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Texas Business Personal Property (“BPP”) Tax - by Daniel L. O’Neil

by News Editor
in Blog
on 15 June 2016
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What is BPP and why should you care about it?

This is part of our series on business personal property tax. Please take a quick look at our prior post in this series if you are so inclined.

 

BPP is concerned with fixed assets and inventory which includes, but is not limited to: furniture, fixtures, equipment, tools, machinery, computers, copiers, motor vehicles, aircraft, watercraft, raw materials, goods in process, finished goods and/or those awaiting sale or distribution, and inventory held for sale on consignment. If you use your own personal tools, machinery, equipment, vehicles or any other item, gadget or thing to produce a product or provide a service and receive income, those items are included in the appraisal assessment.

What is the rendition then?

The rendition is filed on Comptroller’s Form 50-144. The form provides the appraisal district with the description, location, cost and acquisition dates for personal property that you own. The appraisal district uses the information to help estimate the market value of your property for taxation purposes. This form must be filed with the appraisal district office in the county in which your property is taxable. It must not be filed with the Comptroller of Public Accounts. If you make a false statement on this form, you could be found guilty of a Class A misdemeanor or a state jail felony under Texas Penal Code Section 37.10. Making false statements on this form to avoid a bit of tax is a really bad idea.

When is the rendition due?

Rendition statements and property reports must be delivered to the chief appraiser after January 1 and not later than April 15, except as provided by Texas Tax Code Section 22.02. On written request by the property owner, the chief appraiser shall extend a deadline for filing a rendition statement or property report to May 15. The chief appraiser may further extend the deadline an additional 15 days upon good cause shown in writing by the property owner.

What else do you need to know?

Pursuant to Texas Tax Code Section 22.07, the chief appraiser or his authorized representative may enter the premises of a business, trade, or profession and inspect the property to determine the existence and market value of tangible personal property used for the production of income and having a taxable situs in the district.

Now with the nuts and bolts of BPP and rendition out of the way – why should you really care? The penalties!

The chief appraiser must impose a penalty on a person who fails to timely file a required rendition statement or property report in an amount equal to 10% of the total amount of taxes imposed on the property for that year by taxing units participating in the appraisal district. The chief appraiser must impose an additional penalty on the person equal to 50% of the total amount of taxes imposed on the property for the tax year of the statement or report by the taxing units participating in the appraisal district if it is finally determined by a court that: (1) the person filed a false statement or report with the intent to commit fraud or to evade the tax; or (2) the person alters, destroys, or conceals any record, document, or thing, or presents to the chief appraiser any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the purpose of affecting the course or outcome of an inspection, investigation, determination, or other proceeding before the appraisal district.

If you need help with your rendition and do not have a good relationship with a Texas CPA in place we can introduce you to one of our trusted referral partners at a local Houston CPA firm. There are many benefits of having a relationship with a trusted Texas CPA in place, one of which is knowing that if your tax positions get challenged on the state or federal side you can come back to me and I can seamlessly take the file back when we are in tax controversy and start defending the positions the trusted CPA advised you to take.

We can’t guarantee the outcome of any case – anyone that does is lying to you and has an ethical problem – but we can promise that we believe every taxpayer should pay their fair burden of tax, and we will help explain to the appraisal district what your fair burden of tax is, and nothing more.

 

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