A recently enacted Utah bill changes how motor vehicles involved in car-sharing platforms are taxed.
The Wacky World of Rental Tax
While accurate sales tax compliance is never impossible, those companies operating in the rental arena have several challenges unique to their business. In this blog, we will detail some of those challenges and the steps that rental companies must take to stay safe from significant audit exposure.
Utah to Impose Sales and Use Tax on Sales of Leased Personal Property Effective July 1, 2023
The Governor of Utah signed S.B. 14, a bill that was passed unanimously by the state Senate and House of Representatives, and which will impose the state\’s sales tax on charges for leases and rentals of personal property.
Out-of-State Car-Sharing Platform Not Responsible for Collecting Tax in Texas
Texas issued a private letter ruling stating that an out-of-state peer-to-peer car sharing platform (taxpayer) is not responsible for collecting and remitting Texas motor vehicle gross rental receipts tax since it is not the owner of the vehicles on the platform.
The State of New York Maintains that End-of-lease Adjustments for Fleet Cars are Not Eligible for a Sales Tax Refund
A fleet management company that leases fleets of vehicles to businesses in New York was told by an administrative law judge at the New York Division of Tax Appeals that it could not claim sales tax credits for refunds of tax paid to vehicle lessees at the end of their leases following a rental adjustment that decreased the total rent paid under the lease.
Arizona Requires Peer-to-Peer Car Sharing Platforms to Pay Transaction Privilege Tax
Arizona Senate Bill 1720, effective September 29, 2021, requires peer-to-peer car sharing platforms to pay transaction privilege tax on rentals conducted on their platforms.
Rental Cars Used in Chicago – A Personal Property Lease Transaction Tax Saga
The Illinois Supreme Court held that the City of Chicago’s ruling to require rental car companies located within three miles of the City to collect tax is unconstitutional under the home rule article of the Illinois Constitution.
Washington Amends Lease and Rental Excise Tax Rule for Certain Construction Scenarios
The Washington rule on leases or rentals of tangible personal property has been amended to clarify the state’s polices for specific construction services like concrete pumping.
Portable Toilet Rentals Subject to Tax, Not Exempt as a Service in Missouri
Missouri held that the provision of portable toilets and related services were taxable as the rental of tangible personal property, not exempt as waste removal services.
Not-To-Be-Missed Sales Tax Updates out of the Midwest
When it comes to sales tax, there is no such thing as “fly over country.” If you have business operations in the Midwest or make sales into Midwestern states, you must stay on top of sales tax changes that impact…
Virginia Denies Request for Reconsideration of Tax Determination on Lease/Purchase Transaction
A taxpayer’s request for reconsideration of a Virginia tax determination was denied since the taxpayer failed to prove that the state erroneously assessed tax on equipment purchased under a lease/purchase agreement.
Peer-to-Peer Car Sharing Services to Remain Taxable in Maryland
Maryland has extended the sunset date for the imposition of sales tax on peer-to-peer car sharing services until June 30, 2021.
Cylinder Rental Fees Taxable in Wyoming Since They’re Not Demurrage
Cylinder rental fees charged by a seller of industrial, medical, and welding gasses were subject to Wyoming sales tax since the seller failed to establish that they were exempt as demurrage charges.
Chicago Updates Cloud and Software Lease for Release Rule
Chicago modified its application of the lease for re-lease exemption to include certain software and cloud products, effective July 1, 2020.
How States Tax Rentals of Tangible Personal Property
States do not have a uniform approach to taxing rentals and leases of tangible personal property. Learn the three general categories state rules fall into in taxing true leases of TPP.
Florida Reduces Sales Tax Rate for Rental, Lease, or License to Use Real Property
The Florida sales tax rate imposed on commercial rentals will decrease from 5.7 to 5.5 percent, effective January 1, 2020.
Indiana Issues Directive on Heavy Equipment Rental Excise Tax
Indiana has a heavy equipment rental excise tax imposed at a rate of 2.25% and effective January 1, 2019.
Reduction of Florida Sales Tax on Commercial Real Property Leases to Commence January 2018
Beginning January 1, 2018, Florida’s sales tax rate imposed on the total rent charged for renting, leasing, letting, or granting a license to use commercial real property is reduced.
Rentals Used for Church Construction Contract Exempt in Oklahoma
Oklahoma tax law allows a contractor who has a construction contract with a church to make purchases of tangible personal property or services necessary to perform the contract, exempt from sales and use tax.
Colorado Issues Guidance on Advance Payments for Vehicle Rentals
The Colorado Department of Revenue indicated that vehicle and hotel occupancy rentals are similar in nature and therefore, several occupancy provisions seem appropriate to apply to the taxability of advance payments on vehicle rentals.
Oklahoma Issues Letter Ruling Regarding Taxability of Car Rental Fees
Customer facility charges that are separately stated, imposed on and charged to customers, and remitted to airports by a car rental company should not be included in gross receipts for sales tax purposes.
Additional Payments For Real Property Lease Taxable in Florida
A Florida lessor failed to charge, collect, and remit sales tax to the state on payments made in addition to rent from a lessee. The lessor was audited, and the state assessed sales tax on the additional payments.
Tax Base of Aircraft Acquired in Exchange Not Reduced for Like-kind Exchange from Indiana Sales Tax
A company was required to collect Indiana sales tax on the leasing of an aircraft it acquired in an exchange based on the total consideration the company provided with a deduction for the value of a like-kind exchange.
Rentals & Leases: How Does Sales Tax Apply to Them?
Whether you’re a lessor or a lessee, it’s important to understand the different scenarios that you may encounter and know how sales tax applies to the different types of transactions.