What Property is Taxable?
Tangible (that is, physical) property is subject to the personal property tax unless exempted by statute. Items defined as tangible personal property range from the chairs in a barbershop to the furnishings in a doctor’s office waiting room.; from the drills used by a dentist to the poles owned by a utility or furnishings in a second home or cottage.
All individuals owning or holding household furnishings or effects not located at their domicile on January 1 must file a Form of List (State Form 2HF) each year itemizing these effects and furnishings.
What Property is Exempt?
Tools employed by a plumber, carpenter, auto technician and other trade professionals are exempt from personal property tax. In legal terms, this exemption covers “tools of trade” of a “mechanic” (e.g., small tools that can fit in a tool box). Boats, fishing gear and nets - up to $10,000 in value – owned and used in a commercial fishing business are exempt.
Tools of other professionals not listed in the above paragraph are considered taxable. These include dentist’s drills and x-ray machines. Computers are also subject to the personal property tax, but in cases where they are utilized by a corporation for internal purposes only (e.g. for such functions as internal accounting or administrative operations), computers are not subject to taxation.
Tangible personal property subject to some other type of local tax is also exempt from the personal property tax. Motor vehicle and trailer excise, ship and boat excise, the farm animal and equipment excise, and mobile home park license fees are all included in this category.
Intangible personal property is exempt from the personal property tax. Intangible property includes stocks, bonds and cash, mortgages and other evidence of ownership of property rights.
Individuals, Sole Proprietors, Partnerships, Trusts
For business corporations, poles, underground conduits, wires and pipes (property generally owned by utility companies) and machinery used in the conduct of business are taxable.
The term “machinery used in the conduct of business” does not include personal property directly used in any purchasing, selling, accounting or administrative function; nor does it include inventory or stock in trade, or personal property directly used in connection with laundering or dry-cleaning processes, the refrigeration of goods or in the air conditioning of the premises. Such property is therefore exempt.
When, however, “machinery” is used primarily on behalf of that corporation’s customers (e.g. using computers and equipment to process data on behalf of clients), then the machinery is not exempt from taxation.
(Domestic & Foreign)
Poles, underground conduits, wires and pipes of manufacturing corporations are taxable.
Machinery of a manufacturing corporation (domestic or foreign) is not subject to personal property taxation. The Commissioner of Revenue for the Commonwealth determines what is a manufacturing corporation.
All Other Domestic Corporations
All other domestic corporations (including all that are subject to taxation under Chapter 63 of the Massachusetts General Laws – such as insurance companies, public service corporations, utilities, savings banks and cooperative banks) are subject to taxation on poles, underground conduits, wires and pipes; as well as machinery used in the manufacture or in the supply or distribution of water.
Where the Personal Property is Assessed
Generally, all tangible personal property is assessed in the city or town in which the personal
property is situated as of January 1. The principal exception is in situations where the personal property has only a temporary location as of January 1. In the latter case, the property is assessed at the residence of the owner.
Form of List
Each year, prior to March 1, all persons subject to taxation in a city or town must submit a list of all their personal property which is not exempt from taxation. These personal estate items must be included on the documentation known as the Form of List.