Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.2968 Tax-Paid Status of Leased Equipment. A lessor of equipment sells the equipment together with the existing lease to a purchaser. The equipment was purchased tax-paid by the lessor and lease receipts were not subject to tax. The lessor (seller) pays the sales tax on the sales price to the Board, but does not charge the sales tax reimbursement nor obtain tax reimbursement from the purchaser.
The sale of tax-paid property subject to an existing lease is a retail sale with no option to purchase the equipment for resale since the existing lease is not a continuing sale. Since the seller properly paid sales tax to the Board on its sale, no further tax is due on the transaction between the seller and the purchaser.
However, since the purchaser (new lessor) did not pay sales tax reimbursement on the purchase price, any future leases of the equipment would be taxable continuing sales. 8/29/96.