How does Tax Law distinguish between a True Lease and a Lease-purchase agreement?
If the agreement is a true lease and the equipment is truly owned by the leasing company, the leasing company is responsible to report the equipment and pay the taxes on it. The lessee reports the same equipment on schedule “D” of the Signed Statement of Personal Property for information purposes only but does not pay the tax. If the agreement is a financial arrangement for the purchase of the equipment, the Signed Statement of Personal Property should be filed and the tax paid by the lessee. If you are leasing equipment and have questions about the terms of your lease, contact your leaser to find out if the leasing company is reporting and paying the taxes on the equipment.
