Section R. 205.132 - Lease or rentalRule 82.
(1) A lessor is a person engaged in the business of renting or leasing tangible personal property.(2) The terms "lease" and "rental" have the same meaning and may be used interchangeably. For agreements entered into after September 1, 2004, a lease or rental means either of the following: (a) Any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration and may include future options to purchase or extend.(b) An agreement covering motor vehicles or trailers if the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property, as that term is defined in 26 USC 7701(h)(1).(3) A lease or rental does not include any of the following: (a) A transfer of possession or control of tangible personal property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.(b) A transfer of possession or control of tangible personal property under an agreement requiring transfer of title upon completion of the required payments and payment of an option price that does not exceed $100.00 or 1% of the total required payments, whichever is greater.(c) Except as provided in subrule (4) of this rule, the provision of tangible personal property along with an operator for a fixed or indeterminate period of time, where that operator is necessary for the equipment to perform as designed. To be necessary, an operator shall do more than maintain, inspect, or set up the tangible personal property.(4) Beginning March 29, 2019, a lease also includes the transfer of possession or control for consideration, for a fixed or indeterminate term and including future options to purchase or extend, of a school bus primarily used in the performance of a contract entered into with an authorized representative of a school for the transportation of preprimary, primary, or secondary school pupils to or from a school or school-related events authorized by the administration of the school. A transaction described in this subrule qualifies as a lease even if the operator of the school bus is also provided under the lease.(5) A lessor may elect to pay use tax on the rental receipts for tangible personal property that would otherwise be taxed on the full cost at the time of purchase. The election to pay on rental receipts is made on each item of tangible personal property. The election is made by claiming an exemption from sales or use tax at the time of purchase and paying use tax on the rental receipts.(6) A lessor remitting tax on rental receipts must hold a sales tax license, or register under the Use Tax Act, 1937 PA 94, MCL 205.91 to 205.111. For aircraft, a person shall register for use tax with the department of treasury by the earlier of the date set for the first payment of use tax under the lease or rental agreement or 90 days after the lessor first brings the aircraft into this state.(7) The remittance of use tax on rental receipts is the obligation of the lessor. If the lessor places the economic burden of the tax on the lessee, the charge must be separately itemized.(8) A taxpayer that makes the lessor election will lose that election if tangible personal property is converted to personal use. Tax is owed at the time of conversion on the original purchase price of the property.Mich. Admin. Code R. 205.132
1979 AC; 2023 MR 15, Eff. 8/11/2023