Leases of equipment by a taxpayer were subject to Arkansas sales tax and short-term rental tax since the taxpayer physically transferred tangible personal property (TPP) to customers at deliverysites and the services rendered by the taxpayer were incidental. The taxpayer leases equipment for special events, is responsible for setting up and taking down the equipment, and remains with the equipment during the event. In Arkansas, if TPP is rented with an operator’s services included, the property rental and operator service is a nontaxable service, provided that the service alone would have been exempt from tax. If, TPP alone is rented, sales tax and rental tax apply. The transaction is characterized as a taxable lease of TPP since physical possession passes to the customer at the delivery site and the customer’s intention is to use the equipment. The presence of the taxpayer’s representatives does not convert the lease of equipment into a serviceas the taxpayer’s representative was not required to operate the equipment. The rentals were also subject to short-term rental tax since the equipment was rented in four-hour intervals. The taxpayer was also liable for a failure to file penalty since no evidence was presented by the taxpayer that the failure to filewas due to reasonable cause.(Administrative Decision Nos. 17-198, 17-199, 17-200, Arkansas Department of Finance and Administration, Office of Hearings and Appeals, March 27, 2017)