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Wisconsin Court Confirms Tax Exemptions

by Mark Marceau, National Director of Complex Property Services, August 2013

 

A recent Wisconsin court decision has important implications for owners and lessees of computerized equipment. The ruling upholds personal property tax exemptions for computers and other equipment operated by a computer referred to as electronic peripheral equipment.

 

Background

 

In 2008, the Wisconsin Tax Appeals Commission ruled in City of LaCrosse v. Wisconsin Department of Revenue and Gundersen Clinic, Ltd. that the following categories of computerized medical equipment are tax exempt:

 

  • Ultrasound equipment

  • Magnetic resonance imaging (MRI) equipment

  • Radiology oncology and linear accelerator equipment

  • Laser equipment

  • Cardiology equipment

  • Nuclear medicine equipment

  • Digital imaging equipment

  • Diagnostic equipment

The Dane County Circuit Court confirmed the commission's ruling and the city is not appealing. Therefore, the commission's ruling is now final.

 

Broad Implications

 

Although the Gundersen Clinic case specifically addresses computerized medical equipment, it has much broader implications. The court gave weight to the Department of Revenue's computer exemption guidelines that recognize more than 40 different categories of electronic equipment including credit card readers, retail scanners, and ATMs.

 

By recognizing the guidelines as authoritative, the Gundersen decision fortifies the position that other types of devices, that are connected to and controlled by computers, similarly qualify as electronic peripheral devices and are entitled to an exemption.

 

Claiming the Exemption

 

Businesses that rely heavily on computerized equipment should take steps to evaluate whether their reporting needs to be adjusted for future tax filings. If the computerized equipment is used in manufacturing, it is most likely exempt under a separate exemption for manufacturing machinery and equipment.

 

If the computerized equipment is not used in manufacturing, it may be entitled to the computer exemption.

 

Companies that own or lease computers and computer-controlled devices and have reported the equipment as taxable in the past should carefully consider whether to instead report the equipment as exempt based on the court rulings. If the assessor reclassifies the equipment as taxable, an appeal should be pursued.