Property
tax exemption denied
Exemption
limited to short-term leases
By
David Ziemer
david.ziemer@wislawjournal.com
May
7, 2007
| What
the court held Case:
United Rentals, Inc., v. City of Madison, No. 2005AP1440. Issue:
Is rented personal property exempt from tax if it can be rented for any length
of time? Holding:
No. Only if
the property is held for rental for periods of only one month or less is it exempt
under sec. 70.111(22). Attorneys:
For Appellant:
Derus, Margaret M., Milwaukee; Beaudry, Lucien, Milwaukee; For Respondent: O'Brien,
Larry W., Madison |
Personal
property available for rent for more than a month is not exempt from tax pursuant
to Wis. Stat. sec. 70.111(22), the Wisconsin Court of Appeals held on April 26.
United
Rentals, Inc., is an equipment rental company in Madison. Its property can generally
be rented for a day, a week, or for four weeks. The property can also be rented
for more than four weeks, in which case a customer is billed monthly. Approximately
10 percent of its rentals exceed four weeks.
In
2002 and 2003, United paid personal property taxes to Madison, based on nonexempt
assets of roughly $38,000. United did not include its stock as personal property,
claiming it as exempt rented personal property.
The
City sent assessment notices, asserting that the stock was not tax exempt, and
that United owed taxes on property worth more than $2 million. The City later
denied a request by United for a refund.
United
brought suit, challenging the denial of its refund request, but Dane County Circuit
Court Judge Daniel R. Moeser granted summary judgment in favor of the City.
United
appealed, but the court of appeals affirmed, in a decision by Judge Paul B. Higginbotham.
Section
70.111 establishes personal property tax exemptions and provides an exemption
for rented personal property, defined as, in relevant part: “Personal property
held for rental for periods of one month or less to multiple users for their temporary
use...”
United
Rentals argued that, because they rent property for periods of less than one month,
they qualify for the exemption.
The City
argued that, because the property is also available for rent for more than a month,
it does not qualify.
The
court agreed with the City, rejecting United Rentals’ argument that the City’s
interpretation impermissibly adds the word, “only,” to the definition.
The
court concluded, “We see no ambiguity in the statutory language such that
it might possibly apply to property that is held for rental for one month or less
and is also available for rental for more than one month.”
The
court added, “The plain and unambiguous language of Wis. Stat. sec. 70.111(22)
reflects a clear legislative intent that the statute apply only to property held
for rental for one month or less, and not to property available for rental for
longer periods. We reject United Rentals’ invitation to read more into the
exemption statute than what is plainly there.”
Because
the property was available for rent for either less than a month, or more than
a month, the court held that the property was subject to taxation, and affirmed.
Click
here for Case Analysis.
David
Ziemer can be reached by email.
