News and Insights

Pennsylvania Supreme Court Affirms that Pallets Are Not Containers, Making Them Eligible for Sales Tax Exemption

Tax Development Oct 19, 2012

On October 16, 2012, the Pennsylvania Supreme Court upheld the decision of the Commonwealth Court that pallets are not “containers” for sales tax purposes. No. 113 MAP 2011, affirming Proctor & Gamble Paper Products Co. v. Commonwealth of Pennsylvania (No. 786 F.R. 2009, decided October 13, 2011). Because of this decision, returnable pallets qualify for Pennsylvania’s sales tax exemption for wrapping supplies purchased or used by a seller.

The wrapping supplies exemption specifically excludes returnable containers. The law defines “returnable containers” as items designed to deliver property to customers more than one time. Because the law does not define “containers,” the Commonwealth Court used the plain meaning and common description of a “container,” which is a receptacle or a formed or flexible covering for packing or shipping goods. Based on this definition, the Supreme Court affirmed the Commonwealth Court’s determination that pallets alone are flooring, not containers. Because pallets are not returnable containers, they qualify for the sales tax exemption for wrapping supplies.


Dennis J. Kolumber, Jr.