Microsoft Word - Guide to Personal Property Rendition.docx

Guide to Personal Property Rendition

If you own a business, you are required by law to report to your county appraisal

district all personal property that is used in that business. There are substantial penalties for failure to report or

for falsification and tax evasion. The Gregg County Appraisal District has prepared this document to assist you

in complying with this very important law.

What is a rendition?

A rendition is a form that provides information about

property that you own. The appraisal district uses the

information you provide to appraise your property for

taxation.

Who has to render?

There are three categories of taxpayers who must render:

• Owners of tangible personal property that is used for

the production of income (see below)

• Owners of property on which an exemption has been

cancelled or denied

• Owners who have been formally notified by the chief

appraiser that they must render.

What kinds of property must be rendered?

For taxation purposes, your property is classified as either

real property (land, buildings, and other items attached to

land) or personal property (items that can be owned but are

not attached to land). Personal property that you use to

produce income – or for business purposes – must be

rendered unless the total value of all of the personal

property is less than $500. This includes furniture and

fixtures, equipment, machinery, computers, inventory held

for sale or rental, raw materials, finished goods, and work

in process. You are not required to render intangible

personal property items that can be owned but do not have

a physical form such as, cash, accounts receivable,

goodwill, custom computer software, and other similar

items. If your organization qualifies for an exemption that

applies to personal property – for example, a religious or

charitable organization exemption, you are not required to

render the exempt property.

You may qualify for an exemption from ad valorem

taxation for one passenger car or light truck that is owned

by an individual and used by that individual for both

professional and personal activities. Vehicles that are

individually owned and used for the transportation of

passengers for hire are NOT eligible for this exemption.

To request this exemption, your application must be filed

with the appraisal district on, or before, April 30. If you

mail the form, it must be postmarked no later than midnight

April 30. The individual who has been granted or has

applied for this exemption is not required to render the

vehicle for the year in which the exemption has been

applied for or granted. The application is available at

www.gcad.org under forms. It is called “Vehicle Personal

Use Application Form”.

Which forms will I need to file?

For Gregg County Appraisal District, most businesses will

need to file the general rendition. If you own business

vehicles or aircraft that travel outside of Texas and would

like to apply for a mileage or departure allocation, you will

also need to submit Form 50-147. Call our office at (903)

238-8823 if you have questions about these forms.

When must the rendition be filed?

Normally, the last day to timely file your rendition is April

1st. If you mail the rendition or send it by a contract carrier

such as UPS or FedEx, it must be postmarked or bear a

receipt mark on or before April 1st. If you hand deliver it,

GCAD must physically receive in our office before the

close of business on April 1st. When your property needs

to be rendered because the chief appraiser has denied or

cancelled an exemption, you must render it within 30 days

of the date the chief appraiser denies or cancels the

exemption.

Where must the rendition be filed?

Renditions for property located in Gregg County Appraisal

District must be filed with GCAD. The mailing address for

the general rendition forms is Gregg County Appraisal

District, Personal Property Department, 4367 W. Loop 281,

Longview, Tx. 75604.

If my business personal property assets are exactly the

same as reported in my prior year rendition, do I still

need to render?

Yes. Per Texas Property Tax Code Section 22.01(L), if your

personal property assets on January 1

, were exactly the

same as those assets contained in your most recent rendition

statement you have filed with the appraisal district, then all

you need to do is check the affirmation box in Step 3 on

page one on your rendition form. After checking the

affirmation box in Step 3, complete the Signature and

affirmation in Step 6 on page 2. A copy of the previous

year’s asset listing should also be included.

What will the appraisal district do with my rendition?

Your rendition will be analyzed and used, along with other

information we collect on similar businesses, to develop an

estimate of value for your property.

Is my information confidential?

Yes. Information contained in a rendition cannot be

disclosed to third parties except in very limited

circumstances. In addition, the Tax Code specifically

provides that any estimate of value you provide is not

admissible in proceedings other than a protest to the ARB

or court proceedings related to penalties for failure to

render. The final value we place on your property is public

information, but your rendition is not.

What do I have to file if my personal property is

valued at less than $20,000?

Unless your total business personal property assets are

valued at less than $500, you will have to file at least the

general rendition form. However, you will only be required

to fill out a short table generally describing your assets and

giving their location.

What information is required for the rendition?

Depending on the type of property you own and its value,

you can expect to provide the following information:

Location

You will need to give the address where the property was

located on January 1

. If the property was in transit on

January 1

, or is regularly used in more than one location,

you should provide additional information about the

property’s normal location and circumstances on January

st.

General description

A general description should give enough information to

identify the property and distinguish it from other items that

you own. At minimum, you should identify the major

categories of personal property assets that you own, using

the same terminology you would use in reporting to the

internal revenue service. You have the option of providing

an itemized listing of the various assets in any category. For

vehicles, you will need to provide the plate and VIN

number, as well as the year, make, and model.

Quantity of items

If you own an inventory of items that you hold for sale or

rental, you will need to provide an estimate of the quantity

of each type of item that you hold in Inventory. Again, you

can provide an itemized list if you prefer for any category.

Good faith estimate of market value

The appraisal district will estimate the market value of your

items on the basis of your rendition and other information

in its possession. Under the rendition law, you must include

in your rendition either a good faith estimate of the market

value of your items or the historical cost and acquisition

date (discussed below) of the items, if the value of your

items are $20,000 or more. If you choose to give a market

value estimate, you should be aware that there are several

different definitions of market value that may apply. For

items other than inventory, market value is defined as

follows:

"Market value" means the price at which a property would

transfer for cash or its equivalent under prevailing market

conditions if:

(A) exposed for sale in the open market with a

reasonable time for the seller to find a

purchaser;

(B) both the seller and the purchaser know of

all the uses and purposes to which the

property is adapted and for which it is

capable of being used and of the

enforceable restrictions on its use; and

maximize their gains and neither is in a

position to take advantage of the

exigencies of the other.

(Sec. 1.04, Texas Property Tax Code)

For inventory, market value is defined by the Tax Code as

“the price for which it would sell as a unit to a purchaser

who would continue the business.” Sec. 23.12, Texas

Property Tax Code. If your business has 50 or fewer

employees, you may base your estimate of value on federal

income tax depreciation schedules. You will need to be

prepared to defend your estimate and explain how it was

developed.

Original cost (Preferred Method)

Instead of providing a good faith estimate of market value,

you may provide the original cost and date you acquired the

property. Original cost (the Texas Property Tax Code uses

the term “historical cost when new”) refers to the amount

you paid to acquire the property. Your cost would include

transportation and any other necessary expenses incurred in

acquiring the property. If you purchased a used item, you

should note on the form that you purchased it used and give

the amount you paid.

Date of acquisition

Date of Acquisition is simply the date you bought or

acquired ownership of the property.

How should I determine original cost?

To determine original cost, you need to refer to your

accounting records, such as original journal entries and

account ledgers. Use original purchase documents, such as

invoices or purchase orders to determine the original cost

of the asset. You need to add all cost that is attributed to

getting the asset functioning, such as freight and set-up

cost.

Should I include fully depreciated or expensed assets

on my rendition?

Yes. The rendition should include assets that have been

fully depreciated on your books and assets which were

expensed rather than capitalized for income tax purposes,

so that all tangible personal property used for the

production of income is reported.

What are the penalties for failure to comply?

There are two levels of penalties for failure to comply. If

you fail to file your rendition or explanatory statement

before the deadline or you do not file it at all, the penalty is

equal to 10% of the amount of taxes ultimately imposed

on the property. If a court determines that you have

committed fraud or done other acts with the intent of

evading taxes on the property, a penalty equal to 50% of

the taxes ultimately imposed on the property will be levied.

Fraud could also result in criminal prosecution.

If I can’t file on time, what should I do?

If you need more time to complete your rendition, you have

the right to request in writing, an extension to May 1

, and

a further 15-day extension if you show good cause. You

must complete and mail the extension request form. The

May 1

extension request form must be mailed or delivered

no later than April 1

st.

If you need the additional extension

for good cause, that request form must be mailed or

delivered no later than May 1

How do I find out whether the appraisal district

received my rendition on time?

Call our office at (903) 238-8823. Please provide your

account number and the name of your business, they can

enter it into our system and inform you of the date your

rendition was received.

What are my rights if a penalty is assessed against me?

If a penalty is assessed against you, you can file a request

for a waiver of the penalty. You must file the request in

writing with the chief appraiser within 30 days after you

receive the notice that the penalty has been imposed. Your

request must include documentation showing either that

you substantially complied with the rendition law or that

you made a good faith effort to do so. The documentation

should also address:

(1) your compliance history with respect to paying taxes

and filing statements or reports;

(2) the type, nature, and taxability of the specific property

involved;

(3) the type, nature, size, and sophistication of the person’s

business or other entity for which property is rendered;

(4) the completeness of your records;

(5) your reliance on advice provided by the appraisal

district that may have contributed to your failure to comply

and the imposition of the penalty;

(6) any change in appraisal district policy during the current

or preceding tax year that may affect how property is

rendered; and

(7) any other factors that may have caused you to fail to

timely file a statement or report. The chief appraiser is

required by law to consider these factors and notify you in

writing. If the chief appraiser declines to waive a penalty

and you have made a timely request for waiver, you may

protest the imposition of the penalty to the appraisal review

board. The board may waive the penalty if it finds that you

substantially complied with the rendition law or made a

good faith effort to do so.

When can the chief appraiser request an explanatory

statement from me?

If you provide a good faith estimate of market value instead

of original cost and acquisition date for any items, the chief

appraiser may request an explanatory statement from you.

The chief appraiser must make the request in writing, and

you must provide the statement within 21 days of the date

you receive the chief appraiser’s request.

What must I include in an explanatory statement? The

explanatory statement must set out a detailed explanation

of the basis for the estimate(s) of market value given in your

rendition. The statement must include adequate information

to identify the property. It must describe the physical and

economic characteristics of the property that are relevant to

its market value. It must give the source(s) of information

used in valuing the property and explain the basis for the

value estimate.

What happens if I don’t file my statement on time?

If you don’t file your statement on time, a penalty equal

to 10% of the amount of taxes on the property will be

imposed. There is also a 50% penalty if a court finds you

engaged in fraud or other actions with intent to evade taxes.

You have the same waiver and appeal rights discussed

above.

What if the appraisal district values my property at a

higher amount than what I render?

You may file a protest with the Appraisal Review Board.

Can I report all my properties on one rendition?

If the appraisal district has already set up accounts covering

your property, you should file a rendition corresponding to

each account. If the district does not have accounts set up

for your property, it is generally best to file a rendition

applicable to each location where your property is kept. For

example, if you own three separate convenience stores, file

three renditions, one for each store.

Can I request an extension to file the rendition?

Yes. See what to do if you can’t file on time, above.

If I can’t file by the extension deadline, what should I

do?

You should file your rendition as soon as you can and

include with it a request for waiver of penalty and

explanation of your reasons for missing the deadline as

described above. If you receive a notice form the chief

appraiser regarding the imposition of a penalty, be sure to

file the request for waiver within 30 days of the date you

receive it.

For more information, contact Gregg County Appraisal

District at (903) 238-8823. The appraisal district’s website

is www.gcad.org