Small businesses have short window to take advantage of state tax break

Business owners in Michigan have an opportunity to save money but must act quickly.  The state has made some significant changes regarding personal property taxes.  Beginning December 31, 2013 eligible personal property is exempt from taxation if the “true cash value” of the property is less than $80,000. This exemption affidavit must be filed by February 10.

What does this mean for a small business in Michigan?  Let’s say your business is an office environment and you have approximately 10 employees.  Assume your business is 10 years old, and over that period of time you have acquired $100,000 worth of office furniture, computers and other equipment.  This would typically result in a true cash value for property tax purposes of approximately $50,000.  The resulting personal property tax due for that company would be in excess of $1,000.  By simply filing the Affidavit of Exemption by February 10, you will not be subject to this tax.

The typical kinds of equipment found in a small business environment that would be subject to personal property tax are office furniture, computer equipment, phone systems, copiers, equipment to manufacture and assemble your product, shelving, cash registers, cooking equipment, tables and chairs, etc.  Other than inventory and supplies, if it is not attached to the building and you can take it with you, it is subject to the personal property tax.

Now for the details, in order to comply with these regulations, you must meet ALL of the following requirements:

• The exemption must be properly claimed on Form 5076 and filed by February 10.  This form can be downloaded at: www.michigan.gov/documents/treasury/5076_439273_7.pdf

• The personal property must be classified as industrial or commercial property.

• The property cannot be leased to or used by a person that previously owned the property.

• The combined True Cash Value is less than $80,000.  This includes property that is owned, leased or in your possession.

This is a great opportunity to save money for your business. The Affidavit of Exemption from Personal Property Tax Exemption must be filed by February 10.  Please contact us with questions or if we can be of assistance regarding this tax saving opportunity.

Martin J. Talty, CPA, is president of Kopmeyer & Talty P.C., a Livonia-based accounting and business consulting company serving the local business community for 28 years.