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Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations


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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660

Annotation 330.3194

(b) Rental Receipts—Items Included and Excluded

330.3194 Charges Under Leases. A taxpayer leases automobiles and makes the following charges:

(1) Excess mileage fee: assessed for excess miles driven by lessee over a predetermined standard.

(2) Renegotiation fee: assessed at the time the lessee signs a new lease agreement covering the same vehicle under a prior agreement. This is a flat rate documentation fee.

(3) Documentation fee: assessed at the time the lease is signed as a fee for processing the lease.

(4) Assumption fee: assessed if the lease is assigned by the lessee to another party.

(5) Deferral fee: assessed if lessee wishes to extend the lease for a short period of time without signing a new lease agreement.

(6) Late charges: assessed for failure to return the vehicle timely upon termination of the lease.

These are all payments required by the lease. Therefore, these charges are subject to tax.

A payment made by the lessee for failing to return the vehicle when due is a charge for use of the vehicle and also is subject to tax. 2/5/87.