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Owners of business personal property worth more than $20,000 must file a rendition that also includes a description of each type of inventory, a general estimate of the quantity of each property type and the owner's good faith estimate of the property's market value or the property's historical cost new and its year of acquisition.


If the owner simply provides a good-faith estimate of the property's market value, the appraisal district may request a statement of supporting information indicating how the property owner determined the value. This detailed statement must be delivered within 21 days after the date the property owner receives the request.

Rendition deadlines
The rendition addresses business personal property as of Jan. 1 of the tax year and may be filed annually between Jan. 1 and April 15. There is an automatic extension of the filing deadline until May 15 upon written request, and the chief appraiser may extend the filing deadline for an additional 15 days if the property owner files a written request showing good cause.

With the new legislation, the Texas Property Tax Code also offers property owners a special rendering provision for the 2003 tax year. If owners render business personal property before Dec. 1, the appraisal district may re-value the property for tax year 2003. Revaluation is likely to occur if there was no previous account for the property or if the rendered value greatly exceeds the current assessed value.

However, exercising the special rendering, or amnesty, provision in 2003 allows the property owner to avoid omitted property taxes for the two prior years.

When business personal property not already on the tax rolls is discovered, the Texas Property Tax Code requires it be assessed at the market value for the two prior years. For example, if business personal property were discovered in 2003, the appraisal district would also typically assess the property for 2001 and 2002. By rendering during the established amnesty window, Sept. 1 through Nov. 30, the property owner avoids the exposure of paying property taxes for prior years.

Valuation issues
The Texas Property Tax Code defines tangible personal property as "property that can be seen, weighed, measured, felt or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has no negligible or intrinsic value."

Examples of tangible personal property, or business personal property, include equipment, furniture, computers and inventory. Business personal property does not include accounts receivable, stocks, bonds, notes, franchise agreements, licenses, permits, certificates of deposit, insurance policies, pensions, contracts and goodwill.

Market value is the price at which a property would sell under prevailing market conditions if put up for sale in the open market for a reasonable time, if both the seller and the purchaser know how the property is being used and the enforceable restrictions on its use, and if both seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.

Market value may be less than or more than book value. For example, the value of a three-month-old computer may be half of the initial acquisition price. The book value based on IRS tax per IRS depreciation schedule would be 95 percent of cost based on a 60-month depreciation schedule. Other examples of items whose market value may decline sharply after being placed in service include cars, linens and bedding at motels, phone systems, copiers and furniture.
 

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