Lease or Rental (Rescinded May 30, 2003)

AUTHORITY: section 144.270, RSMo 1994. S.T. regulation 020-9 was last filed Dec. 31, 1975, effective Jan. 10, 1976. Refiled March 30, 1976. Amended: Filed Sept. 14, 1976, effective Dec. 11, 1976. Amended: Filed Aug. 13, 1980, effective Jan. 1, 1981. Rescinded: Filed Nov. 15, 2002, effective May 30, 2003. Op. Atty. Gen. No. 71, Buechner (4-8-77). A corporation involved in the rental and leasing of motor vehicles may elect either to pay sales tax at the time it receives the gross receipts from the rental or lease agreements or at the time of registration of motor vehicles. However, either election must include all motor vehicles held for rental or lease and a corporation with separately managed divisions may not elect to have one division pay Missouri sales tax at the time the vehicles are purchased and another division pay sales tax as rental proceeds are received from its customers. Hal Aviation, Inc. v. Director of Revenue, Case No. RS-79-0310 (A.H.C. 1/20/83). Taxpayer purchased airplanes pursuant to a resale exemption certificate thereby escaping the payment of sales tax on the purchase. Taxpayer then used some of the planes in the operation of a flight school prior to selling them. A sales tax assessment was issued against the taxpayer based upon the theory that the use of the planes by the taxpayer should be taxed pursuant to section 144.020.1(8), RSMo as a rental to the flying students. The court held that the use of these planes by the flying students was no more a rental than the use of classrooms by other types of students. The students paid valuable consideration for a service, the flying lessons, and not for the rental of the planes. Additionally, the court found that the department could not impose a tax on the theory that taxpayer evaded sales tax by the improper use of resale exemption certificates because this was not the basis of the audit and it went beyond the scope of the complaint and the answer. Note, that since the lease of the airplanes by students does not constitute a rental, sales or use tax would be owed to the state of Missouri on the original purchase of the plane.