Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660

Annotation 330.2140

(a) IN GENERAL

330.2140 Default—Allocation of Security Deposit. There is no provision in the Sales and Use Tax Law concerning the order in which funds from a security deposit must be applied upon default. If the lease contract itself does not specify an order, the lessor may apply the security deposit funds as it deems appropriate.

Thus, if the lessor applies any of the security deposit funds to satisfy charges which are taxable, the lessor is liable for payment of the tax. For example, if the lessor applies a portion of the security deposit to the past due lease payments, the amount applied is considered lease payments which are subject to the use tax. 1/3/96.