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
(d) "SUBSTANTIAL CHANGE IN FORM"
330.3974 Franchised Restaurant Location. A restaurant chain/franchiser arranges with a landowner to erect a restaurant building on his land, and leases the land and building from the landowner. The franchiser then purchases tax-paid from various vendors everything necessary to equip and furnish the building as a ready to operate restaurant. The location is then operated by the franchiser until a franchisee is found, or the franchiser immediately franchises it. The franchise agreement includes a sublease of the land and building and a lease of the equipment and furnishings. This activity does not result in a substantial change in form of the property leased and the lease is not subject to tax. 9/12/68.