How Does Your Company File Property Tax Renditions in Texas?
Part 1 of our 3 part series on filing fair market value
A long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.” – Thomas Paine, Common Sense
Business Personal Property (BPP) tax compliance is typically viewed as a mundane task not worthy of any more attention than the minimum to fill out forms and mail them in.
Like the Thomas Paine quote above, the custom of filing BPP (categorize and enter cost and age) gives this time-worn filing approach the superficial appearance of being right. So, over time many companies simply accept filing cost and age as “the” way to file their property taxes. Thus, as Paine wrote, “A long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom.”
Mass Appraisal Inflates Assessed Business Personal Property Values
Being a state founded on free-market and taxpayer-friendly ideals, Texas is one of only a few states that allow BPP owners the option to file their annual property taxes at fair market value.
However, tax assessors needed to develop a simplified method of reporting and mass appraisal. The problem is that the mass appraisal of Business Personal Property using ill-fitting categories and outdated depreciation factors (and often exaggerated indexing) leads to assessed values that are often 20% to 40% above fair market value.
PART 2: Defining Fair Market Value
In part two of this series, we will define fair market value and look deeper into the reasoning behind this approach.
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