2013 End of Session Wrap Up: Tax and Revenue – Personal Property Tax Legislation

This post summarizes the status of tax and revenue bills related to personal property taxes that MACo either considered or took a position on.

Personal Property Tax Liens: As introduced,  HB 419 would require a county to record a lien on personal property for unpaid taxes with the clerk of the court and make a personal property lien secondary to other non-tax liens.  MACo opposed the bill stating that it would significantly undermine a county’s ability to effectively pursue the collection of delinquent taxes. Under current law, both personal and real property taxes are given first lien priority for priority for payment, ahead of private lenders and other entities.  With assistance from county attorney and finance staff, MACo worked with the industry to develop a process to aid counties with the collection of personal property taxes.  This process authorizes a secured party to send notice to a county when personal property is repossessed with an estimate of the personal property taxes owed, and then forward on payment after a reasonable time of sending notice.

Final Status:  HB 419 passed the General Assembly with MACo’s amendments. MACo changed its position to support the bill as amended.

Decoupling of the Personal Property Tax: HB 1190/ SB 573 would authorize a county to set its personal property tax rate at no more than 2.5 times the rate for real property. One of MACo’s 2013 legislative initiatives, MACo supported the bills stating that decoupling the personal property tax rate from the real property tax rate would allow counties to incentivize business investment using a deliberate approach rather than one that is lock-step with the more general real property tax rate.

Final Status:  The General Assembly passed both bills without amendments. 

Depreciation Schedule Changes: SB 251 would establish a 10-year depreciation schedule for personal property. The personal property would depreciate at 10 percent per year until the property has an assessed value of $0 in the eleventh year. Under current statute and regulations, personal property depreciates over an 8 year cycle. Following the 8th year, the property remains at 25% of value and is assessed on this percentage of value until the property is no longer in use.  MACo opposed this bill stating that there is no justification to change the depreciation schedule and that the bill would have a significant fiscal effect on local governments.

Final Status: No action was taken on SB 251 by the Senate Budget and Taxation Committee.