An ad valorem tax is a tax that is calculated as a percentage of the value of something—such as tangible (physical) personal property (goods in a warehouse, office furniture, computer and telephone systems, inventory, etc.).
For example, county tax assessors often place a value on a business's tangible personal property and assess an ad valorem tax on the property.
In Colorado, ad valorem taxes, also known as property taxes, are applied to both real property (land and buildings) and tangible personal property (items such as furniture, equipment, and inventory) owned by businesses. The county tax assessors are responsible for valuing these properties annually and determining the tax based on the assessed value. The tax rate, or mill levy, is set by various taxing authorities such as school districts, cities, and counties, and is applied to the assessed value of the property. For tangible personal property, Colorado allows for exemptions, including an exemption for business personal property up to a certain value, which is adjusted periodically. It's important for businesses to report their personal property accurately to the county assessor to ensure correct tax assessment. Failure to comply with personal property tax regulations can result in penalties and interest charges.