Ruling Eliminates Sales, Usage Tax On Pallet & Container Rentals in Florida
24 August 1999
Ruling Eliminates Sales, Usage Tax On Pallet & Container Rentals in Florida
ORLANDO, Fla.--Aug. 24, 1999---- CHEP helps gain favorable tax ruling for users of pallet and container rental systems in the State of Florida
-- Company now moves to address sales and usage fees in other jurisdictions
The State of Florida, working closely with CHEP, has ruled that companies renting pallets and containers in the State of Florida, may qualify for an exemption of sales tax.
Now, in an effort to eliminate costs from the food and consumer packaged goods supply chain, CHEP is set to address the issue with other states imposing what the company considers an unfair tax.
Currently, most states tax the leasing of pallets and containers from third-party service companies, with the activity incurring a sales or usage tax. CHEP believes this tax policy creates an uneven playing field for reusable pallets and containers competing with one-way pallet systems and non-reusable containers. In addition, these regulations run counter to the stated environmental goals of both the federal and state governments to reuse assets where possible and reduce the size of the waste stream.
"Simply put, the elimination of the sales and usage taxes on pallet and container leasing will take additional costs out of the supply chain. This will, in turn, result in more efficient trade channels," explains Mike Helm, Senior Vice President for Government Relations. "The environmental benefits of leasing systems like the CHEP pooling program are added incentives for the states to support the elimination of these taxes."
In the Florida case, the Department of Revenue ruled that since the "Manufacturers who are leasing the pallets . . . only intended to use the leased pallets onetime for shipping of bulky goods to their customers, such leases may qualify for a packaging exemption pursuant to Section 212.02(14)(c), F.S." The ruling specifically cited the fact manufacturers "do not pay sales tax on the pallet/containers they purchase" as a reason for the action.
CHEP customers that do business in Florida may qualify for an exemption of sales tax on pallets and containers immediately. However, CHEP can not determine if a customer meets the rules of the packaging exemption, they must determine this for themselves by either contacting their internal tax department or the State of Florida.
Once a customer determines that they qualify for an exemption, they must complete the Florida Exemption Certificate (suggested format for Form DR-97 "Blanket Certificate of Resale/Exemption") and forward it to the CHEP Tax Department. The certificate must be filled out completely and signed.
This ruling gives the parties impacted by the taxation of pallet and container leasing services the legal backing to approach all other states taxing these activities. CHEP is now working both independently and with the newly formed Reusable Pallet and Container Coalition to ensure that government officials at all levels have the right information on which to base their tax policy.
"CHEP strongly encourages all of our customers and their partners, and even our competitors in the marketplace, to help take these costs out of the supply chain by contacting state legislators and tax authorities to explain the injustice and the environmental impact of the current tax policies," adds Helm.
CHEP is an international pallet and container pooling company servicing manufacturers and distributors in the consumer goods industries; grower/shippers and receivers in the produce industry; packers, processors and distributors in the meat industry; home improvement, hardware & housewares manufacturers and distributors and suppliers and assembly plants in the automotive industry. CHEP service in the Americas spans the US, Canada, Mexico, Brazil and Argentina, supplying customers with high quality pallets and reusable containers from a comprehensive depot network. The company is part of the worldwide CHEP organization, which operates in more than 30 countries on six continents and controls more than 111 million pallets and containers. CHEP operating principles, service organization and computer tracking systems give participants a simple solution and improved efficiency in product delivery. Additional information on CHEP is available at www.CHEP.com.