Connecticut Administrative Code › Title 12 - Taxation › 426 - Sales and Use Tax › Section 12-426-25 - Leasing and rental of tangible personal property

Current through July 10, 2024
(a)
General rule
. The rental or leasing of tangible personal property
			 for a consideration in this state is a sale and is subject to the tax. The
			 lessor is a retailer who must register with the Commissioner of Revenue
			 Services for a permit and collect the tax. The tax is imposed upon the gross
			 receipts from the rental or leasing of tangible personal property. Such
			 retailers shall pay the taxes so collected in the manner and form as other
			 retailers licensed to sell tangible personal property. A lessee may issue a
			 resale certificate to a lessor only in those cases where the lessee has
			 qualified with this department as a lessor and the property is being leased
			 solely for sub-leasing purposes.
(b)
Transitional rules
. The tax
			 applies to all leases of tangible personal property existing on July 1, 1975.
			 No credit against the tax is given for any sales or use tax paid by the lessor
			 on such property purchased prior to July 1, 1975. The tax is imposed on the
			 total amount of rental payments received on or after July 1, 1975. The rental
			 is deemed received when it is due and owing. The lessor must collect and pay
			 the tax on the total amount of payment or periodic payments received for
			 leasing or rental of tangible personal property for any term on or after July
			 1, 1975 whether or not such amount is prepaid and received prior to said
			 date.
(c) "Gross receipts" shall
			 include the total amount of payment, royalties or periodic payments received
			 for the leasing or rental of tangible personal property. Said amount shall
			 include all charges including but not limited to maintenance and service
			 contracts, cancellation charges, installation service and transportation
			 charges for delivery to the lessee, whether or not such amounts are separately
			 stated. Gross receipts shall not include the cost of gasoline or insurance
			 charges when such amounts are separately stated and the lessee has the option
			 to either accept the lessor's insurance offer or to procure other
			 coverage.
(d) Gross receipts do not
			 include the amount charged for the operator where the lessor supplies an
			 operator for the leased property if the amount charged is for the compensation
			 of the operator, is reasonable and is segregated in the invoice. A reasonable
			 charge is one based upon the prevailing rate in the area. However, where an
			 operator is supplied with the equipment, the contract is entered into for a
			 specific job or operation, and where the owner of the equipment through the
			 operator retains complete control over the equipment and retains discretion as
			 to when and how to perform, said contract will be one for services and not for
			 lease.
(e) Tangible personal
			 property purchased exclusively for lease or rental is purchased for resale and
			 a resale certificate may be issued therefor. Said certificate may be issued in
			 the purchase of parts and accessories used directly in the rental or leasing or
			 used in the reair of the leased property. Where the property is purchased in
			 part for lease and in part for the use of the lessor, it may not be purchased
			 on a resale certificate and the vendor must collect the tax on the purchase
			 price. The tax must also be collected on any subsequent lease of the
			 property.
(f) The rental of safe
			 deposit boxes, food lockers, storage or baggage lockers are not rental of
			 personalty but rental of storage space and not subject to tax. Charges for
			 chartering of buses, boats, airplanes and limousines are not subject to tax,
			 where the owner maintains complete control over the conveyance.
(g) Rental of equipment to contractors
			 engaged in work on exempt projects is subject to the tax.
(h) A lease is considered to be consummated
			 in this state and subject to the tax where delivery of the tangible personal
			 property is taken within the state or the property is leased with the intent to
			 use it in the State of Connecticut and the property is so used. The tax does
			 not apply where delivery is taken outside the state and the property is used
			 exclusively outside the State of Connecticut.