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DEPARTMENT HIGHLIGHT

Personal Property Vs. Private Railcar Tax

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 tax relating to the property that
we own and operate. The two main types of tax relating to our machines is Personal Property Tax and Private
Railcar Tax (often referred to as Carline). Deciding which type of property tax we file solely depends on the
state, sometimes states offer only one of the two, sometimes they offer both, or sometimes they don’t have a
property tax. Locating and tax planning according to the state is one of the more important tasks when handling
these types of taxes.

Railcar Tax

Railcar tax is a very specific type of personal property tax that applies to our business. This tax is a prop-

erty tax on privately owned railroad car fleets operating within a state. This tax is also in lieu of all local ad val-
orem property taxes on private railroad cars (this includes Loram and LTI equipment). The tax amount is partially
based on what the states consider the fair market value of the equipment is. State by state they assess differently,
and calculations of the property value varies. On top of the states using different calculation methods for the valu-
ations, the amount of time or miles spent working in the state also greatly affects the total amount of tax to be
paid. At the end of every year the major railroads send a report tracking the number of miles spent on each line
and each state. This information is used almost as a pro-ration and in general you would take the states miles
over the total miles everywhere to come up with a percentage that would be allocated against the total valuation.

Personal Property Tax

As previously stated, not every state offers Railcar tax. Personal property tax is another property tax that
the Tax Department files. Personal property tax is a broader tax that applies to most businesses. Depending on
the state this could be a tax that we are subject to and plan accordingly. Personal property differs from normal
property tax as it is not attached to a home or building. Like private rail car tax, personal property tax is calculat-

ed and assessed differently by jurisdiction. Personal property for our scope of business applies to where our ma-
st
chines are tied up or working on January 1 . It is very important to avoid the taxing jurisdictions which could re-
sult in a high personal property valuation and tax bill.
With the background knowledge stated above it is the time of year where we are starting to tie up ma-
chines and should be cognizant of where we are parking our machines. If possible, avoid shutdowns in Mary-
land. The potential assessed tax liability on a machine tied up in Maryland could be substantial due to Maryland’s
high personal property tax rates.

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