Pillsbury Winthrop Shaw Pittman

70 days and counting: clock is ticking to claim embedded software tax exemption

By Lawrence Hoenig, Craig Becker, Richard Nielsen and Dianne Sweeney

The number of non-taxable embedded software being taxed in California is staggering. While companies own assets with millions of dollars of embedded software, few companies are maximising their property tax savings through the embedded software exemption.

The good news is that it is not too late to dig in and maximise your potential tax savings. Most businesses have until 7 May 2014 to file their annual business property tax statements (form 571-L) with California counties.

Embedded software is everywhere — computers, phones, servers, network equipment, ATMs and credit card machines, tracking devices, security and alarm equipment, robotic and other electronically controlled manufacturing equipment, semiconductor manufacturing equipment, industrial process monitoring and control equipment, medical equipment and telecommunications equipment. Assets containing embedded software now fill many companies’ fixed asset listings. Like patents, trademarks, copyrights and other intangible assets, embedded software is exempt from property tax assessment in California…

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