New Personal Property Tax Exemption for 2018

Jordan Lamb and Wes Webendorfer, DeWitt Ross & Stevens

Wisconsin businesses have long-advocated for the repeal of the state’s personal property tax, arguing that is it unfair, antiquated, and stifles private sector investment. Compliance with the tax is also challenging and expensive. Every year, businesses are required to inventory and determine the fair market value of a wide range of business personal property and report the figures to local tax assessors. This can take many hours and distracts owners, managers, and employees from running their businesses.

Fortunately, since January 1, 2018, Wisconsin businesses have had the ability to utilize a new exemption to the personal property tax for “machinery” that was included in the 2017-2019 Biennial Budget Act (Budget Act) and signed into law in the fall of 2017. Machinery is defined as “a structure or assemblage of parts that transmits forces, motion or energy from one part to another in a predetermined way by electrical, mechanical or chemical means.” A device is now likely exempt from personal property tax if it plugs in, is fueled in some manner, or contains a mechanism to make it run.

Businesses will be able to exempt an array of office equipment under the “machinery” exemption that was previously subject to tax. In practice, this means that members will no longer report property that was previously listed under Schedules C (machinery, tools and patterns) and D-1 (regarding computer equipment and software) of the Statement of Personal Property form issued by the Wisconsin Department of Revenue. March 1 is the annual the due date for businesses to self-report taxable personal property to their local assessors on the Statement of Personal Property.

While the new exemption for “machinery” is a welcome change, WPVGA members should consider the following actions to ensure they are obtaining the benefits of the new tax law:
• Consult a tax accountant and/or attorney to determine whether specific items of personal property are subject to the “machinery” exemption;
• Update your list of personal property and ensure tax records are well-organized; and
• Compile evidence to justify items previously reported as taxable that may be exempt beginning in 2018, as assessors may ask to examine personal property listed on the Statement of Personal Property.

The WPVGA will continue to support future efforts in the Wisconsin legislature to completely repeal the state’s business personal property tax.