HD Radio Special Report #3

Property Tax Consequences of HD Radio

By Kirk Low, CPA -

Radio stations must purchase additional equipment to put out the digital signal and the additional equipment will cause higher property taxes. This is particularly true with the conversion to HD Radio, as the analog broadcast equipment will have to be kept in service for several years while the public purchases enough digital receivers to make the digital signal dominant.

In most states taxing business personal property, their laws require the assessor to determine the “fair market value” of the property as the starting point for the tax calculation. Since the determination of “fair market value” presents a difficult task for assessors, many states have adopted standard classifications and percentages that are applied to the original cost of each piece of equipment to arrive at what is considered to be a reasonable estimate of the value. However, when an industry is experiencing large changes in equipment, there is a significant effect on the fair market value of the existing equipment that the standard percentages simply do not account for and the result is not does not approximate “fair market value.”

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