Wisconsin Court Confirms Computer-Controlled Medical Devices Are Exempt From Property Tax

In 2008, the Wisconsin Tax Appeals Commission ruled that the following categories of computerized medical equipment are exempt from property tax:

Ultrasound equipment Magnetic resonance imaging (MRI) equipment Radiation oncology and linear accelerator equipment Laser equipment Cardiology equipment Nuclear medicine equipment Digital imaging equipment Diagnostic equipment City of LaCrosse v. Wisconsin Dep't of Revenue and Gundersen Clinic, Ltd. (Gundersen Clinic).1 The Dane County Circuit Court recently affirmed the commission's ruling, and the city is not appealing. Therefore, the commission's ruling is now final.

The Gundersen Clinic case has important implications not only for owners and lessees of computerized medical equipment located in Wisconsin, but also for owners and lessees of other devices that are connected to and operated by computers. Wisconsin taxpayers should take immediate steps to evaluate whether to correct their personal property tax reporting for such equipment.

Statutory Exemption of Computer Equipment

The ruling in Gundersen Clinic is based on Wis. Stat. § 70.11(39), which exempts from property tax "mainframe computers, minicomputers, personal computers, networked personal computers, ... electronic peripheral equipment, tape drives, [and] printers." The exemption does not apply to "equipment with embedded computerized components." The Computer Exemption Guidelines (Guidelines) published by the Wisconsin Department of Revenue state with respect to medical devices that "certain electronic imaging and monitoring devices" are exempt if they are "computers or electronic peripheral equipment" and cite as examples of exempt medical devices "ultrasound imaging device, magnetic resonance imaging device (MRI), and computerized axial tomography." The Guidelines state that x-ray imaging equipment, on the other hand, is taxable because it is "not a computer or connected to and operated by a computer."

The Gundersen Clinic Ruling

In the Gundersen Clinic case, the taxpayer reported the above categories of medical equipment as exempt in its personal property statements for the years at issue. The city assessor reclassified all but ultrasound and MRI equipment as taxable. The taxpayer objected to the reclassifications, and the State Board of Assessors ruled for the taxpayer. The city appealed to the Tax Appeals Commission.

Both the city and the taxpayer moved for summary judgment based on their respective experts' opinions as to the...