PROPERTY TAX NOTE: TV Personal Property Tax Depreciation

February 28, 2008 - We have received many phone calls and emails from stations regarding 2008 tax year personal property tax assessments.

New depreciation schedules for television equipment take effect with the 2008 tax year. The new tables are available by following this link (see page 3 of the document):
New Property Tax Assessment Depreciation Tables

You should know that when we passed these new depreciation tables into law, the federal date for conversion to digital programming was scheduled for 2008. Because the federal government pushed that date back into 2009, stations may find they have to pay substantially more in property taxes for 2008 and 2009 for analog television broadcasting equipment. You should be removing this analog equipment from use in 2009 so that by January 1, 2010, you should no longer have the equipment in service and should not have to pay property tax on that equipment. But for 2008 and 2009, you will need to calculate the assessed value of your television broadcasting equipment according to the new tables.

If you have any questions, please contact me at ray@raymccarty.com.

Ray McCarty
MBA Tax Consultant

Exemption Does Not Expire

We have received communications from several members asking if the exemption we obtained through our legislative efforts last session would expire.

The exemption will continue into perpetuity, unless it is changed by a bill that would have to be passed by the General Assembly and signed into law by the Governor. Although the "Emergency Rule" that was first issued by the DOR expires, the accompanying regular rule remains in effect. Also, the rules only interpret the law and the law does not expire. Only future legislation could take this exemption away and we will certainly do our best to make sure that does not happen.

If you have any questions, please review the information below and feel free to contact me with questions.

Sincerely,

Ray McCarty
ray@raymccarty.com

DOR ISSUES RULING ON EXEMPTION

January 3, 2008 - The Missouri Broadcasters Association worked through one of our television broadcasting members to obtain a ruling from the Missouri Department of Revenue regarding the new MBA sales and use tax exemption.

The new exemption was made possible by our legislative sponsors, Representative Shannon Cooper (R-120, Clinton), Representative Bryan Stevenson (R-128, Joplin) and Senator Gary Nodler (R-32, Joplin) and we thank Governor Matt Blunt for signing the legislation into law. We are also especially grateful for the efforts of the following who helped make the exemption and the interpretation possible:

• Trish Vincent, former Director of Revenue and now Chief of Staff to Governor Matt Blunt;
• Lowell Pearson, former Deputy Director of Revenue and now Chief Counsel to Governor Matt Blunt;
• Julie Allen, acting Director of Revenue; and,
  
• Rochelle Reeves, General Counsel, Missouri Department of Revenue.
  

The exemption, contained in subsection 3 of section 144.054, Revised Statutes of Missouri, was effective August 28, 2007, and applies to all "utilities, machinery, and equipment used or consumed directly in television and radio broadcasting".

The Missouri Department of Revenue issued guidance on this exemption in the form of a letter ruling to our member station dated December 28, 2007. The ruling properly states that broadcasting encompasses the contents of the radio or television signal and the act of transmitting that signal. The ruling answers several common questions that will help broadcasters obtain the proper amount of exemption from state and local sales and use taxes.

The following are EXEMPT:

• Purchases of utilities, machinery and equipment used in the traffic department;
• Purchase of utilities, machinery and equipment used in the television studio areas;
• Purchases of utilities, machinery and equipment used in the production areas;
• Purchases of utilities, machinery and equipment used in the advertising department which are used for the production or preparation of commercials for broadcast;
• Purchases of utilities, machinery and equipment used in the technical and engineering areas;
• Purchases of utilities, machinery and equipment used in the graphic arts areas;
• Purchases and leases of audio and video recording equipment;
• Purchases and leases of remote transmitting equipment (trucks, etc.);
• Purchases and leases of utilities, machinery and equipment used at the remote transmitter sites; and,
• Cell phones and cell phone services used directly in broadcasting.

The following are NOT EXEMPT: Administrative offices, internet broadcast department, motor vehicles and aircraft (except remote broadcasting trucks).

The MBA thanks you for your patience as we worked to obtain this clarification and we would be happy to assist any Missouri broadcaster with any additional questions or problems you may encounter. Please send your questions to Ray McCarty, MBA's tax legislative consultant, at ray@raymccarty.com. For a copy of the full ruling, click HERE.

MBA Wins Tax Exemption for Radio and Television Stations

The Missouri Broadcasters Association worked hard in the last legislative session to pass a sales tax exemption that will benefit every radio and television station in Missouri. The exemption was effective Tuesday, August 28, 2007.

The exemption is a complete state and local sales tax exemption for all utilities, machinery and equipment that are used or consumed directly in television or radio broadcasting. The exemption will apply to all utilities that are used directly in the station's broadcasting activities, but may not apply to all utilities purchased by a broadcaster. If a station has common areas or other areas that are not used in broadcasting, the station will need to calculate a percentage of utility usage that is directly related to broadcasting and furnish it to their utility supplier on the exemption form. Please note that the machinery and equipment purchased by the station must be used directly in broadcasting, but the law does not require exclusive use.

Broadcast radio and television stations will need to complete an exemption form and give it to utility companies, machinery and equipment suppliers to take advantage of the new exemption. The exemption form may be found here. On the form, in Section 5a, check the "other" box and show "radio broadcasting" or "television broadcasting" in the space provided.

The Missouri Department of Revenue has issued a draft regulation that you may find here regarding the exemption. UPDATE: For a copy of the emergency rule and the accompanying regular rule as it was actually filed by the DOR on September 17, 2007, use the following links:
Emergency Rule Filed by DOR 091707
Regular Proposed Rule Filed by DOR 091707

We are continuing to work with the Missouri Department of Revenue to implement this exemption. If you have any questions regarding the new exemption, please send them to Ray McCarty, MBA's tax legislative consultant, at ray@raymccarty.com.