Property Tax Included in Leased Vehicle Sales Price in Rhode Island

The sales price of motor vehicle lease payments properly included personal property tax charged to the lessee by the lessor, for Rhode Island sales and use tax purposes. Only taxes that are legally imposed on the consumer can be excluded from the sales price. The property tax was legally imposed on the lessor and passed on to the lessee as a separately stated charge. The property tax was not imposed on the lessee and therefore, the legal incidence of the tax remained on the lessor. As the property tax was included in the sales price, the property tax was properly subject to Rhode Island sales and use tax. (Administrative Hearing Decision No. 2012-11, Rhode Island Division of Taxation, September 5, 2012)

Posted on November 26, 2012