Property tax exemption denied

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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.

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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.

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David Ziemer can be reached by email.