35 Miss. Admin. Code Pt. IV, Subpt. 5, Ch. 03 — Renting or Leasing Tangible Personal Property

100 General
101 Miss. Code Ann. Section 27-65-23 taxes the gross income received from renting or
leasing personal property used in this state. The tax due on the lease or rental is at the
same rate as the sale of the property.
102 (Reserved)
200 Definitions
201 Rental or Lease means any transfer of possession or control of tangible personal property
for a fixed or indeterminate term for consideration. This definition shall be used for sales
and use tax purposes regardless if a transaction is characterized as a lease or rental under
generally accepted accounting principles, the Internal Revenue Code, the Mississippi
Code of 1972, or other provisions of the federal, state or local law.
202 Lease or rental does not include providing tangible personal property furnished with an
operator or crew for its operation. An operator or crew must do more than maintain,
inspect or set-up the property. Under these circumstances, a service is rendered other
than leasing or renting of property.
203 Miss. Code Ann. Section 27-65-3 (i) defines gross income to include the total charge for
service or the total receipts derived from the rental or lease of tangible personal property
without any deduction for rebates, cost of property sold, cost of materials used, labor
costs, interest paid, losses or any expense whatever. Gross income also includes any
charges made to the lessee for damages to, loss of or excessive use of the property.
204 Charges to lessees which represent a recovery of expenses (repairs, transportation, hotel,
meals, supplies, etc.) are in reality an allocation of the selling price to this cost of
operation and cannot be excluded from the measure of tax imposed upon the gross
income.
205 Rentals for re-rental by a lessor engaging in the renting or leasing business are wholesale
sales and are not considered to be taxable income.
206 Motor Vehicle is defined as any self-propelled, wheeled conveyance that does not run on
rails. The term includes all private carriers of passengers and any light carriers of
property having a gross vehicle weight of 10,000 pounds or less.
207 (Reserved)
300 Purchases and Sales
301 Persons qualified to do business in this State of renting or leasing tangible personal
property are considered retailers and may purchase property to be rented exempt from
sales or use tax. The tax, likewise, shall not apply to repair and repair parts of such
property.
302 Leasing companies may purchase tangible personal property from a customer to be leased
back to the same customer as a financing tool to benefit the customer. However, if the
condition of the property has been altered or if the customer has used the property since
the time it was originally purchased by the customer, there will be no credit for sales or
use tax paid by the customer when originally procured prior to the sale to the leasing
company.
303 All purchases of tools, supplies, machinery and equipment which are purchased for use in
operating the business and not for rental are taxable at the regular retail rate of sales or
use tax.
304 Sales of property to consumers which has been rented or leased are considered to be retail
sales and are taxable on the gross proceeds of such sales.
305 Owners or other persons receiving benefit from use of tangible personal property in this
State are liable for use tax on the property.
306 (Reserved)
400 Tax on Motor Vehicle Rentals
401 In addition to the 5% sales tax due on the rental of motor vehicles, a 6% motor vehicle
rental tax is due on the gross income from the short term rental of motor vehicles.
Therefore, the total tax due on short term rentals of these motor vehicles is 11%. Short
term rentals are defined as rental agreements with a term of 30 or less continuous days.
The total tax due on the long term (rental agreements in excess of 30 continuous days)
rental or leasing of motor vehicles is 5%.
402 Effective July 1, 2014, as provided by Miss. Code Ann. Section 27-65-101 (1)(ss), the
income received from renting or leasing of truck-tractors and semi-trailers used in
interstate commerce and registered under the International Registration Plan (IRP) or any
similar reciprocity agreement or compact relating to the proportional registration of
commercial vehicles, as provided by Miss. Code Ann. Section 27-19-143, is exempt .
Similar vehicles not used in interstate commerce and not registered in such a plan are
taxed at the special rate of 3% provided for truck-tractors and semi-trailers, under Miss.
Code Ann. Section 27-65-17(1)(d).
403 The total amount charged for rental of "you-drive-it" or "you-haul-it" vehicles is taxable
income to the lessor, even though the lessee may use the property in multiple cities in
Mississippi or in other states, and even though the charge may be collected by or with
another person. The tax rate on these vehicles is 3% for vehicles with a gross vehicle
weight (GVW) in excess of 10,000 pounds. Vehicles with a GVW of 10,000 pounds or
less are subject to tax at the rate of 5% for sales tax and the additional 6% motor vehicle
rental tax.
404 Motor fuel charges are not considered to be taxable rental income when separately
invoiced from the charge for rental or lease. Sales of motor fuel by lessor are not subject
to sales tax.
405 Rental cars provided under a new car warranty either from a dealer's own fleet or through
a car rental agency are considered part of the warranty repair and not subject to sales tax
or the motor vehicle rental tax.
406 (Reserved)
500 Reporting Requirements
501 Adequate records must be maintained to substantiate tax classifications of sales and
purchases.
502 Income received from the rental or lease of transportation equipment between cities and
counties in this state is not subject to city diversion. Any business renting or leasing
transportation equipment and other items of tangible personal property must report the
income from these activities separately.
503 (Reserved)