Advertisement
The move prolongs a battle between City Hall, Gundersen Clinic Ltd. and the Wisconsin Department of Revenue over arcane language used to classify medical devices as taxable or exempt.
The state Tax Appeals Commission stood with the Department of Revenue and Gundersen Clinic, striking a blow to the city, which stands to lose tens of thousands of dollars annually in tax revenue.
“This case is important because it decides that major medical devices, like ultrasound equipment and MRI machines, are exempt from property taxes,” said Robert Horowitz, an attorney for the city. “The Legislature never intended to exempt medical equipment of this kind.”
The court’s ruling would have statewide ramifications if upheld on appeal, creating a major tax loophole and shifting tax liabilities across the state, officials said.
While the state has vowed to compensate communities for the lost tax base, there’s no assurances how long that policy will last and the reimbursement isn’t dollar for dollar, City Assessor Mark Schlafer said.
“One of the reasons the city has continued with this is the unknown of that fund being available each year,” he said.
With state reimbursement, local taxing entities still came up $80,700 short in 2002, the first year Gundersen Clinic claimed the exemption, Schlafer said.
This year, the shortfall likely would amount to about $290,000, with a $10 million gap between what the city and clinic consider taxable property.
“We feel strongly this is a bad ruling, and it was a very, very poorly written law,” Schlafer said.
The camps have dissected language in the Wisconsin statute, which exempts mainframe computers, personal computers and electronic peripheral equipment but not “custom software, fax machines, copiers ... equipment with embedded computerized components.”
The city contends the court misinterpreted the statute and guidelines in shifting ultrasound, radiation oncology, laser, cardiology, nuclear medicine, digital imaging and other equipment from taxable to exempt.
“Peripheral equipment” was intended to include printers and scanners, not X-ray and ultrasound machines, he said.
Gundersen Clinic is La Crosse’s largest taxpayer, paying $2.36 million in 2007, according to the city assessor’s office. An assessment earlier this year valued its property at $84.2 million.
While the city has not yet filed a petition for judicial review, the city council did authorize an appeal.
Samantha Marcus can be reached at (608) 791-8220 or smarcus@lacrossetribune.com.
