PERSONAL PROPERTY TAX

A Brief Explanation of Personal Property Tax

According to the Ohio Revised Code, at Section 5701.03, "'Personal Property' includes every tangible thing that is the subject of ownership, whether animate or inanimate, including a business fixture, and that does not constitute real property as defined in section 5701.02 of the Revised Code." What does this mean in plain language?

When you open a business, you need certain supplies, equipment and furnishings. Examples would be telephones, computers, desks, chairs, drills, pencils, pens, reference books, and shelves. These are just a few of the items considered to be tangible personal property. The law also says a "business fixture" is an item that is permanently attached to either the land or structure and benefits the business being conducted. An example of this would be a walk-in freezer at a fast food restaurant. If a item is used to control the structure's environment, is lines, tanks or towers for water, either drinking or fire control, or is electrical or communications wiring, it is not a business fixture. If an item benefits the structure or realty itself, it is not considered to be a business fixture.

If you were to build an apartment building, any appliances that are supplied would be considered tangible personal property. These appliances could be refrigerators, ranges, washers, or dryers. If an attorney were to commence business, he would need to report not only his furniture, but also his law books, just as an accountant would need to report her accounting and tax books.

There are some exceptions under Ohio law. Property used in agriculture, registered motor vehicles and aircraft. Now, with the recent passage of Am. Sub. H.B. 66, all manufacturing equipment first placed in service in Ohio by a manufacturer on or after January 1, 2005, is immediately exempt, but must be listed in "Schedule 5" on the tax return.

"Manufacturing equipment" includes machinery, equipment, tools, implements and patterns, jigs, dies and drawings used at a manufacturing facility by a manufacturer. A "manufacturing facility" is a facility or portion of a facility used for manufacturing, mining, refining, rectifying or combining different materials with a view to profit. New manufacturing equipment meeting this definition should be listed at 0% of its true value beginning with the 2006 return (R.C. 5711.22).

Am. Sub. H.B. 66 also phases out the personal property tax over the next four years. The listing percentages for the phase-out period are as follows: 2006-18.75%; 2007-12.50%; 2008-6.25%; 2009-0%;

For 2006, all businesses in Ohio, with more than $10,000 of taxable personal property, with the exception of financial institutions and public utilities, must file a tangible personal property tax return annually with the Auditor. If the business operates in more than one county in Ohio, the return is filed directly with the Ohio Department of Taxation. The tax return must be filed between February 15 and April 30. An extension of up to forty-five days may be granted by the Auditor. If any tax is due, at least one-half must be paid within ten days of filing the return or ten days after the close of the filing season. If the return is not filed, the taxpayer may have a forced assessment levied against him/her. If the tax is not paid, a lien is placed upon the tangible personal property as well as the real property in the taxpayer’s name. If the tax is not paid after a certain period of time, as determined by the County Treasurer, the Treasurer has the option to seize the property and sell it at public auction. A list of unpaid taxes and taxpayers is published annually in the local newspaper.

Businesses with less than $10,000 of taxable personal property are not required to file.