Chapter 43. Use Tax On Leases Of Tangible Personal Property
TITLE 30
State Taxes
Occupational and Business Licenses and Taxes
CHAPTER 43. USE TAX ON LEASES OF TANGIBLE PERSONAL PROPERTY
§ 4301. Definitions.
As used in this chapter:
(1) "Lease" means an agreement (either written or oral) under which a lessor grants to a lessee the right to use property for a specified period or at the will of either the lessor or lessee. An agreement which purports to be a sale but which is in substance a lease shall be considered a lease.
(2) "Lessee" means any person to whom a lease is made.
(3) "Lessor" means any person who grants a lease.
(4) "Person" means and includes an individual, partnership, firm, cooperative, corporation or any association of persons acting individually or as a unit.
(5) "Person required to collect the tax" shall include every lessor of property the use of which is subject to tax under § 4302 of this title, and shall also include any officer or employee of a corporate lessor of such property and any member of a partnership lessor of such property.
(6) "Place of business." Each person leasing tangible personal property in this State shall be considered to have at least 1 "place of business" in this State.
(7) "Motor vehicle lessee" shall mean a lessee, as defined in this chapter, of a motor vehicle as defined in § 101 of Title 21.
(8) "Motor vehicle lessor" shall mean a lessor, as defined in this chapter, of a motor vehicle as defined in § 101 of Title 21.
30 Del. C. 1953, § 4301; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 523; 71 Del. Laws, c. 150, § 62.;
§ 4302. Imposition of tax on lessees [Effective until Jan. 1, 2014]
(a) There is imposed by this section on every lessee a use tax, for the use within this State, under a lease of tangible personal property (other than motor vehicles, household furniture, household fixtures or household furnishings, hospital equipment and any and all medical and remedial equipment, aids and devices leased by or to elderly, ill, injured or handicapped persons for their own use, including television sets leased to patients in a health care facility, and manufacturing equipment under leveraged leases in which rental payments are guaranteed, in whole or in part, by the Economic Development Administration of the United States Department of Commerce pursuant to Public Law 89-136 [42 U.S.C. § 3121 et seq.], as amended) equal to 2.0736% of the rent under such lease.
(b) There is imposed by this section on every motor vehicle lessee a use tax, for use within this State under a lease of a motor vehicle, equal to 2.0736% of the rent under such lease.
(c) This section shall not apply to rents on leases of equipment, machinery, fixtures, buildings and/or nonregistered vehicles used in the business of raising crops or animals in agricultural production reusable pallets and containers for use by food processors. For purposes of this subsection, the term "reusable pallet and container" means any pallet or crate which is under an arrangement for the repeated return of such property to its initial purchaser for long-term reuse.
30 Del. C. 1953, § 4302; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 451; 62 Del. Laws, c. 104, § 1; 68 Del. Laws, c. 80, § 12; 70 Del. Laws, c. 484, § 11; 71 Del. Laws, c. 150, § 63; 71 Del. Laws, c. 439, § 1; 73 Del. Laws, c. 77, § 1; 73 Del. Laws, c. 390, § 1; 75 Del. Laws, c. 199, § 10; 76 Del. Laws, c. 282, §§ 13, 16; 77 Del. Laws, c. 83, §§ 17, 18.;
§ 4302. Imposition of tax on lessees [Effective Jan. 1, 2014]
(a) There is imposed by this section on every lessee a use tax, for the use within this State, under a lease of tangible personal property (other than motor vehicles, household furniture, household fixtures or household furnishings, hospital equipment and any and all medical and remedial equipment, aids and devices leased by or to elderly, ill, injured or handicapped persons for their own use, including television sets leased to patients in a health care facility, and manufacturing equipment under leveraged leases in which rental payments are guaranteed, in whole or in part, by the Economic Development Administration of the United States Department of Commerce pursuant to Public Law 89-136 [42 U.S.C. § 3121 et seq.], as amended) equal to 1.92% of the rent under such lease.
(b) There is imposed by this section on every motor vehicle lessee a use tax, for use within this State under a lease of a motor vehicle, equal to 1.92% of the rent under such lease.
(c) This section shall not apply to rents on leases of equipment, machinery, fixtures, buildings and/or nonregistered vehicles used in the business of raising crops or animals in agricultural production reusable pallets and containers for use by food processors. For purposes of this subsection, the term "reusable pallet and container" means any pallet or crate which is under an arrangement for the repeated return of such property to its initial purchaser for long-term reuse.
30 Del. C. 1953, § 4302; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 451; 62 Del. Laws, c. 104, § 1; 68 Del. Laws, c. 80, § 12; 70 Del. Laws, c. 484, § 11; 71 Del. Laws, c. 150, § 63; 71 Del. Laws, c. 439, § 1; 73 Del. Laws, c. 77, § 1; 73 Del. Laws, c. 390, § 1; 75 Del. Laws, c. 199, § 10; 76 Del. Laws, c. 282, §§ 13, 16; 77 Del. Laws, c. 83, §§ 17, 18, 25.;
§ 4303. Collection of tax.
(a) Every person required to collect the tax under this chapter shall collect the tax from the lessee when collecting the rent under the lease to which the tax applies. The tax shall be paid to the person required to collect it as trustee for and on account of the State.
(b) For the purpose of the proper administration of this chapter and to prevent evasion of the tax imposed by § 4302 of this title, it shall be presumed that all rental payments under leases are subject to the tax until the contrary is established and the burden of proving that any rental payment is not taxable under § 4302 of this title shall be upon the person required to collect the tax or the lessee.
30 Del. C. 1953, § 4303; 57 Del. Laws, c. 136, § 18.;
§ 4304. Liability for the tax.
(a) Every person required to collect the tax imposed by this chapter shall be personally liable for the tax imposed, collected or required to be collected under this chapter. Any such person shall have the same right in respect to collecting the tax from the lessee or in respect to nonpayment of the tax by the lessee as if the tax were part of the rent and payable at the same time.
(b) Where a lessee has failed to pay the tax imposed by this chapter to the person required to collect the same, then, in addition to all other rights, obligations and remedies provided, the tax shall be payable by the lessee directly to the Department of Finance and it shall be the duty of the lessee to file a return with the Department of Finance and to pay the tax to it within 20 days of the date the tax was required to be paid.
(c) The Department of Finance may, whenever it deems it necessary for the proper enforcement of this chapter, provide that a lessee shall file returns and pay directly to the Department of Finance any tax imposed under this chapter at such time as returns are required to be filed and payment made by the persons required to collect the tax.
30 Del. C. 1953, § 4304; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 741, § 46; 70 Del. Laws, c. 186, § 1.;
§ 4305. Lessor's license [Effective until Jan. 1, 2014]
(a)(1) Every person engaged in or desiring to engage in business in this State as a lessor of tangible personal property other than motor vehicles shall obtain a license by making application to the Division of Revenue and paying a fee of $75, plus $25 for each additional place of business or business location within this State. Such license shall be valid until the last day of December following the issuance thereof, at which time it may be renewed annually upon application and payment of the fees and taxes specified in this chapter.
(2) Every person engaged in or desiring to engage in business in this State as a motor vehicle lessor shall obtain a license by making application to the Division of Revenue and:
a. Paying a fee of $75, plus $25 for each additional place of business or business location within this State; or
b. Supplying proof of having obtained with respect to each such location a valid business license under paragraph (a)(1) of this section.
(b) In addition to the license fee required by subsection (a) of this section, every such lessor shall pay an annual license tax in quarterly installments at the rate of 0.3110% of the lease rental payments received, except lease rental payments on manufacturing equipment under leveraged leases on which rental payments are guaranteed, in whole or in part, by the Economic Development Administration of the United States Department of Commerce pursuant to Public Law 89-136 [42 U.S.C. § 312 et seq.], as amended. In computing the fee due on such aggregate gross receipts under this subsection for each quarter, there shall be allowed a deduction of $240,000, to be applied first to receipts from leases of tangible property other than motor vehicles and any remainder applied to receipts from leases of motor vehicles. For purposes of this subsection, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 quarterly deduction from the aggregate gross receipts of the entire enterprise. Returns shall be filed quarterly by each lessor on the dates specified in § 4307(b) of this title.
(c) Any person required to be licensed as a retailer under § 2905(a) of this title shall not be required to pay the license fees or taxes imposed by this section; provided, that:
(1) Such person deems gross receipts to which subsection (b) of this section would otherwise apply to be receipts from the sale of goods and thus subject to § 2905(b) of this title; and
(2) Any such person more than 50% of whose gross receipts are derived from the leasing of personal property within this State shall obtain a license under subsection (a) of this section.
Nothing in this subsection shall exempt any person from imposition or collection of tax under § 4302 of this Title.
(d) [Repealed.]
30 Del. C. 1953, § 4305; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 681; 57 Del. Laws, c. 741, § 46; 60 Del. Laws, c. 163, § 1; 62 Del. Laws, c. 104, § 2; 65 Del. Laws, c. 392, § 10; 66 Del. Laws, c. 381, § 7; 67 Del. Laws, c. 261, § 13; 68 Del. Laws, c. 80, §§ 13, 14; 69 Del. Laws, c. 289, § 1; 70 Del. Laws, c. 230, § 4; 70 Del. Laws, c. 484, § 10; 70 Del. Laws, c. 489, § 21; 71 Del. Laws, c. 150, §§ 65-67; 71 Del. Laws, c. 351, § 12; 75 Del. Laws, c. 199, §§ 34, 35; 76 Del. Laws, c. 282, §§ 14, 16; 77 Del. Laws, c. 83, § 19.;
§ 4305. Lessor's license [Effective Jan. 1, 2014]
(a)(1) Every person engaged in or desiring to engage in business in this State as a lessor of tangible personal property other than motor vehicles shall obtain a license by making application to the Division of Revenue and paying a fee of $75, plus $25 for each additional place of business or business location within this State. Such license shall be valid until the last day of December following the issuance thereof, at which time it may be renewed annually upon application and payment of the fees and taxes specified in this chapter.
(2) Every person engaged in or desiring to engage in business in this State as a motor vehicle lessor shall obtain a license by making application to the Division of Revenue and:
a. Paying a fee of $75, plus $25 for each additional place of business or business location within this State; or
b. Supplying proof of having obtained with respect to each such location a valid business license under paragraph (a)(1) of this section.
(b) In addition to the license fee required by subsection (a) of this section, every such lessor shall pay an annual license tax in quarterly installments at the rate of 0.288% of the lease rental payments received, except lease rental payments on manufacturing equipment under leveraged leases on which rental payments are guaranteed, in whole or in part, by the Economic Development Administration of the United States Department of Commerce pursuant to Public Law 89-136 [42 U.S.C. § 312 et seq.], as amended. In computing the fee due on such aggregate gross receipts under this subsection for each quarter, there shall be allowed a deduction of $240,000, to be applied first to receipts from leases of tangible property other than motor vehicles and any remainder applied to receipts from leases of motor vehicles. For purposes of this subsection, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 quarterly deduction from the aggregate gross receipts of the entire enterprise. Returns shall be filed quarterly by each lessor on the dates specified in § 4307(b) of this title.
(c) Any person required to be licensed as a retailer under § 2905(a) of this title shall not be required to pay the license fees or taxes imposed by this section; provided, that:
(1) Such person deems gross receipts to which subsection (b) of this section would otherwise apply to be receipts from the sale of goods and thus subject to § 2905(b) of this title; and
(2) Any such person more than 50% of whose gross receipts are derived from the leasing of personal property within this State shall obtain a license under subsection (a) of this section.
Nothing in this subsection shall exempt any person from imposition or collection of tax under § 4302 of this Title.
(d) [Repealed.]
30 Del. C. 1953, § 4305; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 681; 57 Del. Laws, c. 741, § 46; 60 Del. Laws, c. 163, § 1; 62 Del. Laws, c. 104, § 2; 65 Del. Laws, c. 392, § 10; 66 Del. Laws, c. 381, § 7; 67 Del. Laws, c. 261, § 13; 68 Del. Laws, c. 80, §§ 13, 14; 69 Del. Laws, c. 289, § 1; 70 Del. Laws, c. 230, § 4; 70 Del. Laws, c. 484, § 10; 70 Del. Laws, c. 489, § 21; 71 Del. Laws, c. 150, §§ 65-67; 71 Del. Laws, c. 351, § 12; 75 Del. Laws, c. 199, §§ 34, 35; 76 Del. Laws, c. 282, §§ 14, 16; 77 Del. Laws, c. 83, §§ 19, 25.;
§ 4306. Records to be kept.
Every person required to collect the tax under this chapter shall keep records of every lease the rent under which is subject to tax under this chapter in such form as the Department of Finance may require. The records shall be available for inspection and examination at any time upon demand by the Department of Finance and shall be preserved for a period of 3 years; except that the Department of Finance may consent to their destruction within that period or may require that they be kept longer.
30 Del. C. 1953, § 4306; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 741, § 46; 67 Del. Laws, c. 40, § 16.;
§ 4307. Filing returns and payment of tax.
(a)(1) Every person required to register with the Department of Finance under § 4305 of this title shall file a return quarterly with the Department of Finance showing the amount of rental payments received during the period covered by the return which are subject to tax under this chapter and the amount of taxes required to be collected with respect to such use.
(2) Notwithstanding § 4305(c) of this title, every motor vehicle lessor or other person required to collect the tax under this chapter from motor vehicle lessees shall be required to set forth separately from other amounts reported under this chapter the tax imposed under § 4302(b) of this title with regard to motor vehicle lessees.
(b) The returns required by this section shall be filed on or before October 31, January 31, April 30 and July 31 of each year for the next preceding 3-month period ending on September 30, December 31, March 31 and June 30 of each year.
(c) The form of returns shall be prescribed by the Department of Finance and shall contain such information as it may deem necessary for the proper administration of this chapter.
(d) Every person required to file a return under this section shall, at the time of filing such return, pay to the Department of Finance the tax imposed by this chapter. All the taxes for the period for which the return is filed shall be due and payable to the Department of Finance on the date prescribed for filing the return for such period without regard to whether a return is filed or whether the return which is filed correctly shows the taxes due.
(e) [Repealed.]
30 Del. C. 1953, § 4307; 57 Del. Laws, c. 136, § 18; 57 Del. Laws, c. 741, § 46; 60 Del. Laws, c. 547, § 2; 71 Del. Laws, c. 150, §§ 64, 68; 71 Del. Laws, c. 351, § 27; 76 Del. Laws, c. 278, § 1; 76 Del. Laws, c. 282, § 15.;