Expertise Beyond the Numbers

CA Embedded Software Exemption – Property Tax Challenges

In the state of California, both Taxpayers and Assessors have struggled with an outdated statute exempting embedded application software within machinery and equipment.

At their meeting on May 22nd, the California Board of Equalization (BOE) resumed discussions related to this issue. Several interested parties presented testimony to discuss both long and short-term solutions.

Joe Vinatieri, an attorney with the law firm Bewley, Lassleben & Miller, LLP, recently discussed this topic in an SC&H Group podcast.

Some of the topics Joe discussed include the following:

  • The history of the CA statue exempting application software and how it applies to embedded software within machinery and equipment.
  • The issues that have surfaced over the years causing both Taxpayers and Assessors to seek guidance from the BOE that may result in legislative change.
  • The short term solution adopted by the California Assessor’s Association (CAA) presented at the May 22nd BOE meeting, which is an attempt to bring uniformity amongst the 58 CA county assessors regarding the four types of evidence taxpayers may submit to support the exemption.
  • The proposed long-term solutions discussed at the May 22nd BOE meeting, which include additional research projects by industry professionals, as well as recommendations to gather additional taxpayer information in an effort to inform and support legislative change.

To listen to the full podcast interview with Joe Vinatieri, click the link below:

If you believe your California business is not benefitting from the embedded software personal property tax exemption, please contact SC&H Group’s State & Local Tax practice. SC&H Group has experience in assisting taxpayers with quantifying and successfully defending this underutilized exemption.