HD51 - The Taxation of Daily Rental Property

  • Published: 1989
  • Author: General Assembly. Joint Subcommittee
  • Enabling Authority: House Bill 687 (Regular Session, 1988)

Executive Summary:
INTRODUCTION

The 1988 General Assembly established this joint subcommittee pursuant to House Bill No. 687 to further analyze and evaluate 1987 legislation which classified daily rental equipment as merchants capital, in lieu of tangible personal property, for local taxation. The 1988 General Assembly requested this joint subcommittee to examine the following three issues before the reclassification scheme from tangible personal property to merchants capital became effective:

(1) The revenue impact resulting to local governments if rental equipment is removed from the tangible personal property tax base and taxed as merchants capital;

(2) The administrative burden that will be imposed upon commissioners of the revenue and rental dealers if daily rental property is taxed as merchants capital; and

(3) Whether the original legislation passed by the 1987 General Assembly accomplishes its goal of bringing equity to persons engaged in the rental equipment business.

SCOPE OF STUDY

The joint subcommittee held three meetings and examined the following issues relating to the taxation of short-term rental property:

(1) The legislative history of House Bill No. 687;

(2) The administrative problems of classifying daily rental property as merchants capital;

(3) The revenue impact upon local governments if daily rental property is removed from the tangible personal property tax base; and (4) Alternative tax schemes in lieu of classifying daily rental property as merchants capital.