This article is original content written by Thomas Scanlon, CPA, CFP® of Manchester, CT.
All Connecticut business owners that own personal property must file a Personal Property Tax Declaration in the town that business resides in by November 1, 2021.
Failure to file this declaration or filing late will result in a penalty equal to 25% of the assessed value of the property…and nobody wants to pay 25% more in taxes! So, you can file or have Borgida & Company file for you, but don’t forget to FILE!
Business owners must file a declaration in each town in which they own property. This report will declare most of the personal property used by the business. Real property (real estate) is not declared on this form. The towns assess the value of real estate and bills taxpayers accordingly. Similarly, registered vehicles are also not declared on this form. The Motor Vehicle Department tracks these and notifies the towns regarding the amounts owed by the taxpayer.
The key document that will support the Personal Property Declaration is the Depreciation Schedule, which is also known as the Fixed Asset Report. This will list all of the depreciable or fixed assets of the business. This schedule would include real estate, leasehold improvements, vehicles, office equipment, machinery and any other fixed assets. The details on this schedule would include:
- Date Acquired
- Cost Basis (Purchase Price)
- Depreciable Life
- Accumulated Depreciation
- Current Depreciation
- Tax Elections Taken for Depreciation
It is important that taxpayers notify the assessor’s department if you should move your business in or out of town.
Caution must be exercised when completing this report. The Personal Property Tax Declaration, like other tax forms, is potentially subject to audit. Local towns, like the federal and state governments, need tax revenue. Unlike real estate and vehicles, the personal property tax is self- assessed. With the current economic pressures facing the towns, it’s very easy to see towns putting additional resources at this to generate more tax revenue.
Extension of Time to File
An extension of time may be requested to file this report. There is no form to make this request. The taxpayers should send a letter to the town assessor’s office requesting additional time. The reasons for the request should be clearly spelled out. Although there is no clear regulation on this, many towns will grant an extension of time for 30-60 days due to reasonable cause.
ACTION ITEM: Connecticut business owners should file their personal property tax declaration timely. Failure to do so will result in unnecessary penalties being assessed. They should also maintain accurate records particularly with their depreciation schedule to support this declaration. Please give us a call if you need assistance filing your Personal Property Tax Declaration.