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Business personal property tax for leased business equipment and software?

Who is obligated to pay business personal property tax if we leased the equipment, us or leasing co.? How about computer software? Is software treated same way as other business equipment (copier, computer etc), or it has different rules in terms of business property tax.

Thanks in advance

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August 17, 2009 | Filed Under Equipment Leasing Questions 

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3 Responses to “Business personal property tax for leased business equipment and software?”

  1. bostonianinmo on August 17th, 2009

    That depends entirely upon local laws and the terms of your lease. Most commercial leases are written such that the lessee pays all taxes and unless local law bars that practice that contract stipulation would stand up in court.

    As to computer software, most localities only tax tangible personal property so software GENERALLY isn’t taxed. However that is a local issue as well, subject to the interpretation of local laws and the terms of the lease.

  2. Andrew P on August 17th, 2009

    I’m not a tax expert but I’d believe that the company paying tax would be the company which owns it and takes the depreciation. You should check your leasing contract for the specifics.

  3. Wayne Z on August 17th, 2009

    Generally, the owner of the equipment (the lessor) is obligated to pay the tax. If you look at your lease contract there is probably a clause that states that the lessee is responsible for reimbursing the lessor for property taxes paid.
    The lessor will generally send you a bill for the property taxes that they have paid (or will pay).

    The taxability of software for personal property tax purposes varies by state. In some states it is taxable and in some states it is not.

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