James Crowley, Esq.
Bureau of Municipal Finance Law

Could you still be liable for personal property taxes if your business is sold? This was the subject matter of the Appellate Tax Board decision of Stephanie Spinosa d/b/a/ Gourmet Decisions v. Board of Assessors of Wellesley, (ATB, docket #F294337, August 6, 2009).

Stephanie Spinosa had operated a restaurant known as Gourmet Decisions in the Town of Wellesley. She sold the business in June 2007 prior to fiscal year 2008 which began on July 1, 2007 and ended on June 30, 2008. For fiscal year 2008 the assessors valued the business personal property at $10,000 and the tax collector sent a bill for $91.80 to Spinosa. She reluctantly paid the tax bill and filed a timely abatement application which the assessors denied. Spinosa then promptly appealed to the Appellate Tax Board (ATB) which found that it had jurisdiction.

Spinosa contended that her business personal property was overvalued for the simple reason that she did not own business personal property in Wellesley during fiscal year 2008. She proved that the personal property had been sold in June 2007 prior to the start of fiscal year 2008. For this reason she requested that her tax bill be abated in full.

The ATB did not agree with the taxpayer. It noted that Spinosa admitted she owned business personal property in Wellesley as of January 1, 2007, which was the assessment date for fiscal year 2008. Although it was not discussed by the ATB, the taxpayer must have included this business personal property information in her form of list (Form 2), which was due in the assessors' office on or before March 1, 2007 prior to the start of fiscal year 2008. Under M.G.L. Ch. 59 §29, each taxpayer with taxable personal property must furnish a true list of all non-exempt personal property for the upcoming fiscal year which begins four months later on July 1. Under the terms of the statute, the assessors in their discretion may extend the filing deadline to a reasonable date, but in no event later than thirty days after the tax bills are mailed provided the taxpayer can establish a sufficient reason to justify the failure to file by March 1.

It is important for taxpayers to realize that the failure to file the form of list bars the taxpayer from abatement. If the taxpayer eventually submits the form of list after the March 1 deadline date or after the extension time granted by the assessors, however, the taxpayer may be granted abatement, but will penalized for the late filing in the form of a reduced abatement. In that case, under M.G.L. Ch. 59 Sec. 61, the assessors may not reduce any overvaluation below 150 percent of the actual value of the personal property. Assume, for example, that personal property with an actual value of $3,000 is assessed for $5,000. The taxable value that can be abated is only $500, which is the difference between the $5,000 assessed value and $4,500 (150 percent of the $3,000 actual value).

In the case at hand, the taxpayer had satisfied the procedural requirements for abatement. On the taxpayer's substantive claim, the ATB reviewed M.G.L. Ch. 59 Sec. 18, which provides, as a general principle, that January 1 preceding the start of the fiscal year is the relevant date for determining ownership of taxable personal property. By its terms, this statute had established a fixed date assessment for personal property. In applying the law to the present factual situation, the ATB observed that Spinosa owned business personal property in Wellesley on January 1, 2007 which was properly assessed for fiscal year 2008 taxes. The ATB found no basis in the statute for choosing another date such as July 1 for determining the ownership of this taxable personal property. According to the ATB, where the Legislature had intended July 1 to be the operative date, the Legislature clearly expressed it. For example, in another part of M.G.L. Ch. 59 Sec. 18, the Legislature listed July 1 as the determinative date for assessing ships and vessels. Under the facts presented, the ATB ruled that the taxpayer owned the business personal property on the January 1 assessment date and was liable for the tax.

In this decision, the January 1 fixed date assessment rendered the owner liable for the personal property tax. In other cases, the fixed date assessment can benefit the taxpayer. Assume, for example, that Spinosa started her business in March 2000. Under M.G.L. Ch. 59 Sec. 18, she would not have been assessed any prorated taxes for the balance of fiscal year 2000, nor would she have paid personal property taxes for the ensuing fiscal year 2001. Her business personal property would have first been assessed as of January 1, 2001 for fiscal year 2002 taxes. Furthermore, if Spinosa moved her business in June 2007 from Wellesley to an adjacent community, she would not be liable for fiscal year 2008 personal property taxes in her new community. Consequently, there is a sense of equilibrium in the statute.

For another article on personal property tax abatement, please see the December 2008 issue of City & Town. pdf format of    december08.pdf