HCS HB 461 -- ASSESSMENT OF BUSINESS PERSONAL PROPERTY

SPONSOR:  Sutherland

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 15 to 0.

This substitute adds studio broadcast equipment, transmitter and
antenna equipment, and broadcast towers to the property tax
depreciation schedules for broadcasting equipment.  Depreciation
tables are established to determine the true value in money of
television broadcasting equipment beginning January 1, 2008, and
radio broadcasting equipment beginning January 1, 2006.

For tax rate setting purposes, the substitute requires each
taxing authority to exclude from its total assessed valuation 72%
of the total amount of business personal property that is the
subject of an appeal at the State Tax Commission or in a court.
This exclusion will only apply to the portion of property that is
disputed in the appeal.  If the taxing authority uses a
multi-rate approach, this exclusion is made from the personal
property class.

The commission will provide the total assessed value for which an
appeal is pending no later than August 20 of each year.  Whenever
an appeal is resolved and the result causes money to be paid to
the authority, the taxing authority is not required to make an
additional adjustment to its rates during the same fiscal cycle
once the deadline for setting rates has passed.  However, the
taxing authority will adjust its rates due to the payment in the
next rate setting cycle to offset the payment in the next taxable
year.

"Business personal property" is defined as tangible personal
property used in a trade or business or used to produce income
and has a determinable life of longer than one year, with some
exceptions.  In order to establish uniformity, each assessor will
use the standardized schedule of depreciation established in the
substitute to determine the assessed valuation of depreciable
tangible personal property.  Each assessor will value depreciable
tangible personal property by applying the class life and
recovery period to the original cost of the property according to
the federal Modified Accelerated Cost Recovery System life
tables.  The estimated value of property determined using the
life tables is presumed to be correct; however, an estimation may
be disproved by substantial and persuasive evidence of the true
value under any method approved by the commission.  These methods
include appraisal using accepted techniques in accordance with
the Uniform Standards of Professional Appraisal Practice or by
proof of functional or economic obsolescence or physical
deterioration.  The salvage or scrap value of depreciable
tangible personal property may only be considered if the property
is not in use on the assessment date.

The substitute does not apply to business personal property
placed in service before January 2, 2006.

FISCAL NOTE:  No impact on state funds in FY 2006, FY 2007, and
FY 2008.

PROPONENTS:  Supporters say that the bill provides direction for
the assessment of property and leads to better consistency,
fairness, uniformity, and stability.  The bill will also improve
the appeal process so that the State Tax Commission does not lose
so many appeals providing more money to schools.

Testifying for the bill were Representative Sutherland; East
Central Community College; Missouri Assessor's Association;
Missouri State Teachers Association; Miller County Assessor;
Missouri School Boards Associations; Missouri School
Administrators Coalition; Cooperating School Districts of Greater
Kansas City; Missouri Library Association; Ryan Robb; Missouri
Chamber of Commerce and Industry; and Missouri Broadcasters
Association.

OPPONENTS:  Those who oppose the bill say that the substitute is
a good step forward resolving the issue of appeals.  The original
bill would have been adverse to business and could cause some
businesses to go elsewhere like Iowa and Illinois which do not
assess personal property.  Chrysler's engineering and design for
their vehicles is completed in Detroit and taxed there, so they
should not be taxed here.  With their business connections around
the world, they could do business somewhere else.  This amounts
to a couple $100 for each car.

Testifying against the bill were Associated Industries of
Missouri; and DaimlerChrysler Corporation.

Karla Strobel, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:19 pm