All persons, corporations, partnerships, etc., who own business personal property, aircraft, or commercial mobile or portable units must list and assess business personal property in the Revenue Commission Office after October 1 each year, but no later than December 31. The list must include a description of all business personal property, along with its acquisition dates and acquisition costs.
Failure to make an assessment by the 3rd Monday in January will result in a 10% penalty and fees, which will be added to each business personal property tax bill. All business personal property is appraised by each respective County Revenue Commissioner based on its cost new with an allowance for depreciation due to age.
A copy of the depreciation schedule used in preparing a taxpayer’s Alabama or Federal income tax return on which the taxpayer’s property is listed may be accepted as a listing of the taxpayer’s business personal property provided the depreciation schedule has been adjusted for additions and deletions to contain property owned by the business on the October 1 lien date. Also, assets which are expensed rather than capitalized for income tax purposes and are not included on the depreciation schedule must be added to the taxpayer’s listing so that all personal property is reported. The depreciation schedule must include each property’s acquisition date and cost, as well as all property whose depreciated value is zero, but which is still owned by the taxpayer on October 1 of the year for which the assessment is made.
Property grouped on the depreciation schedule in categories, such as furniture and fixtures, office equipment, machinery and equipment, etc., must be itemized so as to conform with the requirements noted above.
Personal property has two categories: tangible personal property and intangible personal property.
- Intangible personal property includes an owner’s representation of rights to property such as shares of stock, annuities, patents, market certificates, etc. Intangible personal property owned by businesses is not taxable under the property tax laws of this state.
- Tangible personal property includes material items such as machinery and equipment, tools, furniture and fixtures among numerous other items. Tangible personal property is taxable to businesses for Alabama property tax purposes. Aircraft and avionics equipment is taxable for business personal property in the State of Alabama, as well as, motor vehicle “add-on” equipment. The values published by the Department of Revenue in the Alabama Uniform Motor Vehicle Assessment Schedule for Ad Valorem Taxes represent market value of motor vehicle cab and chassis only and do not include equipment and/or bodies added after a vehicle leaves the manufacturer. The “add-on” equipment and/or bodies are components, which give the vehicle added value and they are taxed as business personal property.
Business personal property is considered Class II property and is taxed at 20% of market value. Market value multiplied by twenty percent equals the assessment value, which is then multiplied by the appropriate jurisdiction’s millage rates to determine the amount of tax due. The State of Alabama publishes a personal property appraisal manual so that basic methods and procedures can be followed in the personal property appraisal process. This is done to ensure statewide property appraisal equity and the manual serves as a reference guide to Alabama’s assessing and appraisal personnel.
The State of Alabama is a situs state for the taxability of personal property; therefore, if property is located in the state on October 1 (the lien date), the property is taxable unless specifically exempted. The State of Alabama has constitutional and statutory exemptions. If you have any questions regarding taxability of personal property, please call our office at (334) 242-1525.