Personal property tax on tools in Michigan?

[Larry Edgerton]

I just got hit with $625 year personal property tax on my tools, not my shop and property, that is another bill.

What are you fellows that have pro shops paying and for what value? I am having a hard time keeping my head above water as it is and the government just keeps coming up with new ways to penilize me for being ambitious.

[Mike Gager]

how did they find out about what tools you have?

[Larry Edgerton]

how did they find out about what tools you have?

They have never been in my shop.

[Brent Smith]

I'm going to sound dumb here, but what the heck is a personal property tax?????

[Jim Becker]

I'm going to sound dumb here, but what the heck is a personal property tax?????

Brent, some states and/or local jurisdictions require their residents pay an annual tax on certain types of property. Virginia handles vehicles that way. (We do not have anything like that in PA, at least in this area) In most cases, it's based on the current value of the property, whether easily determined like with an automobile or self-reported by the tax payer.

I'm not sure how the OP would get a tax bill for a specific amount like that unless it's based on purchase records from vendors or from claims on business tax returns from a prior year. Who knows. I think that the OP needs to investigate to at least find out how the tax is being assessed.

[glenn bradley]

I also have never heard of it but I am not an independent businessman. Weren't the guys that threw the Boston Tea Party businessmen? If they've never been in your shop I assume it is a flat rate based on their shoe size or they use costs on the tools that you have supplied them for tax benefit pueposes(?). I'm just curious but it sure stinks.

[David G Baker]

I didn't know that Michigan had that type of tax. They have been talking about adding a tax on business that provide services like barbers, beauty salons, etc.
If this is the case I can better understand why so many businesses are going under in the lovely state of Michigan.

[Phil Thien]

We have similar personal property taxes for a business (non woodworking) I own here in Wisconsin. Basically they charge us property taxes on fixtures and phones and computers and stuff we use to conduct business.

Where there is a way, there is a tax.

[Brian Kent]

Can we make sure no one mentions this in California?:eek:

[Greg Cuetara]

Here in the Great state of Maine we have what they call 'Business Equipment Tax'. Basically if you have a $100,000 worth of equipment, including computers etc. you pay a tax on it. I think you should find out how it is assessed and go from there.

Greg

[Kevin Arceneaux]

They have that for business here in LA- costs my cousin a 100K or so a year

[Ken Fitzgerald]

We have personal property taxes we pay here on our homes and property. To the best of my knowledge that's it. We also pay state income taxes.

[David Christopher]

sounds like you sould be able to write that stuff off on taxes insted of haveing to pay. I would tell them I had to refurbish and do maintenance on everything in the shop and try to write it off as a loss

[Rich Engelhardt]

Hello,
I googled "personal property tax michigan".
Found this at michigan in brief (first link).

"Personal Property
Personal property generally is interpreted to be that not permanently affixed to land: e.g., equipment, furniture, tools, computers. In Michigan, only businesses pay the personal property tax (PPT); items for household use have been exempt since the 1930s. "

Seems you're on the hook for it.

[Rob Russell]

In CT, a business has to file an annual statement that lists the value of the machinery and equipment you have. The business then gets a tax bill based on the value of that plant and equipment.

[Brent Smith]

In CT, a business has to file an annual statement that lists the value of the machinery and equipment you have. The business then gets a tax bill based on the value of that plant and equipment.

Geez.....talk about milking the cow dry!!!! Here in Quebec we have income tax, sales tax, residential tax (home and land) and a business tax offered by the city. There's no special tax for any movable property we happen to accumulate, commercial or personal.

[Robert Reece]

Hi Larry-

My Jurisdiction assesses property values based on the condition or ownership of property as of Jan 1 of that year. So it's possible you could get around this problem by selling someone out of state your tools for $1 on Dec 31. Then they just never came and got them.
If you are running a business you might be able to "rent" your tools from this new owner, for $1/yr.

However, you better get used to the taxes because as federal and state budgets are crunched, they are going to be taxing you to walk your dog.

[Gene Howe]

Hi Larry-

My Jurisdiction assesses property values based on the condition or ownership of property as of Jan 1 of that year. So it's possible you could get around this problem by selling someone out of state your tools for $1 on Dec 31. Then they just never came and got them.
If you are running a business you might be able to "rent" your tools from this new owner, for $1/yr.

However, you better get used to the taxes because as federal and state budgets are crunched, they are going to be taxing you to walk your dog.

That's really not a bad idea. In Az, RV tags are outrageously expensive, tho not as much as CA. Several folks have established residences in other states (mail fwding P.O. boxes) and, buy their tags from that state.

[Jim Becker]

Before you pursue any "creative" ways to avoid the tax, talk with your CPA...it's cute to talk about interesting methods, but in the end, they are not worth it if you risk losing your business or lifestyle due to illegal tax avoidance.

[David G Baker]

I have known a few people that did gray tax things and belonged to some of the anti-tax groups. A few are now wearing grey clothing and spending time with Bubba. Guess this was a popular thing in Michigan a while back.

[Ken Fitzgerald]

David...those types were scattered all over the country...there were some here in Idaho....Montana....Nebraska.....all over the country. But it's possible they could all meet someday in this world......again....wearing gray...:eek::D

[Dave Verstraete]

Larry
Welcome to the "business " side of the Michigan Tax Code!!! We get to pay tax on our equipment...yeeha. I own a small manufacturing business and have been paying this tax for 24 years....don't get me started!! All you homeowners out there...how about paying a property tax on your couch. Yeah, I didn't think that you would like that one.

[Jeffrey Makiel]

If it's any comfort, you need to look at the overall taxes you are paying on your business. Every State is different in how it gets its tax revenue. Perhaps your commercial property tax is lower in Michigan vs other States? This would offset the personal property tax burden.

However, I understand your frustration. Michigan is being hit hard these past few years with real estate issues and with the automotive industry being in an extremely precarious condition.

-Jeff :)

[Larry Edgerton]

I am starting to make plans for my business to disappear. I rely solely on referrals for my business and I do not need the storefront, all it brings in are big box tire kickers that waste my time. The government gets as of last year $5742 just so I may have the privilege of making a living, just on the shop. This added tax is just the one that set me off!

That does not include income tax, property tax on my other properties, sales tax, gas tax, excise tax, all of the taxes that they stick us with just for the privilege of breathing the air.

Monday I am going to see my CPA about disbanding my corporation, I have a buyer for my shop looking for financing, I and my wife have been looking at propertys, and I am ready to disappear. I'm just fed up.

I had a farm lined up but was too slow on the draw. Next time I won't be. I didn't mind when the ecomomy was better, but all of my expenses have gone up and I am getting by on 92% less business than eight years ago. After all my expenses were paid last year, there was $14,700 left for me after a year of hard work.

I am not the only one in Michigan that is having a hard time, in fact many are gone now. Our state has more state land than most states, and yet they keep buying more and taking it off of the tax rolls, while all the while taxing us to death.

To all of those asking about going into the woodworking business, I will say, make sure you are not in Michigan!

[David G Baker]

Larry,
What I have seen in Michigan is a "Catch 22" situation. Michigan wants and needs to attract business to Michigan but they tax them to death so what is the incentive to come to Michigan and what is the incentive to stay in business in Michigan. There are thousands of small business in Michigan that are in your situation. Many of the folks that have lost their businesses and the employees of those business have left Michigan taking their families with them causing losses in almost every area of our economy.

[Brent Leonard]

I never paid "personal property tax" in Colorado, my home state. In 2007 I moved to Kansas and in the summer of 2008 I recieved a nasty letter from the county assessor stating they were going to file a tax lien on me for failing to declare my boat. My boat is a 2002, 17' fishing boat, worth around 20k. I had never heard of such a thing. I paid sales tax on it when I bought the thing in 2004. NOW, Kansas wants over $200 per YEAR just for the pleasure of owning it, including the fact that I pay to license it in Kansas (another tax), pay to license the trailer (another tax) and pay at the lake every time I put it in the water.

Just for the pleasure of owning a boat. Don't they know I'm already throwing all my money in the proverbial hole in the water?

Colorado was a good state for taxes IMO. Topeka Kansas is an armpit of a town as far as infastructure goes (roads, sidewalks, etc...) and I pay through the nose in taxes here. I just don't understand it. This is the reddest state I've ever been to, and taxes are HIGH. (I did hear a rumor that there is 2 registered democrats in Lawrence Kansas!)

[Mark Elmer]

Hi all,

The pinheads that come up with these taxes are never satisfied. They always need more money to buy the loyalty of those they are supposed to be serving.

The way things are headed our "personal propert" will become "property of the state".

I would support a national sales tax if they'd get rid of all of these other "taxes and fees" We used to be able to deduct some types of taxes but now they are "fees" which do not qualify as a deduction. :mad:

[Karl Brogger]

So much I'd like to say, all of it against the terms of use.


(I did hear a rumor that there is 2 registered democrats in Lawrence Kansas!)

A small town with a college, go figure.:D

[Ed Labadie]

IIRC the Mi. personal property tax is on anything you use for business that doesn't have wheels (registered vehicle). It's based on the original cost of said items and doesn't depreciate.
To the OP, consult your tax accountant, I think you have to tell them what you have, they shouldn't be guessing.
Around me the county nails people when they register their business to protect the name, gives the county a direct link to your wallet.

Ed

[David G Baker]

While working in TV news I did a story on taxing the money earned from tips. What the IRS did was, take the average amount of money earned by people in their category along with factoring in the general type of location and averaged out what they thought the people in that profession in that area should earn and based their taxing on tips to an average of that amount. If the amount of money claimed from tips varied by any significant amount the individual got audited. Wonder if the Michigan business equipment taxing is based on a similar principal? If it does, it is time to visit your CPA (as has been suggested) and get an actual equipment inventory that can be documented then visit the IRS.

[Jon Grider]

That truly stinks, Larry. No wonder Michigan is losing so many businesses to Mexico,southern tier states and even Indiana. The clowns we have in Lansing talk a good talk about bringing businesses into our beautiful state, but the tax structure we straddle them with makes many do exactly what you are doing.

Have you considered writing your Rep and explaining why yet another Michigan business is going down the tube? Not that I'm convinced it would help,but the chamber backslappers need to pause and think about what the business tax laws are doing to our state.

[Dennis Peacock]

Personally, I'd like to see a flat 10% tax with a 10% State tax and forget all the other taxes. I think this should apply no matter if you make $1 per year or $100B per year. Flat tax is what is should be all about.

We pay a personal property tax here in Arkansas as well. I always enjoy paying taxes on my taxes. Not...;)

[Paul Downes]

Gee thanks, I just filed my business papers. You know i just might go talk to my state rep. This is just all wrong. I will have to check on what I got from the Small Business Administration. They come across as all positive in helping you get going and now I find out about this kind of nonsense. It is CRAZY when you take into account the current economic situation. The stimulus package will pay for child care so you can go get a.......wait a minuet WHAT JOB!!! SO lets tax the "rich" businesses so they don't want to locate in our state. This has got to be some form of self cannibalism. I wonder when the people who came up with these ideas figure out that the "body" they have been trying to keep alive through "heroic"(so called stimulus money that we have to pay back through unjustified taxes) efforts is DEAD!

[Larry Edgerton]

Around me the county nails people when they register their business to protect the name, gives the county a direct link to your wallet.

Ed

Exactly. I am dumping my name as part of my rearranging. The name is Crooked Tree Joinery, and I had no idea how many people do not know what joinery means, so it is a bad name anyway. I will then just be Larry Edgerton. I will actually keep the name, but it will be a consulting firm.:)

I checked with the other two shops in the township and I am paying 6 times the one that has the closest amount of tools, but if I bring that up they will just raise the other two shops. Thats how they are always right.

[Steve Clardy]

Personally, I'd like to see a flat 10% tax with a 10% State tax and forget all the other taxes. I think this should apply no matter if you make $1 per year or $100B per year. Flat tax is what is should be all about.

We pay a personal property tax here in Arkansas as well. I always enjoy paying taxes on my taxes. Not...;)

Ditto the 10% tax.


Also have personal property tax here.
Tractors, trailers, boats, horse, goats, tools, whatever they can stick a guy with.
Its hard enough to make ends meet.
Buy something used that the tax has already been paid on, and ya have to pay tax on it over and over over :mad:

[Frank Hagan]

Can we make sure no one mentions this in California?:eek:

Businesses already pay personal property taxes in CA ... the value of the desks, computers, A/V equipment, machinery, inventory, etc. Its collected by the county. I used to have to list the value of our office furniture for my last company (as well as our forklift, shelving, appliances in the kitchen, etc.)

[Frank Hagan]

Hi Larry-

My Jurisdiction assesses property values based on the condition or ownership of property as of Jan 1 of that year. So it's possible you could get around this problem by selling someone out of state your tools for $1 on Dec 31. Then they just never came and got them.
If you are running a business you might be able to "rent" your tools from this new owner, for $1/yr.


I know you were probably joking, but tax fraud doesn't have a statute of limitations here in California, and man, do they nail you for it. A transaction like that would get you some free time in the gray bar hotel!

[Scott T Smith]

Before you pursue any "creative" ways to avoid the tax, talk with your CPA...it's cute to talk about interesting methods, but in the end, they are not worth it if you risk losing your business or lifestyle due to illegal tax avoidance.

+1

Several years ago my accountant advised to be sure to list on the county personal property tax forms any items that are depreciated on federal returns.

If not, if ever audited the IRS apparently can choose to disallow itemized deductions if they were not reported locally. That could really hurt...

[Dewey Torres]

Sounds to me like time to move!!!

[Mike Null]

Besides the other things Steve Clardy listed, here in Misery, we pay a personal property tax on our vehicles every year. I have two, one is 11 years old the other 6. I just paid this years tax of $590. And we have a sales tax on groceries and an income tax.

Fed. state and local taxes on my cell phone are 20% of my monthly cost.

[David G Baker]

I can agree with Dewey. If I move out of Michigan I will do some serious tax research prior to making the move. Don't know if it is still true but at one time Nevada treated my parents well when it came to state taxing.