Pennsylvania – Supreme Court Rules that Pallets are Exempt Wrapping Supplies

SALT Report 1829 – The Pennsylvania Supreme Court affirmed a lower court’s decision that wood pallets are not returnable containers and as a result, qualify for an exemption from sales and use tax as wrapping supplies.  The Department of Revenue had previously argued that pallets were returnable containers which are excluded from the wrapping supplies exemption provided in P S § 7270. 32.6.

P S § 7270.32.6 defines returnable containers as an item that is designed to deliver property to customers more than one time. However, because Pennsylvania law does not define “containers,” the Court relied on the plain meaning of container which is “a receptacle or a formed or flexible covering for packing or shipping goods.”  Based on that definition the Court determined that pallets are similar to “flooring.”

Therefore, the Supreme Court affirmed the lower Court’s determination that pallets are flooring, not containers, and qualify for the sales tax exemption for wrapping supplies.

As the Court’s decision is now final, any taxpayer who has paid sales tax on pallets should consider filing a claim for refund.

For Further Information:

Pennsylvania Supreme Court – Decision # 113 MAP 2011 

Procter & Gamble Paper Products Company v Commonwealth of Pennsylvania