Were five types of already-installed hospital imaging systems movable tangible personal property or immovable component parts under Louisiana Civil Code article 466?

Plain-English summary

The installed MR, CT, XV, XF, and nuclear-medicine imaging systems were immovable component parts of the hospitals.

Every modality was hardwired into the hospital electrical system, making it an electrical installation under the ruling's application of Civil Code article 466. The MR and XV systems also connected to hospital plumbing and cooling systems.

Independently, all five systems met article 466's substantial-damage test because removing them would damage the equipment or the hospital's walls, ceilings, floors, or other structure.

Equipment covered

• Magnetic resonance imaging equipment (MR)
• Computerized tomography equipment (CT)
• X-ray vascular equipment, including cardiac catheterization and specialist labs (XV)
• Radiographic and fluoroscopic X-ray equipment (XF)
• Nuclear-medicine equipment, including PET scanners and gamma or scintillator cameras (NM)

Two routes to immovable status

Installations named by article 466

Hardwiring made the systems electrical installations. The ruling distinguished this from an ordinary device connected by plugging into a socket. MR and XV equipment also qualified through their plumbing and cooling connections.

Substantial damage on removal

The systems occupied multiple rooms, used extensive piping, wiring, utility and data cables, and often required reinforced structural support. Their removal would damage the equipment or hospital structure, satisfying the second paragraph of article 466.

Common questions

Q: Did the ruling classify all five modalities the same way?

A: Yes. All were immovable after installation on the stated facts.

Q: Was hardwiring important?

A: Yes. It made every system an electrical installation under the ruling.

Q: Did every system connect to plumbing and cooling?

A: No. The ruling specifically identified the MR and XV modalities for those additional connections.

Q: Would the result necessarily cover plug-in medical equipment?

A: No. The ruling contrasted hardwired units with devices removable by pulling a plug from a socket.

Citations and references

• La. R.S. 47:301(16)(a), 47:302, 47:321, and 47:331
• La. Civ. Code art. 466 — component parts and permanent attachment
• Equibank v. I.R.S., 749 F.2d 1176 (5th Cir. 1985)
• Louisiana Revenue Ruling 02-003 — magnetic resonance imaging scanners
• LAC 61:III.101.C — Private Letter Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA PLR 03-005

Original ruling text

Private Letter Ruling 03-005
Redacted Version
Classification of Medical Imaging Equipment as Movable or Immovable Property
March 17, 2003
This private letter ruling involves the classification of already-installed durable medical
equipment as immovable property under the Louisiana Civil Code. The facts of the case are
presented below.
Facts
Client and its affiliates, “the Taxpayers,” operate health care facilities in Louisiana. The affiliates
of client provide emergency medical and general health care services as well as specialized
surgical procedures. Client owns a controlling interest in each of the Taxpayers.
The Taxpayers contracted and paid for (i) the acquisition and installation of and (ii) the repair
and maintenance of items of durable medical imaging equipment (the “Imaging Equipment”).
Two subsidiaries of the equipment’s manufacturer sell and maintain, repair, and provide related
services to the Imaging Equipment. These companies will be referred to collectively as
“Manufacturer.”
Manufacturer categorizes and accounts for sales/installation and service of the Imaging
Equipment by grouping the equipment into five modalities:

1.

•

“MR” (Magnetic Resonance Imaging Equipment);

•

“CT” (Computerized Tomography Equipment);

•

“XV” (X-Ray Vascular equipment, e.g., cardiac catheterization laboratories and
specialist laboratories);

•

“XF” (Radiographic and Fluoroscopic X-Ray Equipment); and

•

“NM” (Nuclear Medicine equipment, e.g., PET scanners, gamma or scintillator
cameras).

“MR” Modalities
The Taxpayers purchased and had “MR” units installed in Louisiana hospitals. The type of
MR model that taxpayers purchased is made up of over two dozen pieces of equipment that
are arranged in several rooms and incorporated into the walls and floors. Special construction materials and techniques must be used in order to allow proper functioning and shielding of the MR unit.
The installation was planned and conducted according to the methods that manufacturers/installers of MR units provide to hospitals and architects. Compliance with these guidelines is necessary to (i) protect the magnet from its environment, so that the magnetic field
will not be distorted by other magnetic devices and (ii) protect the environment from the
strong magnetic field, including protecting the safety of patients and health care
professionals.

Revenue Ruling No. 03-005
Page 2 of 5

The manufacturer guidelines require special construction methods and structural considerations. The weight of the magnet and the patient support component that are attached to the
magnet frame weigh over nine tons. This weight, as well as other components, such as the
strong magnetic field, the use of radio frequency signals, and the use of cryogenic liquids for
cooling the magnet all require special structural, electrical, and mechanical modifications to
the building.
2.

“CT” Modalities
Computerized tomography (“CT”) units are imaging devices using multiple radiographic xray images, as interpreted by computers, to create cross-sectional images of body structures.
The site design and installation of the typical CT scanner involves many of the same
structural and safety requirements of the MR equipment. The pieces of equipment in the
examination room, operator room, and power room are linked together by means of cables
and wires that run beneath the floor and through the walls. The CT scanners are linked to the
power supply room through hard wiring and the power supply equipment is also hard-wired
into the building. In compliance with regulations promulgated by the Louisiana Department
of Environmental Quality, high levels of shielding are installed in and around the CT scanners and other x-ray-based imaging equipment.

3.

“XV” Modalities
X-Ray Vascular Rooms (“XV”) include both cardiac catheterization labs, or “cath labs” and
the “specialist lab.” Both labs incorporate radiographic and fluoroscopic x-ray imaging
devices that are either suspended from gantries or contained on large c-arms affixed to the
floor. The imaging devices include integral wiring and cabling conduits that connect the
equipment to specialized power sources, control panels, and computerized control and
monitoring devices. As with the CT units, three contiguous rooms, an examination room,
operator room, and power room, contain the XV equipment and are linked by extensive
cabling and wiring underneath the floor and through the walls. As with the MR and CT
modalities, the immovable property housing this equipment must be adapted to
accommodate the weight, size, and safety requirements of the equipment.

4.

“XF” Modalities
“XF” Modalities include radiographic and fluoroscopic x-ray equipment. The imaging
equipment is mounted on the floor, ceiling, or wall. These systems contain an operator control room and examination room, which are separated by a wall. The rooms housing x-ray
units must, by law, include extensive built-in shielding materials to prevent the x-ray radiation from escaping the room. The operator’s console is connected to the equipment in the
examination room by means of wire and cable extending through the floor and walls.

5. “NM” Modality
   The Nuclear Medicine equipment, or “NM Modality” produces images and highlights certain anomalies within the body through the use of low-level radioactive isotopes referred to
   as radionuclides, radiopharmaceuticals, or radiotracers. The equipment utilizing this technology is configured in three separate, contiguous rooms, which include a magnet room,
   where the patient is scanned, a separate control room for the operator, and a third room

Private Letter Ruling 03-005
Page 3
March 17, 2003

where the power supply and associated equipment are located. The operator workstations
are connected to the imaging system by means of cables and wiring that run beneath the
floor. The imaging system and patient table are permanently mounted on a reinforced
concrete foundation.
Issue
Should the already-installed imaging equipment be classified as movable or immovable property
based on Louisiana Civil Code and judicial interpretation of such code?
Ruling
Louisiana Revised Statutes 47:302, 321, and 331 impose sales tax on the sale of tangible personal property. As defined in Louisiana Revised Statutes 47:301(16)(a), tangible personal
property “means and includes personal property which may be seen, weighed, measured, felt, or
touched, or is in any other manner perceptible to the senses.” However, items of property that are
permanently attached to an immovable become component parts of the immovable, and in turn,
are considered immovable under Louisiana Civil Code Article 466, which provides:
Things permanently attached to a building or other construction, such as plumbing,
heating, cooling, electrical or other installations, are its component parts.
Things are considered permanently attached if they cannot be removed without substantial damage to themselves or to the immovable to which they are attached.
The type of attachment that these items of imaging equipment have to the hospital structure
meets the test of permanent attachment described in Civil Code Article 466. As explained on
page three of Department of Revenue Ruling Number 02-003—Magnetic Resonance Imaging
Scanners, permanent attachment, as provided in Civil Code Article 466, can occur in one of two
methods. The first method of attachment involves the types of items illustrated in the first
paragraph of Civil Code Article 466 (plumbing, heating, cooling, electrical and other
installations). These items are deemed permanently attached as a matter of law and facility of
removal is immaterial.
According to the facts that you have provided, the imaging equipment meets the requirements for
the first paragraph of Civil Code Article 466. All of these items of imaging equipment, once
installed, are connected to the building through hardwiring into the hospital’s electrical system,
and thus become “electrical installations.” This term was explained in Equibank v. I.R.S., 749
F.2d 1176 (5th Cir. 1985) as electrical units connected to the electric energy source through the
interior wiring of the building or other construction. In Equibank, the electrical unit at issue was
a chandelier, which was deemed a component part of a residence. The court emphasized that the
connection and disconnection to the power source required special training and skills.
Conversely, the Equibank court clarified that electrical units connected to the electric energy
source through a plug in a socket are not considered “electrical installations” under the first
paragraph of Civil Code Article 466, because the removal of these types of movables does not
require any special expertise and can be accomplished by pulling a plug from a socket. The
various types of imaging equipment described in your letter were hardwired into the hospital;
therefore, these items became “electrical installations” under the Equibank decision and meet the
requirements of the first paragraph of Civil Code Article 466.

Private Letter Ruling 03-005
Page 4
March 17, 2003

Additionally, specific facts provided with the descriptions of the MR and XV modalities reveal
that those types of imaging equipment are connected to the hospital’s plumbing and cooling
systems. The cryogenerator, which is part of the MR unit, must be cooled by water. This is
accomplished through running chilled water under suspended flooring. Helium needed to cool
the MR magnet and cryogenerator is vented to the exterior of the hospital through insulated
aluminum or stainless steel pipes. The XV cath and specialist labs are sterile environments that
must meet operating room venting standards established by the Louisiana Department of
Environmental Quality. The first paragraph of Civil Code Article 466 provides that items
connected to a building through the plumbing and cooling systems of that structure also become
component parts, and the types of attachment that the MR and XV modalities have to the
plumbing and cooling systems of the hospital qualify these modalities as immovable property
once they are installed.
Revenue Ruling Number 02-003 also discusses the test of “substantial damage” that is provided
in the second paragraph of Civil Code Article 466. Under this provision of the law, objects that
cannot be removed without substantially damaging the items or the items to which they are
attached are considered component parts of an immovable. However, the attachment does not
need to be for perpetuity, nor does the attachment need to be made through the use of cement or
permanent fasteners. What is required is that, if the items are damaged, that this damage is
“substantial” such that the items involved are injured in some way.
The description of the attachment of the MR, CT, XV, XF, and NM Modalities to the hospital
structure indicated that extensive planning goes into the placement of these objects for proper
layout, functioning, and safety of patients and medical professionals. The equipment is situated
over several rooms and is interconnected with piping, wires, and utility and data transmission
line cables. Additionally, the weight of this equipment is often several tons, and reinforced
concrete must be used to support the equipment.
Removal of the systems would cause damage to the hospital structure or to the equipment. The
MR magnet can only be removed by removing the walls of the MR center or the ceiling and
magnetic dome over the magnet. The CT modality is integrated into the hospital structure in a
manner similar to the MR modality and removal of the patient table, CT scanner, or related
equipment would result in damage to the equipment or to the hospital walls, ceilings, or floor.
The XV, XF, and NM modalities require extensive floor, wall, or ceiling mounting of imaging
equipment and accessories, removal of which would also damage the hospital structure.
Therefore, although the first paragraph of Article 466 is satisfied due to the fact that the items of
durable medical equipment are electrical installations and for at least for two modalities, are also
joined to the building’s plumbing and cooling systems, the “substantial damage” test of the second paragraph of Article 466 is also satisfied for all of the modalities.
Summary
According to the facts provided on behalf of the client, all of the imaging equipment installed in
Louisiana health care facilities was hardwired into the medical centers’ electrical systems.

Revenue Ruling No. 03-005
Page 5 of 5

Additionally, two of the modalities were also connected to the Louisiana hospitals through the
plumbing and cooling systems. Therefore, the items of durable medical equipment satisfy the
first paragraph of Article 466 and are component parts of the building. Even in the absence of
these connections, the items of durable medical equipment would meet the test provided in the
second paragraph of Article 466 due to the fact that the hospital or equipment would be damaged
if the imaging equipment were removed.
If you have any questions or need additional information, please contact the Policy Services
Division at (225) 219.2780.
Cynthia Bridges
Secretary
By: _____
Christina L. Fletcher
Attorney
Policy Services Division

A Private Letter Ruling (PLR) is issued under the authority of LAC 61:III.101.C. A PLR provides guidance to a specific
taxpayer at the taxpayer’s request. It is a written statement issued to apply principles of law to a specific set of facts or
a particular tax situation and is limited to the matters specifically addressed. A PLR does not have the force and effect
of law and may not be used or cited as precedent. A PLR is binding on the Department only as to the taxpayer
making the request and only if the facts provided with the request were truthful and complete and the transaction was
carried out as proposed. The Department’s position concerning the particular tax situation addressed remains in
effect for the requesting taxpayer until a subsequent declaratory ruling, rule, court case, or statute supersedes it.