Tangible Personal Property – What CA Businesses Need to Know

Businesses must pay taxes on their tangible personal property (TPP), which includes their supplies, fixtures, machinery, and equipment, in addition to their real property, which includes land and buildings, in most of the U.S. Although, many small businesses owe very little, the costs of compliance can be high. For a negligible loss of revenue, U.S. businesses can remove these compliance expenses by qualifying for a de minimis or other possible exemption. California businesses, located in Orange County, may qualify for a low-value ordinance exemption which increased to $10,000 and does not include real property or business inventory based on those limitations listed on the OC Assessor’s website. Los Angeles County businesses should refer to the LA County Assessor website to determine if they are required to file a Business Property Statement (Form 571-L) annually and if any exemption(s) will apply. Please refer to the local county and city in which your California business is located to find more information.

Managing TPP is difficult because, rather than getting a tax bill from the IRS, Californian business owners (taxpayer) are responsible for figuring out their tax liability every year. Due to the complexity of tax reporting and tax liabilities, any errors could negatively lead to a possible FTB audit, County Reassessment Notice or CDTFA collection action if appropriate legal and financial advice is not obtained from a reliable expert or local tax attorney, at the time of calculation. Additionally, California Business Owners (taxpayers) should know that corporate directors, officers, members, managers, partners, or any other people with control or supervision of the filing and payment of taxes may be held personally liable for any unpaid sales and use taxes, TPP, interest, and penalties. FTB, OC Tax Collector, and CDTFA offer free online tax calculators to help California Business Owners (taxpayers) calculate their tax liability based on filing status and income for the current tax year and tax table. You may also have access to previous tax year calculators and tax tables, subject to availability on these respective state websites. LA County Assessor website offers various tax resources for business owners as well.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s) or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.