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An assessor processes your annually filed personal property tax return and assigns a value based on the cost of and age of your retail store fixtures. Is that assessment correct?

Increasingly, the answer is “no” in a fast-changing retail environment in which online sales are turning in-store shelves into museum pieces.  Online sales have increased 75.8 percent, to $341.7 billion, over the past five years alone. Statista forecasts that to double by 2020.

One-third of all North American transactions (excluding auto, petroleum and food services) are done on Amazon, whose shelves are in warehouses around the country that no customers peruse. Amazon won’t buy your fixtures because they simply don’t need them.

Brick-and-mortar retail, once built to lure customers in with one-stop shopping in big stores offering a large variety of goods, is reacting in many different ways, all of which impact the secondary market for store fixtures, the items that make up a large part of your property tax assessments.nSome have reduced payroll, closed stores and consolidated operations. Still others have worked hard to improve their customer experience. Their typical store size has shrunk significantly.  Inside the stores they have reduced the number of fixtures to allow for wider aisles.  They have also replaced existing fixtures with branded table height displays to provide a more showroom like feel.

As such, are assessor’s valuing retail store fixtures correctly?  Again, the answer is no – not unless they are considering all forms of depreciation in their valuation.  In addition, the typical personal property assessor’s valuation methodology has not changed for decades and only accounts for physical wear and tear depreciation and ignores the loss in value due to outside factors, otherwise known as economic obsolescence.

This was the key take way from a recent Chain Store Age article “How E-Commerce Impacts Retailers’ Personal Property Tax Liability“ by Pat Broome, a Senior Director at leads Altus Group, who leads client engagements in Real and Personal Property Tax. Pat’s article also discusses how investing extra time in managing personal property tax filings and assessment review can improve a retailer’s ability to compete in this ever-changing retail environment.

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Patrick BroomeBroomebu-state-local-tax personal-property-tax-consultingpersonal-property-tax-commercial-real-estatepersonal-property-taxpersonal-property-tax-compliance-2hunt-valley

Vice President, Property Tax

Last updated on October 10th, 2019 at 10:35 am

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