United States: Wisconsin Taxes Aircraft and Software Sale-Leaseback Lease Payments

• Wisconsin Tax Appeals Commission held that aircraft and software sale-leaseback payments made by two affiliated insurers were subject to Wisconsin sales tax.
• The Commission rejected the claim that the deals were really refinancing arrangements, finding the contracts functioned as true leases under Wisconsin law.
• A clause stating the parties would treat the transactions as loans for tax purposes did not bind the Wisconsin Department of Revenue, which was not a party to the agreements.
• The Commission relied on the agreements’ repeated lease terminology, rent provisions, and end-of-term purchase/return options, and found no statutory exception for sale-leasebacks.
• Sales tax was upheld on lease payments for tax years 2015 through 2018.

Source: kpmg.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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