Wisconsin – Determining Where a Sale Takes Place for Lease Payments

SALT Report 3063 – In the latest issue of the Sales and Use Tax Report, the Wisconsin Department of Revenue discusses how to determine where a sale takes place in regards to one-payment leases. Specifically, the Department states that the application of sales tax for a one-payment lease and a multiple-payment lease will be different, as it is based on where the sale of the lease takes place.

Therefore, to determine where a sale takes place, taxpayers should consider the following:

  • If there is only one lease payment, the lease takes place where the customer receives the automobile.  In most cases, this is the lessor or dealer’s location.
  • If there is more than one lease payment, the tax should be based on where the automobile will be kept. This location can be determined by the address provided by the lessee and is usually kept in the lessor’s business records.
  • The Department advises that the criteria above should be used to determine the taxability of lease payments for motor vehicles, trailers, semi-trailers and aircraft that are not considered “transportation equipment.”

The Department defines transportation equipment as any of the following:

  • Locomotives and railcars that are used to carry persons or property in interstate commerce,
  • Trucks and tractors that have a gross vehicle weight of 10,001 pounds or greater, trailers, semi-trailers, and passenger busses, if the vehicles are registered under the international registration plan and operated under the authority of a carrier that is authorized by the federal government to carry persons or property in interstate commerce,
  • Aircraft that are operated by air carriers that have been authorized by the federal government or a foreign authority to carry persons or property in interstate or foreign commerce, and
  • Containers that are designed for use on the vehicles described above and any component parts attached to, or secured on, the vehicles

For Further Information

Wisconsin Department of Revenue – Sales and Use Tax Report