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Sales & Use Tax Tips for October 2009
RENTING OR LEASING PROPERTY CAN TRIGGER NEXUS
Do You Rent or Lease Property? Is Sales or Use Tax Handled Properly When the Property Is Moved Around?
Lessors, Are You Registered and Collecting Tax Where You Have Leased Property Located?
For Lessors, the location of their leased property triggers Nexus - a requirement to register, collect and remit sales tax in behalf of the taxing jurisdictions the property is located in. This often involves multiple jurisdictions when leased property is moved around. For those renting or leasing the property, such rentals are often taxable. Moving the property across jurisdictional borders can trigger differing sales and use tax obligations.
For sufficient Nexus, “Doing Business” may in part be defined as in this example: Any retailer, with respect to a lease or rental, deriving rentals from a lease or rental of tangible personal property situated in this state (or local home-rule jurisdictions in states that have such, i.e. AL, AK, AZ, CO, IL & LA). Definitions vary widely from jurisdiction to jurisdiction.
More generally, physical presence is a Nexus trigger so both the Lessor and Lessee often have sales or use tax obligations as a result of the locations where the property is kept or used. The type of lease, such as an Operating Lease or Capital Lease, may be a factor in determining who the owner is for tax purposes. Exemptions or exclusions may also exist.
For more on how our professionals can help you understand and work through the sales and use tax issues impacting you and your customers please see the Services or Who We Serve section of our website.
If you are concerned about how your company’s sales and use tax issues have been handled in the past, we suggest performing a Diagnostic Review to identify, quantify and fix problems going forward. Exposure Resolution options can be explored to resolve past hidden liabilities.
Click here for more Sales Tax Tips or visit our website www.oatax.com. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.
Contact us today or call 1-888-466-2829 to speak with an Olivier &
Associates Sales and Use Tax professional for a no-obligation consultation about your Sales & Use Tax issues.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
