1. When is Business Personal Property appraised?
Unlike real property, business personal property is appraised annually. Owners of all businesses must file a business property statement each year with the Assessor’s Office detailing the cost of all their supplies, equipment, and fixtures at each location. This is required unless the Assessor’s Office has already established the value of the business property and sent out a notification of “direct billing” or “low value” exemption. Business inventory is exempt from taxation. For more information, call (415) 554-5531.
2. I received a Business Property Statement (Form 571-L, 571-R), what’s this all about?
The Assessor’s records indicate that you were doing business at this location on the lien date, January 1. The lien date is the day that taxes became a lien on the property and/or its owners, even though the valuation and tax bills have not yet been computed and mailed. The tax lien date is January 1 of each year (Revenue and Taxation Code, Section 2192). All machinery, equipment, fixtures, construction in progress and leasehold improvement held or used in connection with a trade or business are taxable as business property. The property statement is a means for you to declare all your taxable business property located within the City and County on the lien date, January 1, and is used to assist the Assessor in determining the value of taxable property for assessment purposes.
3. I have a business in San Francisco but did not receive a Business Property Statement, what shall I do?
You must contact the Assessor’s Office to enroll your business and have a 571-L Statement/Form sent to you. It will have your permanent account number, owner’s name, mailing address, and business location. You must complete the form, then sign and return the statement to the Assessor’s Office.
The Form 571-L is not available for download from our website because each statement is assigned with a barcode that is specific to each business which is necessary for receiving, processing, and valuation purposes. Putting the form on our website without the said feature might cause confusion.
4. Why are you taxing my business assets, under what authority?
The State Constitution says that all property is subject to property tax unless otherwise exempt. Most people are familiar with the property taxes on their home. The assets of a business are also subject to assessment and taxation. Section 201 of the Revenue and Taxation Code of California states that “All property in this State, not exempt under the laws of the United States or of this State, is subject to taxation under this code”.
5. What is Business Personal Property?
Business Personal Property is any tangible property owned, claimed, used, possessed, managed or controlled in the conduct of a trade or business. This includes all machinery, fixtures, office furniture and equipment. In general, business personal property is all property owned or leased by a business except licensed vehicles, business inventory, intangible assets or application software.
6. Who must file a Business Property Statement?
Per Revenue and Taxation Code, Section 441, you must file a statement if…
a) The Assessor’s Office has sent you a property statement
b) You have taxable personal property with a total cost of $100,000 or more, located within the City and County as of January 1 of each year, even if the Assessor did not send you a property statement.
Failure to complete and return the property statement will result in the Assessor estimating the value of your business property and adding a 10% penalty to the assessment (R&T Code, Sections 441, 463 and 501).
7. What is the due date for the Business Property Statement?
The due date for filing the Business Property Statement is April 1st.
8. What is the last date to file the Business Property Statement without a penalty?
The due date for filing the Business Property Statement is April 1st. A 30-day extension until May 1st may be granted for reasonable cause. The request for extension must be made in writing, preferably on company letterhead, and addressed to Phil Ting, Assessor-Recorder, Business Division, 875 Stevenson St., Suite 300, San Francisco, CA 94103. Please indicate the account number, if any, sign and print your name and title. You may fax it to (415) 554-5544, no later than March 31st. Any property statements filed or postmarked after May 7th will have a 10% penalty added to the assessment (Revenue & Taxation Code 441 (b) & 463).
9. I was not open for business on January 1; do I still have to complete the statement?
Yes. A business does not have to be opened for its taxable personal property to be subject to assessment. For example, let’s presume that on the lien date, January 1, a new pizza parlor is under construction and nearly ready for its grand opening. Even though the pizza parlor was not open for business on the lien date, taxable business personal property (such as furniture, ovens and supplies) was in the owner’s possession on the lien date and the Assessor is required to assess it.
10. I went out of business prior to January 1; do I still have to complete the statement?
Yes. Anytime a person receives a statement from the Assessor and their business is no longer in operation, the statement must still be signed and returned to the Assessor. Make a notation on the statement that the business has closed and the closing date. If this is not done, the Assessor may not be aware of that fact, and may continue to assess the property despite its true circumstance.
11. I went out of business after the lien date; do I still have to complete the statement and pay personal property taxes?
Yes. The law specifies that all taxable personal property must be assessed as of specific point in time, and that point is precisely at 12:01 A.M. January 1 (regardless of what transpires after that date). Even if closed shortly after the lien date, a business must still file a statement and pay taxes for the coming fiscal year (July 1 through June 30) on any taxable property they owned on the lien date.
12. My business has moved to a new location within San Francisco.
If you have moved within the City and County of San Francisco, line through the old location on your Business Property Statement, including the mailing address, if applicable, and write your new address above the old one.
13. My business has moved to a new location outside of San Francisco.
If you moved out to another county before January 1, make a notation on the statement that you have moved outside of the county. Return the statement to the address indicated on the form and contact the new county to request a Business Property Statement.
14. I closed or sold my business; do I still have to file the statement?
Yes, indicate on the statement the status (closed or sold) of your business including the date the status change took place. Please indicate the disposition of the equipment, if closed, or the name of the buyer, if sold, then sign the front page and return to the Assessor’s Office.
15. Are non-profit organizations required to file Business Property Statements?
Yes. The filing laws apply to non-profit organizations. Non-profit organizations may, however, qualify for property tax exemptions. For more information, please contact the Exemptions Division of the Assessor’s Office by calling (415) 554-5596. If you would like more information regarding the Homeowner's Exemption, please dial (415) 554-5609 or (415) 554-5542.
16. All the equipment I use in my business was given to me and I don’t know what to report on my property statement?
Equipment gifted to you for use in your business is taxable and must be reported on the property statement. If you don’t know the equipment cost and/or year of acquisition, provide a good description including make and model and the general condition of each piece of equipment.
17. Can I get a copy of my prior year 571-L statement?
Yes, send the Assessor’s Office a written request, preferably on company letterhead, specifying what year you are requesting and the location of the business. Address it to Phil Ting, Assessor, Business Division, 875 Stevenson Street, Suite 300, San Francisco, CA 94103, and may be faxed to (415) 554-5544. Please indicate your Account Number, sign and print your name and title. If you are an authorized agent, include an authorization letter from the taxpayer.
18. How is the assessed value determined?
Assessment begins with the cost of the asset, including sales tax, freight and installation. The Assessor applies a depreciation factor to the asset cost and this becomes the assessed value. The depreciation schedule is based on the expected economic life of the asset, and is different from the depreciation schedule used by tax accountants.
19. If the statement is not filed, how is my assessed value determined?
The Assessor’s Office, directed by state law, will arbitrarily determine an assessable value. In addition a 10% penalty for failure to file will be added to your assessment (R&T Code, Sections 441, 463 and 501).
20. I do not own anything and lease all my equipment; do I still have to file the statement?
Yes. You are required to report this information in Part III of the statement so that the Assessor can properly locate and assess the actual owner of the equipment. However, if you own any small equipment, such as printer, copier, supplies, etc., which you are using in the business you need to report these costs under Part II of the statement.
21. Who can sign the statement?
The owner or an authorized agent can sign the statement. When signed by an agent or employee other than a member of the bar, a certified public accountant, enrolled agent or a duly appointed fiduciary, the assessee’s written authorization of the agent or employee to sign must be filed with the Assessor. The signature on the authorization must be an original, not a fax copy. In the case of a corporate assessee, the statement must be signed by an officer or by an employee or agent whom the board of directors has designated in writing. A property statement that is not duly signed in accordance with the foregoing instructions does not constitute a valid filing and may be subject to the 10% failure to file penalty.
22. I have already completed and sent my Business Property Statement and now realize that I have to amend the statement. What should I do?
You will have to resubmit or file a new statement with all the preprinted identification that was on the initial statement. Please indicate this is an “AMENDED COPY” to the statement that was submitted previously. You may call the Business Division at (415) 554-5531 and ask for another statement, if necessary. Statements that were initially filed on time may be amended without penalty until May 31st (R&T Code, Sec. 441 (i).
23. How much will my taxes be?
Applying the 2010 tax rate of 1.159% will give a conservative estimate of what the actual tax liability will be. Proposition 13 established a tax rate of 1% of the value of assessable property. San Francisco tax rate is determined by the Board of Supervisors, based on property assessed value and bond measures passed by San Francisco voters. For example, if the business depreciated assessed value is $125,000 the property taxes on the business assets will be approximately $1,449.
24. When will I receive my bill?
When you file your business property statement in a timely manner, you should receive your bill by the end of July. Payment is due on or before August 31st, and becomes delinquent after that date and will be subject to penalties and interest. If the business owner also owns the business in which the business resides, the business property tax will be included with the secured tax bill. The secured tax bill is sent by the end of October with the 1st installment due by November 1st.
25. What if I don’t agree with the value on my tax bill, can I dispute it?
The value can be corrected if a clerical or administrative error was made. If that’s the case, first contact the Assessor’s Office to speak to an auditor to understand how to go about correcting the error. For assistance, contact the Business Personal Property Division by calling (415) 554-5531 during normal business hours, Monday through Friday, 8:00 a.m. to 5:00 p.m. PST. However, if the disagreement is a matter of valuation, then you must file an “Application for Changed Assessment” with the Assessment Appeals Board no later than September 15th for the regular tax bill. Their telephone number is (415) 554-6778. Pay the bill first to avoid late payment penalties (if it cannot be cleared by August 31st). A refund will be issued if the Appeals Board rules in your favor.
26. Is there any property that is exempt or that I do not have to report on my Business Property Statement?
The following are some common exempt items that should not be reported:
* Business Inventory (Revenue and Taxation Code 129)
* Application Software (Property Tax Rule 152)
* Licensed Motor Vehicles (R&T Code 10751)
* First $50,000 of employee-owned Hand Tools (R&T Code 241)