AGENDA DATE: 8/5/2015
TITLE:
Title
Ordinance to Establish Separate Classification of Personal Property for Business Personal Property with Original Cost of Less Than $250
BODY
SUBJECT/PROPOSAL/REQUEST: Ordinance to create a separate class of personal property for taxation purposes
ITEM TYPE: Regular Action Item
STAFF CONTACT(S): Foley, Letteri, Davis, Herrick, Burrell
PRESENTER (S): Betty Burrell
LEGAL REVIEW: Yes
REVIEWED BY: Thomas C. Foley
BACKGROUND: Virginia Code § 58.1-3506 defines different classes of personal property that are subject to local taxation. Though Albemarle County has consistently taxed all personal property at the same rate, the Virginia Code allows localities to tax specifically-enabled classes of property at different rates.
Although 2013 County tax forms instructed users to exclude the reporting of business personal property (BPP) items with an original cost of less than $250, no provision of the Virginia Code specifically authorized that practice at the time. This exclusion was corrected on the 2014 BPP tax returns, and business owners were advised of the change. Subsequently, a request was made regarding the taxation and reporting of business personal property with original cost of less than $250.
As part of the Board’s legislative agenda, the 2015 General Assembly adopted House Bill 2098, which amended Virginia Code § 58.1-3506 to create a separate class of BPP for items with an original cost of less than $250, effective July 1, 2015. This newly-enacted legislation also enables localities to allow these items to be reported as an aggregated estimate, rather than an itemized list. Therefore, a locality creating a special classification for this type of property could do so to reduce either (a) the tax reporting requirements and/or (b) the tax rate for these items.
STRATEGIC PLAN: Economic Prosperity: Foster an environment that stimulates diversified job creation, capital investments, and tax revenues that support community goals.
DISCUSSION: Staff recommends adopting a separate classification for business personal property with original cost of less than $250, for the purpose of allowing that property to be reported as an aggregated estimate. Establishment of this separate classification also allows the Board the option to consider a lower tax rate for this classification, if deemed appropriate, during the upcoming budget review process for calendar year 2016.
If the Board were to create this separate class of business personal property for tax purposes, the Finance Department has already prepared a communication plan to engage the business community to communicate the change in the reporting requirement for business personal property with an original purchase price of less than $250:
• The Business Personal Property Tax brochure (displayed in the Revenue Administration lobby) would be updated to include information regarding the new BPP classification. (Attachment C)
• Instructions would be included in the 2016 BPP return regarding the new classification of BPP.
• A Finance Department sponsored public information session would be held for businesses in January or February 2016 to inform business owners. Revenue Administration Division staff would lead a session on the BPP filing requirements, and Purchasing Division staff would lead a session on “How to do Business with Albemarle County.”
BUDGET IMPACT:
The aggregated reporting of BPP is expected to have no impact on business personal property tax collections. There should not be a difference from the previously provided revenue projections in the five year plan. In the event that a separate tax rate for this BPP were set during the budget process, the expected fiscal impact would still be minimal. Further, the new revenue administration system could accommodate multiple classifications and tax rates on a single BPP tax return without incurring customization expenses.
RECOMMENDATION:
Recommendation
Following a public hearing, staff recommends that the Board adopt the proposed ordinance (Attachment A).
ATTACHMENTS:
Attachment A - Proposed Ordinance
Attachment B - House Bill 2098
Attachment C - Draft BPP Brochure