Idaho Business Personal Property Tax Exemption

How it Works and What You Need To Do:

Karyn Scott

Recently, the Idaho legislature passed House Bill 315 that exempts up to the first $100,000 of value per taxpayer per county from the Business Personal Property Tax effective immediately.  There is a lot of confusion, miss-information, and unknowns that still surround this legislation.  The Rules Committee is working on interpretations, but we do not expect to see anything until next year.  In addition, each county can interpret the legislation differently, so depending on your organization, you may need to call your assessor directly.

The bill addresses two separate exemptions.

1. $100,000 per taxpayer per county exemption for all business personal property
2. An exemption for stand alone property costing less than $3000 purchased after 1/1/13.

Let’s simplify the first exemption (A) above and how it applies using a few bullet points:

• A taxpayer is defined as in the Internal Revenue Code, which means that if your business has multiple divisions, but you file your business income taxes on one tax return, you only have one $100,000 exemption in each county that you operate your business.
• Value, as defined by the county, is the cost of the asset adjusted for a depreciation factor determined by the county.  As such, your declaration should declare the cost of the asset, not your personal opinion of the “value.” Cost of the asset will include not only the purchase price, but all taxes, shipping, installation and training costs required to get the asset operational.
• The $100,000 exemption applies to each county in which you operate.  If you have locations in both Ada county and Canyon county, you will receive a $100,000 exemption for assets located in each county.
• If you have multiple locations within the same county, you must file “Idaho Personal Property Exemption Location Application Form” and indicate which locations you want to apply your $100,000 exemption.  Different locations do have different levy rates, so if this applies to you, you may want to look up the levy rates by location.  These levy rates are available on the County Assessor’s website.  NOTE:  This form is due May 1^st of each year!  The form is a work in progress and vague.  It is important to list each location by its physical address and the amount of the exemption you want to apply to that location. Click here for a link to the form.
• If you do not file the location application form, the county will determine how to apply your exemption.  In Canyon County for example, the decision has been made to apply this pro-rata by location.
• Once a location election is made, you are not “stuck” with it.  You are able to change the location election once a year by filing the Idaho Personal Property Exemption Location Application Form by May 1^st.
• Do you still have to file your annual declaration each year?  That depends.  If your personal property exceeds $100,000 as measured by the taxpayer (not by location) you must file an annual declaration.  Currently, if your personal property is less than $100,000, you are only required to file the personal property declaration once every 5 years.  However, this is being addressed by the rules committee and we expect modification next year.

Now let’s discuss the second exemption for standalone property valued at less than $3,000 acquired after Jan 1, 2013.

• What is standalone?  Essentially this means that the asset purchased, in and of itself, is capable of performing the job for which it was acquired.  If you purchase a lateral file cabinet for $1200, this asset will be exempt from declaration.  The lateral does not require any additional components in which to perform the job for which it was acquired.  However, if you purchase a color laser printer for $350, this equipment must be declared.  The printer is a component.  It cannot operate without a computer or some other device, so despite the fact its cost is less than $3000, it must be declared.
• The $3000 exemption is completely separate from the $100,000 exemption.  If a newly purchased (2013) asset meets the definition under this second exemption, it does not count towards the $100,000 per taxpayer per county exemption.
• Do you have to report exempt assets on your personal property declaration?  No, but keep in mind the definition of standalone property.  You will need to evaluate all equipment purchases each year to determine if the acquisition needs to be declared.

Still have questions?  Feel free to call your local county assessors office.  As mentioned earlier, rules may be applied differently by each county, so it will be important to determine these differences if you are operating in more than one county.  Failure to comply with the law (as determined by your county) may result in fines.