Sales Tax Issues for Rental and Lease Transactions: Tangible vs. Intangible, Sourcing, Tax Elections, Exemptions

State Tax Rules, Accurately Reporting Sales Tax, Maintaining Compliance for Certain Assets

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, December 8, 2020

Recorded event now available

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Course Materials

This course will provide tax professionals and advisers an in-depth analysis of state sales tax treatment of lease, purchase, and finance transactions for certain assets. The panel will discuss the taxation of tangible versus intangible property, sourcing rules for leases, available tax elections, exemptions, and some state-specific examples.

Description

The rental or lease of tangible property can create unforeseen sales tax implications. Sales taxes on these transactions are complicated and vary from state to state requiring tax professionals to regularly obtain facts around each transaction and monitor applicable state tax law.

Generally, if tangible personal property is taxable when purchased, it is also taxable when leased. Additionally, if an exemption applies to the purchase, it will also apply to the lease. Thereafter, the application of sales taxes to rental or lease transactions aren't as easy to determine. Tax advisers must consider various factors, such as the lease or rental agreement, the inclusion of ancillary charges, available exemptions, and other critical matters.

Also, since ownership title is not transferred, having property in another state creates sales tax and possibly income tax nexus. This will require the owner of the property to collect sales taxes. Depending on the type, rented or leased property may create a property tax obligation.

Listen as our panel discusses the application of sales tax to tangible versus intangible property, sourcing rules, and exemptions, as well as techniques for accurate sales tax reporting and maintaining compliance.

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Outline

  1. Overview of state tax rules for rental and lease transactions
  2. Determining what constitutes a rental or lease of property
  3. Tangible vs. intangible property
  4. Sourcing rules, tax elections, and exemptions
  5. Recent state developments
  6. Best practices for reporting and maintaining compliance

Benefits

The panel will discuss these and other crucial issues:

  • What constitutes a rental or lease of property for sales tax purposes?
  • How is sales tax paid on rentals or leases of tangible personal property?
  • How does the application of sales tax to rental or leased property differ in certain states?
  • Are there any exemptions available for certain transactions?
  • How can taxpayers maintain state sales tax compliance and accurate reporting?

Faculty

Roberts, Stacey
Stacey L. Roberts, CPA
State and Local Tax Director
TaxOps

Ms. Roberts has been making SALT less taxing for thousands of businesses over the last 25 years. As a director of the...  |  Read More

Vorndran, Judith
Judith B. Vorndran, JD, CPA, MSBA
Partner
TaxOps

Ms. Vorndran helps clients and tax professionals navigate the morass of state and local tax issues with the goal of...  |  Read More

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