Pennsylvania Supreme Court Holds That Installed Medical Equipment Retains Its Identity as Personal Property

PHILADELPHIA, Feb. 13, 2012 /PRNewswire/ -- In Northeastern Pennsylvania Imaging Center v. Pennsylvania, the Supreme Court of Pennsylvania ("Court") reversed a lower court decision and held that installed MRI and PET/CT scan systems should be treated as personal property for sales tax purposes. [No. 93 MAP 2009 (Pa. 2011)].

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Pennsylvania law provides that a contractor owes sales tax on personal property that the contractor incorporates into real property. No tax is due on the amount the contractor charges its customer for the installed property. If, however, the personal property retains its identity as personal property, the customer owes sales tax on the property.

Northeastern Pennsylvania Imaging Center ("Northeastern") argued that the MRI and PET/CT scan systems were furnished by and incorporated into real property by its contractor and that the contractor was responsible for the sales tax.

The Court disagreed. In finding that Northeastern was responsible for sales tax, the Court explained that property retains its identity as personal property if property can be disassociated from realty without injury to the property. Because the scan equipment and systems were removable and replaceable, they retained their identity as personal property. Therefore, Northeastern was responsible for sales tax on the equipment.

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Ryan is an award-winning global tax services firm, with the largest indirect tax practice in North America and the seventh largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. In 2010, Ryan received the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 900 professionals and associates serves over 6,500 clients in 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

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