[author: Sharon R. Paxton]

On October 16, 2012, the Pennsylvania Supreme Court affirmed the Commonwealth Court’s decision in Procter & Gamble Paper Products Company v. Commonwealth, 29 A.3d 1221 (Pa. Cmwlth. 2011), in which the Commonwealth Court ruled that “CHEP” pallets qualify as exempt “wrapping supplies.”

P&G Paper rents pallets from CHEP USA. Following use, the pallets are returned to CHEP, which reconditions and then reissues the pallets. At audit, the Pennsylvania Department of Revenue assessed Use Tax on P&G Paper’s payments for use of the pallets. On appeal, the Department’s Board of Appeals and the Board of Finance and Revenue rejected the company’s claim that the pallets are exempt “wrapping supplies,” on the basis that the pallets are taxable as “returnable containers.” The Commonwealth Court endorsed P&G Paper’s argument that the pallets, themselves, are not “containers” and constitute exempt “wrapping supplies.”

Companies which have paid tax but have not filed refund claims should contact a member of the McNees SALT Group for assistance in filing claims.