Businesses that fail to file an annual return to the tax assessor lose their right to appeal – and might end up paying more tax than necessary.
The deadline to file the form can easily be overlooked because it’s ahead of tax season, said Bill Piccerelli, a CPA/CVA and partner at Piccerelli, Gilstein & Company LLP in Providence. Instead of a March 15 or April 15 due date, the forms have to be returned to city or town assessors by Jan. 31.
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“If they don’t file the form in time, they lose the right to appeal their assessment,” Piccerelli said.
Included in the business property tax are computers, office furniture and other business-related equipment. If a business is given an assessment that includes equipment it no longer owns and they haven’t filed the form in time, they can’t appeal the assessment.
Piccerelli said not carefully reviewing a return to a city assessor is a common misstep that businesses make that costs them money. It’s important to pay close attention to the return because real dollars are at stake, Piccerelli said.
“We had an instance with a client who ran a small medical practice in the city of Providence who found that there were items still on the assessment to the tune of $126,000,” Piccerelli said. “It included $59,000 worth of items that were long gone, like old desks and filing cabinets.”
And because items that have been disposed of can remain on assessments for years, businesses can end up paying several years’ worth of unnecessary taxes, Piccerelli said. The business may have removed the item from their records, but it will remain on the city’s assessment.
“For example, say a business upgrades all their computers in 2004 and that’s on the assessment,” Piccerelli said. “But if they don’t go back and eliminate all the computers that are disposed of from the assessment, in effect they begin to be doubled-taxed.”
For clients at his firm, Piccerelli said they keep asset records by year and by item, so that any item that was disposed of can be removed from the assessment.
“For example, if a business purchased a new computer and disposed of the old one, we take that off the assessment,” Piccerelli said.
The form should be relatively easy to file because businesses have to keep up depreciation records, he said.
“For the most part, assessors accept the information businesses supply on their assessment forms,” Piccerelli said. “If it comes in significantly different than the previous year’s, they might want to know why. The real problem comes when businesses don’t fill out the form.”
Piccerelli recommends that businesses notify their accounting departments when they dispose of a piece of furniture or equipment. When new furniture or equipment is purchased, he said, use that as a reminder that items have been disposed of. And if a business is unsure of the detailed items listed on the return to city assessor form, request a detailed assets listing for review. The listing should have all the items that are included on the return.
