What is the sales taxability of a leasing agreement?
The lessor has the option of either paying the tax up front on the item to be leased or charging the tax on the lease receipts. Only one of these options may be chosen. If the lessor chooses to charge the tax on the lease receipts on items other than motor vehicles, the tax due is based on the place of business of the lessor. If the lessor has more than one place of business, the taxable sale is based on the location where the initial order is taken. Any motor vehicle, which is leased or rented, as the result of a contract, shall be taxable at the lessee’s location at the time the lease is executed.
