Wisconsin SC refuses to hear Xerox tax appeal

Kathy Woods Dec. 28, 2009, 12:33pm

MADISON, Wis. (Legal Newsline)- Xerox Corp. must pay state property taxes on some office equipment leased to customers in Wisconsin, the state Supreme Court said in letting a lower court decision stand.

At issue was whether their office equipment was considered a computer or not. The state appeals court ruled that the devices were not considered a computer and therefore, taxable under state law.

Xerox had argued that their stand-alone devices that can print, copy, fax and scan were computers and therefore be exempt from property taxes.

The property involved in the case was valued at $8.3 million and Xerox was seeking a refund of $104,000 from the cities of Milwaukee and La Crosse.

Evidence submitted by Norwalk, Conn.-based Xerox indicated that multifunctional devices, MFDs, are not copiers and as a printer, electronic peripheral equipment, computer, and or server should be treated as such and be exempt from taxation.

There was no debate on whether the MFDs were connected to a computer; they all agreed they were. The state Department of Revenue's said that MFDs must be connected to an "external" computer to "be considered exempt electronic peripheral equipment under the guidelines."

According to documents, Xerox argued that the external verses internal computer classification is irrational and unconstitutional.

With the implied "external" computer qualifier given to MFDs, Xerox says that other such devices that are currently exempt are connected to a computer and would fall under the same guidelines.

Xerox had asked the high court to hear the case to avoid unconstitutional application of the guidelines, but last week the justices said that they would not be reviewing the case.

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