A bill to boost property tax exemptions for businesses from $3,800 to $25,000 is raising red flags among county assessors and low-income advocates.
By raising the personal property exemption by nearly 650 percent, the measure sponsored by Rep. Patrick Painter, R-Nephi, would shift a $12 million tax burden onto Utah homeowners.
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Painter, a car dealer, said he sponsored HB41 in hopes of reducing the number of audits that businesses have to endure. Small-business owners, in particular, object to having to track items such as printers, computers, desks and other personal business property in preparation for audits, he said.
"If there’s anything I’d like to give the small-business owners of this state … it’s a break on some of their equipment and personal property," Painter told members of the House Revenue and Taxation Committee as the Utah Legislature opened Monday.
The committee eventually voted 11 to 4 to set the measure aside, pending clarification.
Candace Daly, Utah’s director for the National Federation of Independent Business, called auditors "brutal’’ as she spoke in favor of HB41.
"They go through every item," Daly said — including whether sales taxes are being collected on tampons sold in bathrooms and soft drinks dispensed from break-room pop machines.
But the tax shift — amounting to an $8 to $12 property tax increase on a $200,000 house — has drawn concerns on behalf of low-income families already struggling to pay mortgages and rent.
"I’m also not convinced it only applies to small businesses," Allison Rowland, budget director for Voices for Utah Children, said.
Weber County Assessor John Ulibarri warned that as currently written, HB41 might allow a large company such as Comcast — which maintains 20 personal property tax accounts in Weber County alone — to claim an exemption for each one, effectively taking $500,000 off its tax bill.
And Salt Lake County Assessor Lee Gardner said he doubted HB41 would reduce the number of audits his staff conducts. Personal property taxes are self-reported, Gardner said, and a system of random audits helps keep businesses honest.
In 2011, 825, or about 3 percent, of Salt Lake County’s 27,000 personal property accounts were audited, Gardner said. Results showed that 665 had under-reported and 69 over-reported and received a refund. Those same audits identified about $200 million in personal property that businesses had failed to report.
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