HB 155

This bill would provide specific provisions concerning the payment and collection of state and local taxes on the leasing and rental of tangible personal property. The bill would apply retroactively to all open tax periods

Relating to privilege or license taxes on the leasing or rental of tangible personal property; to amend Section 40-12-222 of the Code of Alabama 1975, to make specific provisions concerning the payment and collection of state and local lease taxes; and to provide that this act is declaratory of existing law and shall apply retroactively to all open tax periods.

Section 1

Section 40-12-222 of the Code of Alabama 1975, is amended to read as follows:

§40-12-222.

(a) In addition to all other taxes now imposed by law, there is hereby levied and shall be collected as herein provided a privilege or license tax on each person engaging or continuing within this state in the business of leasing or renting tangible personal property at the rate of four percent of the gross proceeds derived by the lessor from the lease or rental of tangible personal property; provided, that the said privilege or license tax on each person engaging or continuing within this state in the business of leasing or renting any automotive vehicle or truck trailer, semitrailer, or house trailer shall be at the rate of one and one-half percent of the gross proceeds derived by the lessor from the lease or rental of such automotive vehicle or truck trailer, semitrailer, or house trailer; provided further, that the tax levied in this article shall not apply to any leasing or rental, as lessor, by the state, or any municipality or county in the state, or any public corporation organized under the laws of the state, including, without limiting the generality of the foregoing, any corporation organized under the provisions of Sections 11-54-80 through 11-54-101; provided further, that the privilege or license tax on each person or firm engaging or continuing within this state in the business of the leasing and rental of linens and garments shall be at the rate of two percent of the gross proceeds derived by the lessor from the lease or rental of such the linens and garments.

(b) Notwithstanding the above, nothing shall prohibit a lessor subject to a state or local privilege or license tax from passing such the amounts on to a lessee by adding such the taxes to the leasing price or otherwise,; provided, however, that all such amounts passed on to the lessee shall be includable in the gross proceeds derived from the lease of tangible personal property which shall be subject to the privilege or license tax owed by the lessor.

Provided, however, the authority to pass on such the amounts of the privilege or license tax granted in this subsection shall not apply to the leasing or renting of tangible personal property to the State of Alabama, or a municipality, or county in the state, unless the flat amount collected by the lessor includes both the tax and the leasing fee.

(c) The state and applicable local privilege or license taxes applicable to a lease or rental transaction to which a lessor is subject shall be determined as follows:

(1) Except for automotive vehicles as provided in subdivision (2), the following shall apply:

a. When tangible personal property is delivered to the lessee by the lessor or his or her agent, the privilege or license tax levy shall be determined based on where the property is delivered.

b. When tangible personal property is picked up at the lessor's rental location, the privilege or license tax levy shall be determined based on the rental location.

(2) For automotive vehicles required to be registered pursuant to Section 32-6-61, each lease payment is considered a separate lease transaction and occurs in the location as provided below and the following shall apply:

a. The privilege or license tax levy for the initial lease payment and other charges due at the inception of the lease shall be determined in the same manner as provided in subdivision (1).

b. The privilege or license tax levy for all subsequent lease payments shall be determined based on the resident address of the lessee as provided to the county licensing official. The lessor is considered to be engaging or continuing within this state in the business of leasing or renting tangible personal property when a lessee has a resident address within this state."

Section 2

The provisions of this act are declaratory of existing law and shall apply retroactively to all open tax periods.

Section 3

This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.