Related Information

Question: Do I collect and remit city or county sales taxes on leases?
Leases are subject to the same sales taxes as sales of property. On tangible property other than motor vehicles, city, county and special district taxes are only collected when the lessor has a place of business in the same jurisdiction as the lessee. A business location is office, shop, warehouse, salesroom or the temporary but frequent presence of an employee for repair, sales or service purposes. Home-rule jurisdictions have their own guidelines concerning tax on leases. Contact these jurisdictions directly.

Tax collection requirements on leases of more than 36 months. The lessor must charge and submit sales tax with the monthly payments. The lessor must submit an application for a “Permit to Collect Sales Tax on the Rental or Lease Basis” (DR 0440) for each business location.

Tax collection requirements on leases of 36 months or less. The lessor may either pay the tax when purchasing items to be leased or may collect the tax from the customer through the lease payments. However, one method must be chosen and the lessor must use that method for each vehicle or property leased. If the lessor chooses to collect the tax from the lessee, the lessor must obtain permission from the Department of Revenue. Submit an application for a “Permit to Collect Sales Tax on the Rental or Lease Basis” (DR 0440) for each business location. This permit is available at no charge and entitles the lessor to purchase the property without paying state or state-collected local sales tax on the purchases to be leased.


For Further Information:

FYI Sales 56
DR 0440  

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