David Hendley on mon 12 mar 12
Dale, I have been paying personal property tax for all the many years
I have had my shop here in East Texas.
For my situation, it is basically a tax on all the equipment and supplies
needed to make, display, and sell my product. So, this includes my
inventory of raw materials, wheel, kiln, and all my tools.
The tax also covers works in progress and finished but unsold work,
but, as you indicated, the taxable value is the value of the materials
used to make the product, not the selling price.
It sounds like your county has not been collecting this tax from
you, and now a zealous tax appraiser/assessor-collector has decided to
go after artists who consign work in their jurisdiction. Go after the
big money, right?
Every year I am mailed a form called "Confidential Personal Property
Report and Rendition for January 1". The interesting thing is that
the taxpayer determines what everything is worth. I am not about
to go out to my shop and weigh every piece of pottery to determine
how much clay was used to make it, so I basically make up a number.
It's my "best guess", but I really have no idea how accurate it might
be. In 20 years my estimates have never been questioned.
For a potter the total tax bill ends up being pretty insignificant. A
whole roomful of 200 pieces of pottery is only a few hundred
dollars worth of materials. The tax rate is then applied to that
amount and you end up with 3 or 4 dollars of tax due.
How much do you think was spent in postage, printing, and
processing to collect that amount?
Since I am on the hook for all my equipment, my tax bill ends
up being $50 or $60 a year, still more of a nuisance than helping
my local school district. I bet more than half of the amount is
lost to overhead and expenses.
Before you non-Texans start feeling too smug, remember that
we pay no state income tax, and non-business owners pay no
personal property taxes, even on vehicles.
David Hendley
david@farmpots.com
http://www.farmpots.com
http://www.thewahooligans.com
Steve Slatin on mon 12 mar 12
Bonnie -- The Great State of Texas has a Business Property Tax=3D0Athat is =
re=3D
ported on the "Business Personal Property Rendition of=3D0ATaxable Property=
" =3D
form.=3DA0 In it,=3DA0you identify your inventory for taxation=3D0Awhich ca=
n be i=3D
dentified either with a good faith estimate of=3DA0fair market =3D0Avalue=
=3DA0OR =3D
as "historical cost when new" and "year acquired." =3D0A=3DA0=3D0AFor somet=
hing l=3D
ike pottery (or art!) that you've made yourself,=3D0Athe historical cost li=
st=3D
ing gives you an opportunity to use a=3D0Avery low valuation.=3DA0 In any e=
vent=3D
, there's a filing option for assets=3D0Aof under $20,000 total where you j=
us=3D
t declare that that's the=3D0Acurrent market value.=3DA0 =3D0A=3DA0=3D0AInt=
erestingly=3D
, for years the "rendition" was mandatory, but there=3D0Awas no sanction fo=
r =3D
not making it.=3DA0 Most small businesses=3D0Anever even paid attention to =
it, =3D
and most jurisdictions didn't=3D0Apursue it because the taxable amounts wer=
e =3D
risible.=3D0A=3DA0=3D0ATexas taxes are distributed based on an appraisal ro=
ll for=3D
a =3D0Ataxing jurisdiction, and the overall tax to be raised it set,=3D0At=
hen =3D
it is distributed according to the appraisal roll.=3DA0 This=3D0Ameans that=
in =3D
the GSOT, the jurisdiction can be forced to=3D0Araise less money overall, a=
nd=3D
can find that your business (or=3D0Ahome) is worth less than previously th=
e =3D
case, but still=3D0Aassess a tax increase to YOU, if other assessments=3D0A=
drop=3D
more than yours.=3DA0 =3D0A=3DA0=3D0APut differently, when you fill out th=
e blesse=3D
d form, you have=3D0Ano idea what the consequences of it are.=3DA0 =3D0A=3D=
A0=3D0A(It=3D
is not unreasonable for Texans to dislike government,=3D0Aand taxes, more =
th=3D
an the rest of the country.=3DA0 If your local=3D0Agovernment was organized=
as =3D
badly, you'd dislike all =3D0Agovernment, too.)=3D0A=3DA0=3D0A=3D0ASteve Sl=
atin -- =3D
=3D0A=3D0A=3D0AN48.0886450=3D0AW123.1420482 =3D0A=3D0A=3D0A----- Original M=
essage -----=3D
=3D0A=3D0ALocal taxes vary tremendously from jurisdiction to jurisdiction.=
=3D0A=3D
=3D0AThis sounds like a Texas thing.=3D0A=3D0AIt's not clear to me WHAT is =
being =3D
taxed. If it is personal property, I=3D0Awouldn't think that your inventory=
o=3D
f items for sale should be taxed.=3D0A=3D0APersonal property, per the IRS, =
is t=3D
angible property that isn't real estate=3D0Aor land. Tangible means things =
th=3D
at you can touch and feel, as compared to=3D0Aideas and concepts.=3D0A=3D0A=
Do the=3D
y really intend to tax unsold inventory when you are NOT a=3D0Acorporation?=
D=3D
oes this local tax in any way follow the federal tax code=3D0Awhich exempts=
a=3D
rt created by an artist that hasn't yet been sold?=3D0A=3D0AI find the conc=
ept =3D
of taxing the materials that go into creating a work of=3D0Aart to be bizar=
re=3D
, which isn't to say that this isn't what they mean. Just=3D0Abecause someo=
ne=3D
who works for the county appraiser thinks you should pay tax=3D0Adoesn't m=
ea=3D
n that the local tax code allows this.
Elisabeth Maurland on mon 12 mar 12
Bonnie,
So I don't have to count the pots left at the end of the year as unsold =3D
inventory because art is exempt? I don't think my tax man knows this.
On Mar 12, 2012, at 9:30 PM, Bonnie Hellman wrote:
> Do they really intend to tax unsold inventory when you are NOT a
> corporation? Does this local tax in any way follow the federal tax =3D
code
> which exempts art created by an artist that hasn't yet been sold?
Elisabeth=3D20
www.elisabethmaurland.com
Dale Neese on mon 12 mar 12
Does anyone who consigns their "product" ceramics to galleries file a
personal business property rendition to the county for taxation purposes?
I've not found much information on determining value of an object or having
to apply for a tax exemption for your automobile to keep from being taxed
for taking your ceramics to a gallery.
If anyone has some leads to help with these tax forms please share. Don't
need to get into a big discussion over this on list but I think those of us
consigning artwork would like to know more. I've just recently received
forms to fill out for "personal property" consigned to another county
gallery.
Dale Tex
"Across the Alley from the Alamo"
Helotes, Texas USA
www.daleneese.com
Dale Neese on mon 12 mar 12
I had just received these tax forms on Friday and now this morning had the
opportunity to talk to someone in the tax office where this business
property tax has become law. According to the gallery owner where I have my
pottery on consignment the tax officers came and asked for all the artists
names and addresses they represent in the gallery. Many of the galleries an=
d
shop owners-artists in this tourist driven town economy had tried to fight
this tax becoming law several years ago and lost. Now it took effect Jan 1.
Seems that it was modeled on a similar tax in Santa Fe NM.
County appraisal offices only want the cost of materials to produce the
artwork, not the retail value of the mug, bowl, etc. So given the cost per
pound of clay and the fractional cost of glaze materials per piece I feel
somewhat better about what the tax man was asking for. I heard the most tha=
t
someone paid lately was $15.
And the business tax of the automobile that carried your income producing
products to the gallery well it only applies to local county residents. I
was told just to disregard the form being from out of county.
It would be interesting to know if any of our fellow Clay Artist are paying
a similar tax in their towns.
DaleTex
"Across the Alley from the Alamo"
Helotes, Texas USA
www.daleneese.com
Bonnie Hellman on mon 12 mar 12
Local taxes vary tremendously from jurisdiction to jurisdiction.
This sounds like a Texas thing.
It's not clear to me WHAT is being taxed. If it is personal property, I
wouldn't think that your inventory of items for sale should be taxed.
Personal property, per the IRS, is tangible property that isn't real estate
or land. Tangible means things that you can touch and feel, as compared to
ideas and concepts.
Do they really intend to tax unsold inventory when you are NOT a
corporation? Does this local tax in any way follow the federal tax code
which exempts art created by an artist that hasn't yet been sold?
I find the concept of taxing the materials that go into creating a work of
art to be bizarre, which isn't to say that this isn't what they mean. Just
because someone who works for the county appraiser thinks you should pay ta=
x
doesn't mean that the local tax code allows this.
In many places there are personal property taxes on businesses. Usually
these are the non-real estate property used by a business to conduct
business. We have such a tax in Colorado, although the first so many dollar=
s
are exempt.
If you want to scan the form and email it to me, I'd be happy to take a loo=
k
at it, not as a legal professional, but as someone who has spent 30 years
working in the field of tax. I will say that this is a new tax to me and my
Texas clients have never discussed it with me, but they are not creating
tangible works of art.
Best,
Bonnie
Bonnie D. Hellman, CPA in PA & CO
mou10ms at frontier.net
Ouray, CO 81427
-----Original Message-----
From: Clayart [mailto:Clayart@LSV.CERAMICS.ORG] On Behalf Of Dale Neese
Sent: Monday, March 12, 2012 11:20 AM
To: Clayart@LSV.CERAMICS.ORG
Subject: Artists taxation
I had just received these tax forms on Friday and now this morning had the
opportunity to talk to someone in the tax office where this business
property tax has become law. According to the gallery owner where I have my
pottery on consignment the tax officers came and asked for all the artists
names and addresses they represent in the gallery. Many of the galleries an=
d
shop owners-artists in this tourist driven town economy had tried to fight
this tax becoming law several years ago and lost. Now it took effect Jan 1.
Seems that it was modeled on a similar tax in Santa Fe NM.
County appraisal offices only want the cost of materials to produce the
artwork, not the retail value of the mug, bowl, etc. So given the cost per
pound of clay and the fractional cost of glaze materials per piece I feel
somewhat better about what the tax man was asking for. I heard the most tha=
t
someone paid lately was $15.
And the business tax of the automobile that carried your income producing
products to the gallery well it only applies to local county residents. I
was told just to disregard the form being from out of county.
It would be interesting to know if any of our fellow Clay Artist are paying
a similar tax in their towns.
DaleTex
"Across the Alley from the Alamo"
Helotes, Texas USA
www.daleneese.com
Dale Neese on tue 13 mar 12
David and all,
It's the same for me here too David, paying to the state sales and property
taxes as a cost of doing business. The sales and use tax forms I am use to
are different for the state reporting. We all who make pottery must keep ou=
r
overhead low as much as possible to make it work. Since I don't have a shop
or storefront as you have I have "multiple locations", Art Fairs that I wor=
k
towards and I travel to as in Gruene each year. The breakdown of different
local jurisdictions tax rates has to be reported and paid. I've just liked
paying myself first.
Just last year I began to place more of my product on consignment in a few
shops for a few reasons, gasoline prices, just the prices in general for
shows, motel expense etc. and the ole body is not as young as it once was.
One gallery is in a few counties over from me. In the past I have resisted
consignment because of the time and paperwork involved. Made me feel like I
was working more for the shops than creating the things I desired. Those of
you who consign know the effort it takes to pick, price and pack up pots,
make the inventory sheet, load and drive to a shop where there is no close
free parking. Haul the pots to the shop. Then if a piece sells receive 50%
of the selling price the following month. Some shop owners have no problem
calling and asking if you'd "run a few more blue mugs down today". I'd ask
if they could send someone to pick them up. "We are soooo busy". If I just
run them downtown the studio stays empty and the products don't get made.
It's a different kind of math to figure the best way to work when you also
have important other family and other responsibilities at home.
When the property tax forms arrived from another county where I have my wor=
k
on consignment I was surprised and made me realize again why I had resisted
consignment for so long." Fill out these forms to your best knowledge, have
it notarized, or face imprisonment." Have a nice day. Yes, the tax bill may
be low and I don't mind paying a bit more for doing business but it becomes
like you said "more of a nuisance" than anything else.
Off subject for a minute, I get in a wad some days when here in this little
town where we live there was a push back against Wal Mart coming in for
years until a new mayor was elected. Now it's a certainty that a new big bo=
x
store will be built in this community with the usual "tax break incentives"
it will receive from the city. At the same time the mayor tells the citizen=
s
to "shop local", support our local businesses.
Thanks for everyone's reply to the taxation subject. I have a grip now.
Dale Tex
"Across the Alley from the Alamo"
Helotes, Texas USA
www.daleneese.com
Steve Slatin on tue 13 mar 12
Elisabeth -- well, it's more complex than that.=3DA0 If you are running a b=
us=3D
iness required=3D0Ato report inventory, then you must report inventory.=3DA=
0 (d=3D
uh.)=3D0A=3DA0=3D0ABut not every occupation requires that you report invent=
ory.=3D
=3DA0 This all depends on the =3D0Abusiness code you chose when you first c=
reat=3D
ed your business.=3DA0 Bonnie Hellman=3D0Acovered this extremely well some =
year=3D
s back -- you can search the archives for=3D0Aher name and business code an=
d =3D
probably find it quickly.=3D0A=3DA0=3D0A=3DA0=3D0ASteve Slatin -- =3D0A=3D0=
A=3D0AN48.088645=3D
0=3D0AW123.1420482 =3D0A=3D0A=3D0A----- Original Message -----=3D0A=3D0ABon=
nie,=3D0A=3D0ASo=3D
I don't have to count the pots left at the end of the year as unsold inven=
=3D
tory because art is exempt? I don't think my tax man knows this.=3D0A=3D0A=
=3D0AOn=3D
Mar 12, 2012, at 9:30 PM, Bonnie Hellman wrote:=3D0A
Lis Allison on tue 13 mar 12
On March 12, 2012, Bonnie Hellman wrote:
>.....
> Do they really intend to tax unsold inventory when you are NOT a
> corporation? Does this local tax in any way follow the federal tax code
> which exempts art created by an artist that hasn't yet been sold?
>
This sounds a lot like something that the tax people tried in Canada, I
think about 15-10 years ago. There was a huge protest from artists,
especially painters, as it meant they would have had to pay tax on work
that hadn't sold.... you can just imagine how complicated and unfair this
would have been. In the end, they came up with a special clause for
artists which allows them to do 'zero inventory', ie pretend that they
have no inventory at the end of each year. If I understand it correctly.
Also, if I have this correct as well, we are still operating under this
temporary clause and there has been no permanent solution.
The tax machine can't cope with product that has no value until sold!
Lis
--
Elisabeth Allison
Pine Ridge Studio
website: www.pine-ridge.ca
Pottery blog: www.studio-on-the-ridge.blogspot.com
Garden blog: www.garden-on-the-ridge.blogspot.com
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