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State Property Taxes: Personal Property Vs. Private Railcar

By: Zach Williamson, Tax Department

The Tax Department here at Loram is responsible
for filing a variety of different property tax returns.
Due to the unique nature of our business, we are
exposed to different types of state level tax relating
to the property that we own and operate. The two
main types of tax relating to our fleet equipment
are Personal Property Tax and Private Railcar Tax
(often referred to as Carline). Determining the
type of property tax that is applicable is dependent
on the state. Some states mandate only one of the
two, others require both and in some cases the
state has neither tax. Location of the fleet equip-
ment on a specific date and state tax planning according to the respective state’s rules and regulations are the primary
tasks in our strategy to minimize Loram’s tax exposure for these types of state property taxes.

Railcar (Carline) Tax

Carline tax is a very specific type of personal property tax that applies strictly to the railroad industry. This tax is a
state property tax on privately owned railroad car fleets operating within a state. This tax is also in lieu of all local ad
valorem property taxes on private railroad cars. The tax amount is partially based on what the states consider to be
the “assessed” value of the equipment. State by state they assess and depreciate equipment differently so the same
piece of equipment could have a different value depending on the state.
In addition to the states using a wide range of computational methods to determine the assessed value of the proper-
ty, the amount of time or miles the equipment spent working in the state significantly affects the total amount of car-
line tax to be paid. At the end of each year the Class I railroads submit to the states a tracking report that compiles
the number of miles Loram’s fleet equipment spent on each line and in each state that imposes carline taxes. This in-
formation is used to compute an allocation ratio derived by taking the respective states’ miles for the year divided by
the total miles the equipment traveled in all states to come up with a percentage that is applied to the equipment’s
assessed valuation. The resulting amount is then subject to that specific states’ carline tax rate to arrive at the total
annual carline tax. Due to the high value of Loram’s equipment, this tax can be quite costly.

Personal Property Tax

As previously stated, not all states have a carline tax. Personal property tax is another variation of property tax that
Loram’s Tax Department is responsible for. Personal property tax is a broader tax that applies to most businesses
including Loram and LTI. Personal property differs from real property tax as it is not land or attached to a building.
Similar to carline tax, personal property tax is calculated and assessed differently by jurisdiction. Personal property
for our scope of business applies to where our machines are tied up or working on the “rendition or assessment”
st
date of January 1 . As a result of this well-known “assessment” date, and while working within the legal constraints
of the jurisdictions, we are provided with an opportunity to sidestep the taxing jurisdictions that are known to have
high rates or aggressive rules by simply being conscious of where we tie-up our equipment over the annual Holiday
break.

Page 13 OCTOBER 2021