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BTLG Table of Contents > Sales and Use Tax Annotations > L > 330.0000 Leases Of Tangible Personal Property—In General > Annotation 330.3225

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

Annotation 330.3225

(b) Rental Receipts—Items Included and Excluded

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330.3225 Damage Charges. Payments made by a lessee for damages to equipment resulting from improper use or abuse of the equipment are not part of taxable rental charges.

Also, the amount paid by the lessor with respect to the cost of parts used in repairing the damage in question is not taxable. Following the repair of the damage, the parts become incorporated into the leased item. The fact that tax is paid on the rental receipts negates the requirement of paying tax on any component of the unit. 2/11/75.