Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014

Sales and Use Tax Annotations

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460.0000 REIMBURSEMENT FOR SALES TAX—Regulation 1700

Annotation 460.0026

460.0026 Excess Tax Reimbursement—Lease and Sublease Situation. A prime lessor/retailer collected tax reimbursement from a sublessor. The sublessor also collected an amount designated as tax from the sublessee. Under this situation, the sublease is not a taxable sale or use and the proper party to file a claim for refund is the sublessor.

On the other hand, where a prime lessor paid to the state an amount equal to the use tax or rental receipts without billing or collecting reimbursement from the sublessor and the sublessor, not knowing the prime lessor was reporting these amounts, collected and reported tax on its rental receipts, the prime lessor's transaction is a sale for resale. Therefore, the tax paid by the prime lessor is refundable to the prime lessor and tax is correctly due on the sublessor's rental receipts. 5/14/87.