West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-15 - Consumer Sales And Service Tax And Use Tax › Section 110-15-129 - Leases of Tangible Personal Property

Current through Register Vol. XLI, No. 28, July 12, 2024
129.1. In General. - The consumers sales and
				service and use tax laws apply to leases of tangible personal property. A
				lessor of tangible personal property who engages in this State in selling or
				leasing tangible personal property is required to collect consumers sales and
				service tax with respect to such leases when the lessee takes delivery of the
				leased property in this State. A lessee is required to pay use tax with respect
				to the use in this State of leased tangible personal property unless the lessee
				has paid West Virginia consumers sales and service tax with respect to the
				transaction. A lessor who is a "retailer engaging in business in this State,"
				as defined in Section 2 of these regulations, is required to collect and remit
				West Virginia use taxes with respect to tangible personal property leased for
				use in this State. A lessee who pays to the lessor of the tangible personal
				property either the amount of West Virginia consumers sales and service tax due
				or the amount of West Virginia use tax due has no further liability for payment
				of the tax directly to the Tax Commissioner. Exemptions from payment of tax
				allowed by law with respect to certain sales of tangible personal property
				equally apply to leases of tangible personal property and the methods of
				claiming exemption from payment of tax are the same. See Section 9 (exemptions)
				of these regulations. Additionally, long term leases of motor vehicles are
				exempt. See Section 9.2.10 of these regulations. A lessee of tangible personal
				property used in this State is allowed credit against his West Virginia use tax
				liability for payment of consumers sales and service taxes lawfully imposed by
				another state on lease payments attributable to the period of time the lessee
				uses the leased property in this State. The measure of tax is the amount of the
				periodic lease payments.
129.2.
				Certain terms used in this section have the following meanings for purposes of
				application of this regulation:
129.2.1.
				Financing Lease. - The term "financing lease" means:
129.2.1.1. A lease contract which contains at
				the inception of the contract a provision or condition that (1) title to the
				leased property must be transferred to the lessee at the end of the lease, or
				(2) the lessee has an option to purchase the leased property at a nominal
				price.
129.2.1.2. A lease contract
				containing either of the following provisions or conditions at the inception of
				the contract is presumed to be a financing lease:
129.2.1.2.a. The primary lease term is equal
				to seventy-five percent (75%) or more of the estimated economic life of the
				property (determined at the time the primary term of the lease begins) and
				makes no provision for the return of the property to the lessor. For used
				property, this provision does not apply if the beginning of the lease term
				falls within the last twenty-five percent (25%) of the total estimated economic
				life of the leased property, or
129.2.1.2.b. The residual value of the leased
				property is less than ten percent (10%) of the property's fair market value at
				the inception of the lease and the contract makes no provision for the return
				of the property to the lessor.
129.2.1.3. The presumption that the contract
				is a financing lease may be rebutted by showing that the contract is not merely
				a security device, that the property will be usable for its intended purpose at
				the end of the primary lease term, that the lessor in good faith intends to
				reclaim possession of the property at the end of the lease term or to sell or
				re-lease it at that time for its fair rent or fair market value, and that the
				lease was not treated by the lessor as a sale of tangible personal property or
				by the lessee as the acquisition of a capital asset.