Dallas Central Appraisal District business personal property tax review

Each year, companies that are located within the boundaries of the Dallas Central Appraisal District (DCAD) are required to submit specific information regarding companies that colocate (or house) equipment in their facilities.    Generally, DCAD is interested only in equipment that is used in a business setting.  Individual consumers who may have colocated assets for personal use (ie: not in a revenue-generating business) are typically ignored.  We have a detailed description of this process in our Knowledge Base at THIS LINK.

DCAD will then use this information to asses the property for tax purposes.  Business owners are required by State law to render personal property that is used in a business or used to produce income. This property includes furniture and fixtures, equipment, machinery, computers, inventory held for sale or rental, raw materials, finished goods, and work in process.  More on this can be found in the FAQ document that DCAD produces (opens as PDF).

Based on the information that is provided to DCAD by the colocation facility, DCAD will send notifications of business personal property (BPP) tax due to the business owner or representative.  Occasionally, DCAD will come up with a seemingly random value.   This can result in our customers calling our business office demanding that the valuation be lowered, or that we remove this charge.  Unfortunately, this is a matter between the property owner and DCAD, and VIRTBIZ is unable to intervene on behalf of our customers.

However, based on our years of experience with these matters, we offer the following advice to our customers:

  1. Don’t panic!  Even if you have received a statement indicating an outrageous tax value, remember that this is just a “guess” by DCAD staff.
  2. Keep in mind that the BPP assessment is as of January 1 of the current year.  Even if you’ve removed equipment, your assessment is based on your subscription as of January 1.
  3. Communicate with DCAD!   The letter you receive has contact information for the DCAD staff responsible for your assessment.
  4. If DCAD got it wrong, let them know.  It’s possible, even likely, that the value they have placed on your equipment is unreasonably high.  If this is the case, see #3 above.  All feedback we have received indicates that DCAD will “play ball” and arrive at a reasonable value.
  5. Be honest with yourself and with DCAD.  If your company houses 3 racks of servers it would not be advisable to make an argument that your equipment’s value is $20.00.  DCAD employs a team of analysts who specialize in datacenter environments.  Feedback we have received from our customers indicates they are quite flexible, but will know better if a property owner attempts to pull one over on them.

We strongly encourage our customers to view our Knowledgebase document titled “I’ve received a letter from Dallas Central Appraisal District about Taxes“, as it provides our Accounts Department’s best advice.  Of course, please keep in mind that we are a datacenter operator, not tax professionals, and therefore cannot offer specific tax advice.  That said, we’re glad to pass along some things that we have learned that may be of assistance.

To view the compliance document VIRTBIZ received from DCAD on January 6, 2015, please click THIS LINK.