Michigan Updates Guidance on Tax Treatment of Leased School Buses with Operators

• Michigan has updated its guidance on the tax treatment of leases involving school buses and operators.
• The guidance applies to private-sector contractors leasing buses to public school districts for student transportation.
• If an operator is necessary for the equipment to perform as designed, the transaction is considered a service and not a lease of property.
• The updated guidance states that the exemption for the lease of a school bus does not include the exception for when leased property is supplied with the operator.
• Therefore, if a transaction includes a school bus and a driver, it will be considered exempt from sales and use tax.
• This guidance highlights the complexities of lease transactions and how taxability can be influenced by different factors.

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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