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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
L
330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2154
(a) In General
330.2154 Disaster Preparedness. Taxpayer A purchases a computer ex-tax by issuing a resale certificate. It leases the computer to taxpayer B, who in turn issues a resale certificate indicating it will sublease the equipment.
Taxpayer B is engaged in the business of disaster recovery, i. e., an unplanned interruption of the operations of, or inaccessibility to, the customer's computer facility. Customers are entitled to draw upon taxpayer B's computer inventory to continue operations.
Customers pay a monthly subscription fee for the "disaster recovery service" which involves a variety of services in addition to access to the computer inventory (e.g., disaster recovery planning, technical support, software systems, updates of plans).
Taxpayer B is not subleasing the equipment. It exercises dominion and control over it during all periods when the equipment is not being used by subscribers during disasters. Such use by the subscribers is extremely rare. Taxpayer B is liable for use tax on its lease payments to Taxpayer A. 1/14/88.