Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013

Sales and Use Tax Annotations

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Annotation 335.0062.200

335.0062.200 One-Way Rental Trucks. A lessor leases a three-quarter ton truck to the United States Forest Service. The contract provides for no specific term. Under "contract period," it is provided that "the period of use will be as follows: From approximately May 1 through August 15, 1970." Under the terms of the contract, the lessee has the unconditional right to terminate the lease upon 24 hours notice. The bid solicitation document provides for a periodic rental amount, estimated period of use, and the total amount. For example, monthly rental—$110, estimated months—6, amount—$660.

Under the terms of the rental agreement, no definite lease term appears. The estimated period of use of approximately six months does not effectively establish a lease in excess of 31 days in view of the lessee's unconditional right to terminate upon 24 hours notice. Under such a right, the lessee is not obligated to rent the property in excess of 24 hours. Accordingly, the above lease qualifies as a short term lease of not more than 31 days within the meaning of Regulation 1661(a)(1)(C). The use of the equipment by the Forest Service under the lease also qualifies as "one way or local hauling of persons or property" within the meaning of the Regulation. To qualify as "one-way rental trucks" under Regulation 1661(a)(1)(C), the vehicle must be identified to the Board as set forth in the above Regulation. Since this was not done, tax is due on the cost of the vehicle. 4/30/75.