Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.2310.115 Lease of Vehicles to U.S. Government Contractor. A taxpayer leases operating vehicles. In some instances, a vehicle is used for the sole purpose of transporting navy compressors and the cost is passed directly to the government. In other instances, a vehicle is used for various activities not related to a specific government contract, the cost is expensed out to an overhead account and not charged directly to the U.S. Government.
Both categories are leases which are subject to tax. In both instances, the lessee is the taxpayer. There is no sublease of the vehicle to the United States in either case. It is immaterial that the vehicles are used solely for the purpose of transporting navy compressors under a government contract and the cost is passed on directly to the U.S. Government.
While tax does not apply to leases of tangible personal property to the United States, there is no lease of property to the U.S. when the government contractor itself operates the equipment under a government contract. 5/13/91.