Where Should Personal Property Taxes Be Allocated
Q. Our county assesses a yearly personal property tax on our business equipment and small tools (i.e. screwdrivers, drills, printers, etc.). This assessment is only on our indirect property, not government property in our possession. In the past, I have considered this tax unallowable but now have second thoughts. The bill is usually under $2k-3k and it would be difficult to determine how much of this indirect property was used for government/non-government use. Do you think it’s acceptable to allocate this to G&A as a cost of doing business?
A. Yes, I see no problem with allocating the costs to G&A. Generally the tax should follow where the related depreciation costs are charged - if they are in overhead then the tax should technically be an overhead cost. However, the small amount would justify it being charged to whatever indirect cost pool you choose so I would say the G&A should be OK.
