Nev. Admin. Code § 372.922 — 372.922

NAC 372.922    Collection and payment of tax when tangible personal property is
purchased for lease or rental within this State. ( NRS 360.090 , 360B.110 ,
372.170 ,
372.240 ,
372.385 ,
372.725 )    Except
as otherwise provided in NAC 372.932 :
1.  A person who purchases tangible personal
property outside of this State for lease or rental within this State shall pay
the use tax due in this State measured by:
(a) The cost of the property to the person; or
(b) The person’s gross lease or rental charges for
the lease or rental of the property within this State.
2.  A person who purchases tangible personal
property within this State for lease or rental within this State shall:
(a) Pay the sales tax to the person’s vendor on the
sales price of the property to him or her; or
(b) Give the seller a resale certificate for the
property and elect to pay the tax measured by the gross lease or rental charges
for the lease or rental of the property within this State.
3.  If a person who sells and rents or leases
tangible personal property within this State gives a resale certificate to the
vendor from whom he or she purchases property, when the property is:
(a) Sold, the tax applies to the sales price.
(b) Committed to lease or rental transactions in
this State, he or she shall pay the use tax due in this State measured by:
(1) The cost of the property to him or her; or
(2) His or her gross lease or rental charges.
4.  If the purchaser:
(a) Pays the tax to his or her vendor on the sales
price of the property to him or her, no further tax is due and tax must not be
collected from the customer on the gross lease or rental charges.
(b) Elects to measure the use tax by his or her
gross lease or rental charges, the purchaser may seek reimbursement for the tax
from his or her customers measured by the lease or rental charges.
5.  The tax applies to the sales price of the
property within this State following its use in rental or lease service,
without any deduction or credit for the tax paid on the original cost of the
property or the taxes paid on the gross lease or rental charges.
6.  A person who elects to pay the tax
measured by his or her gross lease or rental charges pursuant to this section
is not required to pay the sales tax for the purchase of parts or other
equipment for the tangible personal property which is committed to lease or
rental use in this State if the person gives a resale certificate to the vendor
from whom he or she purchases the property.
7.  A person who initially elects to pay the
tax measured by his or her gross lease or rental charges and later wishes to
pay the use tax may pay that tax measured by the cost of the property to him or
her. The Department shall not grant a refund or credit for any taxes paid or
due before he or she makes such an election.
8.  Mandatory charges, whether or not
separately stated, for any service, activity or function made in conjunction
with the lease or rental of tangible personal property will be considered a
part of the gross lease or rental charge and are subject to the tax. The term
“mandatory charges” may include for example, without limitation:
(a) A fee or charge for mileage.
(b) A fee or charge for the return of the property,
commonly referred to as a “drop-off charge.”
(c) A fee or charge for the reinstatement of a
lease or rental agreement.
(d) Reimbursement for fixed costs or expenses,
including, without limitation, management fees, interest, financing fees and
carrying charges, collection call charges, repossession charges and billing
charges.
9.  Optional charges, separately stated, made
in connection with the lease or rental of tangible personal property are not
subject to the tax. The term “optional charge” may include for example, without
limitation, a:
(a) Fee or charge for the installation, erection,
assembly or disassembly of the property.
(b) Charge for a collision damage waiver or a
similar instrument that acts as a waiver of the lessor’s right to collect from
the lessee for any damage to the property.
(c) Charge for the services of a person to operate
or instruct another in the operation of the property.
(d) Charge for fuel used to operate the property.
(e) Fee or charge for the delivery, transportation
or other handling of the property.
(f) Fee or charge for maintaining, cleaning or
altering the property.
(g) Fee or charge for insurance, such as personal
accident, extended protection or coverage for personal property.
10.  The Department will determine whether a
charge is mandatory or optional according to the terms of the agreement under
which the charges are paid.
11.  The fee for access to an airport and the
charge for reimbursement of property taxes will not be considered part of the
gross lease or rental charge if separately stated.
12.  A gross lease or rental charge must
represent a fair market value of the leased or rented property.
13.  Any charges assessed for damages or loss
for which the lessee is held responsible are exclusive of the original rental
or lease contract, including those commonly referred to as a “charge-back fee,”
“damage reimbursement,” “loss charge” or “replacement charge.” The Department
will treat such charges as a taxable sale of tangible personal property from
either the person making the repair or providing the replacement for the lessor
or from the lessor for the responsible party.
14.  A lessor may discontinue charging use
tax on the basis of gross lease charges when a lease agreement is terminated.
Periodic billing statements for amounts which are past due at the time the
agreement is terminated may continue after termination for collection purposes.
15.  Evidence that a lease agreement has been
terminated includes:
(a) Documentation showing that the leased property
has been repossessed or returned to the lessor.
(b) A formal notice of termination that has been
personally served upon the lessee or served upon the lessee by certified mail,
return receipt requested, or registered mail.
(c) Proof that the property has been wrecked,
damaged, stolen or otherwise rendered unusable.
(d) A new agreement to lease the same equipment to
the same or another lessee.
(e) Any other evidence or documentation which is
acceptable to the Department and shows that a lease agreement has been
terminated.
Ê Such evidence
must be maintained pursuant to NRS
372.735 .
16.  Except as otherwise provided in
subsection 17, if a lease is terminated and the property is returned, any
payments, penalties or other charges or fees collected by the lessor as a
result of a breach of contract are not subject to taxation as gross lease
charges.
17.  Any portion of the payments, penalties,
fees or other charges described in subsection 14 which represents sales or use
taxes must be reported and remitted to the Department.
[Tax Comm’n, Combined Sales and Use Tax Ruling part No.
61, eff. 3-1-68]—(NAC A 9-16-92; R058-02, 1-17-2003; R023-07, 12-4-2007; R021-08,
4-17-2008; R123-18, 6-8-2020)—(Substituted in revision for NAC 372.080)