In an effort to reduce the number of businesses that routinely do not file their annual business property statements mandated by law, thereby evading payment of taxes on business personal property, the Assessor’s Office has implemented new procedures to improve compliance. On the 2008-09 assessment roll, just over 14,000 businesses out of a total of 50,791, failed to return a property statement to the Assessor’s Office by the May 7 deadline. As a direct result of existing and new procedures associated with assessing businesses that fail to file, the Assessor’s Office added over $1.8 billion dollars in business personal property assessed value and penalties to the assessment roll. Since the Assessor can recover value and penalties as far back as four years, more than $400 million more may be added from prior year assessments after July 1.
“We are in the information business, and without accurate information from taxpayers, we are out of businesses,” said County Assessor Larry Stone. “This year the burden is placed on those businesses who fail to return their property statement. Over the last decade, we simplified the process and made it easier for companies to file. This year, nearly 10,000 businesses filed their statement on-line via e-filing, a process that on average requires less than 15 minutes to complete. There is simply no excuse for not returning the statement,” Stone said.
In January, after the completion of an intensive field-canvassing program to identify new businesses, the Assessor’s Office mailed 50,791 business personal property statements (Form 571-L) to every known business in Santa Clara County. Businesses are required to disclose the cost of the assets they own such as machinery, equipment and fixtures. Such properties includes computers, supplies, office furniture, tooling, machinery and equipment. Most business inventory is exempt. The Assessor uses this information to determine the assessed value.
Business property statements are due on April 1 and are delinquent, and incur a penalty, if not filed by May 7. The Assessor must process the information by July 1 when the assessment roll is delivered to the Tax Collector. The Tax Collector issues the tax bill for unsecured business personal property accounts, which are due no later than August 31. Due to the short turn around between May 7 and July 1, the Assessor relies on businesses to properly and timely report their assets. Businesses with values in excess of $400,000 in assets and equipment are mandated by State law to be audited every four years. Other businesses are audited subject to the availability of resources. On average, 1,000 businesses are audited annually by the Assessor’s Auditor-Appraisers, certified by the State Board of Equalization.
Like the Internal Revenue Service and other authorities, when a business fails to return a property statement, the Assessor has the authority and responsibility to both determine the assessed value of a company’s assets and equipment using the best information available and levy a 10 percent penalty.
Over 5,000 businesses that were assessed in prior years did not return their property statement by the May 7 deadline. Based upon economic conditions in Santa Clara County, the Assessor’s Office estimated the fair market value and added the statutory 10 percent penalty. The new assessed value, including the penalty, is then used by the Tax Collector to calculate the taxes, which are typically 1.2 percent of the assessed value.