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"
330.4075 Real Estate Signs. A franchiser's primary business is manufacturing complete real estate signs including frames, signs and stakes. The completed sign packages are sold to franchisees who in turn rent them to local real estate offices. The franchisees' services include the placement and removal of the signs. Although the completed signs cannot be modified, some models carry riders for attaching additional signs which can be changed depending on the lessee's needs.
Since the completed sign packages cannot be modified, except those models with riders that may be changed with very little effort, the franchisees are considered to be leasing the sign packages in the same form as acquired. The franchisees may, therefore, elect to pay the franchiser sales tax reimbursement or timely pay use tax as measured by the purchase price of the sign packages. Thereafter, they could lease the signs with no further sales or use tax being due on the subsequent rental receipts. Alternatively, provided the franchisee has a seller's permit, they may issue the franchiser a resale certificate and collect use tax from their lessees as measured by the rentals payable. 5/20/88.