A company’s purchase of shipping pallets is subject to Indiana use tax according to a ruling of the Indiana Tax Court issued Thursday.
R.R. Donnelly & Sons appealed a determination by the Indiana Department of Revenue that it owed tax on the pallets. Both Donnelly and the department sought summary judgment. Tax Court Judge Martha Blood Wentworth ruled in favor of the department.
Donnelly argued its purchases where exempt under I.C. § 6-2.5-5-9(d), the nonreturnable container exemption. “RR Donnelly’s pallets are returnable containers and RR Donnelly’s purchases of those pallets do not qualify” for the exemption, Wentworth concluded.
The company uses the pallets to ship pre-printed newspaper advertising inserts, buying them from Perfect Pallets and typically passing along their costs to customers. Perfect Pallets frequently retrieves them from newspaper printing facilities after advertising fliers have been distributed, according to the record.
"Because RR Donnelley is not the buyer of the contents of the pallets, the fact that it does not return the pallets to Perfect Pallets itself is not relevant to determining whether the pallets are returnable containers," Wentworth wrote in R. R. Donnelley & Sons Company v. Indiana Department of State Revenue, 49T10-1203-TA-14.