The Pennsylvania Supreme Court has affirmed, without opinion, that returnable pallets utilized in the transport of finished paper products qualify for Pennsylvania’s wrapping supply exemption. Procter & Gamble Paper Products Co. v. Commonwealth, Pa. (10/16/12)
In the earlier Commonwealth Court decision, the court agreed with Procter & Gamble that a pallet “alone” does not constitute a “container” but merely a wooden base which, when used with corner posts, slip sheets and stretch wrap, “contains” the finished product for shipment. Since neither the Pennsylvania statute nor the code provides for the definition of a container, Procter & Gamble referred to multiple dictionary definitions and industry standards to support its position that pallets simply were not containers.
This Supreme Court affirmation of the lower court’s decision may have a significant impact in tax savings over the long run for those taxpayers that routinely rent or purchase returnable pallets that are used to delivery property sold.
For more information on the Commonwealth Court case, see Procter & Gamble Paper Products Company v. Pennsylvania.
If you have questions regarding this article, please do not hesitate to contact your state and local tax practitioner.
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