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
330.2312 Lease vs. Financing Arrangement. A manufacturer leases the equipment it builds to end users. It then assigns the lease and simultaneously sells the equipment to an assignee, under a Purchase and Remarketing Agreement. The agreement provides that the manufacturer is the exclusive agent of the assignee with respect to the lease of the equipment, subject only to the assignee's approval of credit. The manufacturer also collects the rental receipts including the use tax from the lessee. After the assignee has received 160% of the purchase price of the equipment, the manufacturer is entitled to share equally in the remaining lease receipts.
The Purchase and Remarketing Agreement transfers all rights, title and interest in the leased equipment, which must be identified as the assignee's. The manufacturer does not retain any rights in the equipment, but rather is paid a certain amount by the assignee for remarketing and administrative duties. The sharing of the income in excess of 160% of cost, does not indicate that the manufacturer retains any right or title in the equipment. Therefore, the assignee has assumed the position of lessor within the provisions of Regulation 1660(c)(9)(D) and is required to collect, report and pay the (use) tax to the Board. 3/11/82.