TKK Posted February 21, 2014 Share Posted February 21, 2014 What the hell is this? I just finished w my cpa my income tax and all that, and I got this letter. He said its tax on my machines and assets that doesnt make sence to me arent we taxed when buying most assets? Do they do this every year so your being taxed on the same assets? I operate from home so I thought I was deducting some of my mortgage as an expense. Any help w this would be aprecaited. My cpa is out of town til Monday so I wont be able to talk to him til then and its always best hearing it fRom actual vndors Link to comment Share on other sites More sharing options...
TKK Posted February 22, 2014 Author Share Posted February 22, 2014 Anyone Link to comment Share on other sites More sharing options...
AZVendor Posted February 22, 2014 Share Posted February 22, 2014 You really need to speak to your CPA and have him explain this item in layman's terms for you. I'll try to shed some light on it but I'm not a CPA. The subject of your letter is property tax and it refers to tax on business assets, just as there is property tax on a house you own. This is probably a County report. You have listed business assets on your depreciation schedule and those same assets must apparently have property tax paid on them annually. This business property tax is more like a vehicle license tax and should drop with the depreciated value of your assets, meaning for a fixed number of assets that are on this tax return, the property tax should diminish each year as you depreciate them. As you add more assets in future years, your property tax on them will begin at the acquisition value and then drop as they also depreciate. I had to do this myself back when I owned my vending company, but I can't honestly remember how quickly the business property tax reduced. After about the first 9 years of my business I was no longer buying machines so my existing equipment depreciated to nothing and I probably then paid nothing. Don't panic. You're in the real business world and there will be many more things you find that you're responsible for than you could ever dream about. The years my business had $1M in sales I paid more to the IRS, my employees, my customers and to my finance company than I ever made myself. Welcome to the big show! One other thing to remember when we're talking about unexpected things, if you sell a machine (an asset) that is on your depreciation schedule for an amount more than it's depreciated value, you will pay income tax on the value of the sale that's over the depreciated value. This is called recapture of depreciation and is always a surprise as people forget about it. I got a surprise yesterday at my tax appointment when my accountant told me that I would receive no benefit from the donation of a soda machine that I gave to a 503C last year. I only donated the machine because, based on all the forms I have from the IRS, I thought I would get a tax deduction for it but with my tax situation it would make no difference in my taxes at all. Therefore I basically gave away a machine with a value of $800 and I get no benefit from that. His advice to me, and frankly my own conclusion, is to never donate a machine of value. I really could have used that $800 and now I get zip. No more donations from me, America. Oh well, live an learn. Link to comment Share on other sites More sharing options...
TKK Posted February 27, 2014 Author Share Posted February 27, 2014 Ok so this doesnt include my offuce or vehicles right? Trailers? Just machines? Link to comment Share on other sites More sharing options...
AZVendor Posted February 27, 2014 Share Posted February 27, 2014 Talk with your accountant about the specifics of this. He will probably tell you that the business property tax will apply to any assets you are depreciating, but there may be a presumption of taxable assets if they are used and expensed exclusively for your business. Link to comment Share on other sites More sharing options...
mission vending Posted March 1, 2014 Share Posted March 1, 2014 In a very generic answer it is the property that is owned by the business, machines, inventory, vehicles, equipment etc, anything that does not qualify as "real property" like a building. Link to comment Share on other sites More sharing options...
TKK Posted March 1, 2014 Author Share Posted March 1, 2014 Why o dont get it. Day I bought a trailer for 2200 I pay tax, register it. Why do theu need to tax me on it five to seven years? What do u guys act for? Inventory dont we pay sales tax!? Link to comment Share on other sites More sharing options...
falls Posted March 1, 2014 Share Posted March 1, 2014 I'm in Australia, but 15 minutes in Google produced this http://www.poconnor.com/article.asp?id=30 which is a pretty good overview of the rules as they were introduced 10 years ago. Link to comment Share on other sites More sharing options...
WhiteRoom Posted March 27, 2014 Share Posted March 27, 2014 I was surprised by this too. Very annoying as you can't even find any info about rates online for my county. Turns out that each location is probably on a different rate schedule. My county also wants to tax non-inventory consumables if you can believe it, like paper and pens. Also tools. Pretty ridiculous but I do live in a state without sales tax. I did learn that they only care about locations in my county. Although they did make sure to say that other counties where I have assets located probably have a tax too. Link to comment Share on other sites More sharing options...
TKK Posted October 24, 2014 Author Share Posted October 24, 2014 Crud i got a letter they say i owe them 1600 dollars? Where do they receive this figure? How the hell do they know what my assets are valued at? How do u guys deal with this Link to comment Share on other sites More sharing options...
AZVendor Posted October 24, 2014 Share Posted October 24, 2014 Personal property taxing authorities are usually at the county level and they can pull records from a variety of places including any sales tax reports, state tax returns, maybe from federal tax returns, leases with Coke and Pepsi, leases or financed equipment records especially if a lien or a UCC statement was filed, business vehicles based on how it's licensed, etc. The state tax returns will give them information on how much equipment you are depreciating including machines, vehicles and other depreciating items. Welcome to the world of business. You should have gotten a statement and if you call them they can give you more information as to how it's broken down. You might have a late payment penalty if you didn't file and make a timely payment. If you didn't file a property tax return and hoped to fly under the radar, well, you didn't and it's time to pay the piper. Link to comment Share on other sites More sharing options...
TKK Posted October 24, 2014 Author Share Posted October 24, 2014 So arent you supposed to do this yourself? How can they just tax youbon what they want? Is it with income tax returns that they look at? Are you allowed to make payments? And is this tax deductible as an expense? Are comissions an expense even though you dont 1099 them? Link to comment Share on other sites More sharing options...
AZVendor Posted October 24, 2014 Share Posted October 24, 2014 Commissions are an expense and you should 1099 anyone you pay more than $600 to unless you have their Federal EIN on file or their SSA number on file to add to your business tax return. Business personal property tax is an expense as well. The forms for reporting and paying the property tax are available from whomever is collecting the tax, probably the office that your letter came from. Once you are on the tax roll then they should be sending you an annual property tax return to fill out and file. Ask when you speak to them. You won't be taxed at whatever they want, but if they suspect you didn't report taxable property they will estimate what you would have owed based on whatever records they have accessed. It's up to you to file an amended return to report actual taxable property if their bill is incorrect. Once you are on the tax rolls, you won't get off of it unless you can prove that you sold all the assets that they are taxing. But doing that will cause you to have to report any gain you had from the sale and possibly repay any depreciation you took on the sold property. You just can't win against the government. Link to comment Share on other sites More sharing options...
TKK Posted October 25, 2014 Author Share Posted October 25, 2014 Thanx az so i called them up, they said they just looked up an add for vending machines and went with that figure. I have to go to a hearing to do a 1/3rd something. I need to prove that my machines arent that expensive and used etc. Anyone know how to find new pricing on older models? They only want taxes on the machines not dollies etc. She said if my company vehicle doesnt have logos i dont have to add it either just the machines. Link to comment Share on other sites More sharing options...
AZVendor Posted October 25, 2014 Share Posted October 25, 2014 You didn't say how they found out about your machines. Do they have a specific number of machines they are taxing you on? How did they come up with that number? Have they only taken a total gross sales figure from a tax return and divided it by a number they think an average vending machine grosses in one year to determine how many machines you might have? Either you aren't understanding something they are telling you or this is about the valuation of machines you might be depreciating. Your saying that "they just looked up an ad for vending machines and went with that figure" only means that they must have known that you reported a specific number of machines but not what you paid for them, so they went looking for a way to value the machines you reported (or they presume you own). As I recall, you buy all your machines from CL or word of mouth and if you haven't kept purchase records, which you have said before you are lousy at, then you lost your best weapon. Since you haven't bought any new machines, you don't need to prove what your machines might have cost when new but what the average used price of your machines might be. The tax should be on your acquisition cost only. You can still do that from CL ads that you find now. Link to comment Share on other sites More sharing options...
TKK Posted October 25, 2014 Author Share Posted October 25, 2014 Yes, i did not ask how they know how many machines i have i dont know how theyd know that either ill ask again on monday they did say they saw an add on vending machine prices and based it off that. Even if i had bill of sales it wouldnt matter. If u buy a location at 10,000 2 machines making 1500 a month, the 2 machines r not worth the 10k. Im sure i just have to find comparables online Link to comment Share on other sites More sharing options...
musser Posted October 27, 2014 Share Posted October 27, 2014 sounds like a competitor turned you in Link to comment Share on other sites More sharing options...
AZVendor Posted October 27, 2014 Share Posted October 27, 2014 It could also have been someone who was paying property taxes on his machines and then reported that he sold them so they would be removed from his reporting. They would have then asked who he sold them to and at what price. Blue sky doesn't get taxed, so only the actual machine value needs to be reported. Link to comment Share on other sites More sharing options...
TKK Posted October 28, 2014 Author Share Posted October 28, 2014 Thats what imbguessing Link to comment Share on other sites More sharing options...
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