such as sales taxes. While ad valorem taxes are determined and levied annually, transactional taxes are only levied at the time of a transaction.

Tangible Personal Property Ad Valorem taxes are usually levied by a municipality but may also be levied by other local government entities such as counties, school districts or special taxing districts, also known as special purpose districts. Property owners may be subject to ad valorem taxes levied by more than one entity, for example, both a municipality and a county.

What is Tangible Personal Property?

Tangible Personal Property is everything other than real estate used in a business.  It includes machinery & equipment, furniture, fixtures, tools, signs, leasehold improvements, supplies, leased equipment or any other equipment used in a business or to earn income.

How Can a Tax Payer Appeal a Personal Property Tax Assessment?

As a property owner, you have the right to appeal the property appraiser’s assessment of your property’s value. As part of the appeal process, you may do the following:

• Ask for an informal conference with your county property appraiser.
• File a petition with your local Value Adjustment Board (“VAB”).
• File a lawsuit in circuit court.

Informal Conference with your Property Appraiser – You have the right to an informal conference with your property appraiser to discuss your value or application for a property exemption or classification. By having an informal conference, you may be able to settle the issue without going to a hearing or going to court.

Petition the Value Adjustment Board – If you petition the VAB, you must still pay all your non-ad valorem assessments and the required portion of your ad valorem taxes before they become delinquent.

A lawsuit in Court – You may file a lawsuit in circuit court to challenge the property appraiser’s assessment or denial of an exemption or classification. You are not required to participate in an informal conference with the property appraiser or file a petition with the value adjustment board before filing a lawsuit.

Machinery & Equipment Appraisals for Ad Valorem Tax Appeal Purposes – The tax appraiser’s office utilizes cost information that may or may not accurately reflect the market current market value of the subject machinery & equipment.  A machinery & equipment appraisal is an integral document that can be utilized as part of the taxpayer’s tangible personal property tax appeal process. By preparing a formal and defensible machinery & equipment appraisal, the taxpayer can present an accurate estimate of the current market value of the subject machinery & equipment, regardless of the appeal methodology utilized.

M&E Appraisal Associates is expert in providing appraisals to assist the Ad Valorem Tangible Personal Property Tax Appeal process. If you have any questions about the machinery & equipment appraisal process, please call us at (844)VALUEME (825-8363).