On April 3, 2025, the Louisiana Department of Revenue published Revenue Information Bulletin No. 25-013 clarifying the proper sales and use tax treatment for rentals of cranes and other equipment with operators. Under Act 11 of the Third Extraordinary Session of 2024, the Louisiana Legislature repealed the statutory sales and use tax exclusion for the lease or rental of cranes and related equipment with operators. However, R.I.B. No. 25-013 makes clear that this repeal does not mean that all leases of cranes and other related equipment are taxable. The lease or rental of a crane and related equipment with an operator will be treated the same as other rentals of tangible personal property with operators for sales and use tax purposes.
Whether a lease or rental of tangible personal property, including cranes and related equipment, with an operator is subject to sales and use tax is determined based on whether the “essence of the transaction” is the performance of a service (not taxable) or the lease of tangible personal property (taxable). The taxability of such transactions is determined by following the analysis provided in LAC 61:I.4301 “Lease or Rental (c)(i) and (ii). That regulation provides that:
i. A lease or rental does not include providing tangible personal property with an operator who provides some additional service for a fixed or indeterminate period of time when the essence of the transaction is the performance of a service. The essence of the transaction is to provide a service when obtaining the tangible personal property is not an end in and of itself but rather furnishes the mechanism through which a service is provided.
ii. In order to determine the essence of a transaction involving both the performance of a service and the providing of tangible personal property, the facts and circumstances of each transaction must be examined. The following factors suggest, but are not necessarily conclusive, that the essence of the transaction is for the performance of a service:
(a) in order for the tangible personal property to perform as designed, the owner’s operator maintains control over the property. This level of control by the owner’s operator involves more than maintaining, inspecting, or setting-up the property;
(b) the contract between the owner of the property and the person receiving the services and property provides for the performance of a specific job that requires services for a certain number of hours or until completion of a specific job;
(c) the performance of the job using the tangible personal property is conducted in a manner determined by the owner of the property;
(d) the owner of the tangible personal property is responsible for choosing the particular piece of property to be used in the transaction; or
(e) the owner of the tangible personal property has a standard business practice of not allowing customers to rent the property separately from the services provided.
The R.I.B. makes clear that the regulation for the lease or rental of tangible personal property with an operator will also apply to the lease or rental of cranes and other related equipment. “If the facts and circumstances indicate the essence of the transaction is the performance of a service, the lease or rental of a crane with an operator will be treated as a non-taxable service.”
For further questions regarding this update, please contact Liskow attorneys Bob Angelico, Caroline Lafourcade, or Kevin Naccari and visit our Tax practice page and The Louisiana Industrial Insights Hub for further updates.