Sec. 27.
(a) In
general, the gross receipts from renting or leasing tangible personal property
are taxable. This regulation [45 IAC 2.2] only exempts from
tax those transactions which would have been exempt in an equivalent sales
transaction.
(b) Every person
engaged in the business of the rental or leasing of tangible personal property,
other than a public utility, shall be deemed to be a retail merchant in respect
thereto and such rental or leasing transaction shall constitute a retail
transaction subject to the state gross retail tax on the amount of the actual
receipts from such rental or leasing.
(c) In general, the gross receipts from
renting or leasing tangible personal property are subject to tax. The rental or
leasing of tangible personal property constitutes a retail transaction, and
every lessor is a retail merchant with respect to such transactions. The lessor
must collect and remit the gross retail tax or use tax on the amount of actual
receipts as agent for the state of Indiana. The tax is borne by the lessee,
except when the lessee is otherwise exempt from taxation.
(d) The rental or leasing of tangible
personal property, by whatever means effected and irrespective of the terms
employed by the parties to describe such transaction, is taxable.
(1) Amount of actual receipts. The amount of
actual receipts means the gross receipts from the rental or leasing of tangible
personal property without any deduction whatever for expenses or costs
incidental to the conduct of the business. The gross receipts include any
consideration received from the exercise of an option contained in the rental
of lease agreement; royalties paid, or agreed to be paid, either on a lump sum
or other production basis, for use of tangible personal property; and any
receipts held by the lessor which may at the time of their receipt or some
future time be applied by the lessor as rentals.
(2) Rental or lease period. For purposes of
the imposition of the gross retail tax or use tax on rental or leasing
transactions, each period for which a rental is payable shall be considered a
complete transaction. In the case of a weekly rate, each week shall be
considered a complete transaction. In the case of a continuing lease or
contract, with or without a definite expiration date, where rental payments are
to be made monthly or on some other periodic basis, each payment period shall
be considered a completed transaction.
(3) Renting or leasing property with an
operator:
(A) The renting or leasing of
tangible personal property, together with the services of an operator shall be
subject to the tax when control of the property is exercised by the lessee.
Control is exercised when the lessee has exclusive use of the property, and the
lessee has the right to direct the manner of the use of the property. If these
conditions are present, control is deemed to be exercised even though it is not
actually exercised.
(B) The rental
of tangible personal property together with an operator as part of a contract
to perform a specific job in a manner to be determined by the owner of the
property or the operator shall be considered the performance of a service
rather than a rental or lease provided the lessee cannot exercise control over
such property and operator.
(C)
When tangible personal property is rented or leased together with the service
of an operator, the gross retail tax or use tax is imposed on the property
rentals. The tax is not imposed upon the charges for the operator's services,
provided such charges are separately stated on the invoice rendered by the
lessor to the lessee.
(D)
Notwithstanding any other provision of this regulation [45 IAC 2.2]
any lessee leasing or renting a vehicle(s) from any lessor, including
an individual lessor, with or without operators, driver(s), or even if the
operator (driver) himself is the lessor, regardless of control exercised, shall
not be subject to the gross retail tax or use tax, if the leased or rented
vehicle(s) are directly used in the rendering of public
transportation.
(4)
Supplies furnished with leased property. A person engaged in the business of
renting or leasing tangible personal property is considered the consumer of
supplies, fuels, and other consumables which are furnished with the property
which is rented or leased.
