61 Pa. Code § 47.20

Current through Register Vol. 54, No. 45, November 9, 2024

Section 47.20 - Vehicle Rental Tax

(a)Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:

Licensing and title fees-Licensing and title fees imposed by 75 Pa.C.S. §§ 1912, 1916(a), 1920 and 1952(a) and collected by the Department of Transportation. The term does not include encumbrance fees.

Local sales or use tax-Sales or Use Tax imposed by a county of this Commonwealth or the city of Philadelphia and administered by the Department.

PTA-The Public Transportation Assistance Fund created by Article XXIII of the TRC (72 P. S. § 9301).

Purchaser-A person who acquires, for money or other consideration, the custody or possession of a rental vehicle under a rental contract.

Rental contract-A contract between a purchaser and a vehicle rental company for the use of a rental vehicle for 29 or fewer consecutive days. If a rental vehicle is rented for 29 or fewer consecutive days, and the use of the rental vehicle extends beyond a 29-day period without entering into a new written contract, the transaction remains a rental unless the parties enter into a written lease agreement.

Rental payment-Full consideration paid or delivered or promised to be paid or delivered to the vehicle rental company under a rental contract, excluding charges for local sales or use tax, State Sales or Use Tax and PTA fees.

Rental vehicle-A motor vehicle designed to transport 15 or fewer passengers or a truck, trailer or semitrailer used in the transportation of property other than commercial freight, that is rented without a driver. The term does not include a motorcycle, motor-driven cycle, school bus, hearse, motor home, camper or mobile home.

State Sales or Use Tax -Sales or Use Tax imposed by Article II of the TRC (72 P. S. §§ 7201-7281.2).

VRT-Vehicle Rental Tax-The tax authorized under Article XVI-A of the TRC (72 P. S. §§ 8601-A-8604-A).

Vehicle rental company-A business entity engaged in the business of renting five or more rental vehicles in this Commonwealth.

(b)General provisions.

(1)General. This section is promulgated to administer Article XVI-A of the TRC relating to the VRT.

(2)Registration. A vehicle rental company renting rental vehicles that are subject to the VRT shall register with the Department.

(3)Returns. A vehicle rental company shall report the VRT on a return prescribed by the Department. The return is due on a quarterly basis.

(4)Payment. A vehicle rental company shall make payment with the return.

(5)Direct payment permit. A purchaser cannot use a direct payment permit issued under § 34.4 (relating to direct payment permit) in conjunction with the VRT because the vehicle rental company may be entitled to a refund of the tax collected.

(6)Applicability of TRC. Article II of the TRC and regulations promulgated thereunder apply to the VRT.

(c)Scope.

(1)General. With respect to rental contracts involving motor vehicles designed to transport 15 or fewer passengers, a tax of 2% is imposed upon the rental payments. With respect to rental contracts involving trucks, trailers and semitrailers used in the transportation of property other than commercial freight, entered into on or after July 1, 1997, a tax of 2% is imposed upon the rental payments made on or after July 1, 1997. If the vehicle rental company fails to collect the applicable tax, the purchaser shall pay the tax directly to the Department on a form prescribed by the Department.

(2)Examples.

(i) The following are examples of transactions that are subject to the VRT:

(A) "A" rents a rental vehicle from a vehicle rental company for 14 days. Due to circumstances unforeseen at the commencement of the rental, "A," without entering into a new contract, continues to use the car on a day by day basis and eventually returns the car on the 36th day. Because the transaction continues to be governed by the rental contract for the entire 36-day period, the rental payment is subject to the VRT.

(B) "B" rents a rental vehicle from a vehicle rental company for 10 days. The rental contract provides for an additional charge for excess mileage as well as a pick up and drop off fee. In addition, under the rental contract, "B" elects to obtain a vehicle damage waiver, a child's car seat and a car top carrier. Because the charges for excess mileage, a pick up and drop off fee, a vehicle damage waiver, a child's car seat and a car top carrier are all part of the rental payment, the cost of these items is subject to the VRT.

(C) "P" rents a rental vehicle for 7 days from "R." "R" owns two and leases 28 of the 30 rental vehicles that it rents to others. Because "R" has five or more rental vehicles available for rental, "R" is a vehicle rental company, and the rental payment made by "P" is subject to the VRT.

(D) "R" rents a truck to transport a used living room set to "R's" hunting camp. The rental payments are subject to VRT as the living room set does not qualify as commercial freight.

(ii) The following are examples of transactions that are not subject to the VRT:

(A) "Y" rents a rental vehicle from "E" vehicle rental company for 28 days. Due to circumstances unforeseen at the commencement of the rental, "Y" wishes to use the car for a longer period of time. After using the car for 28 days, "Y" returns the car to "E," and pays the VRT on the rental payment, and the parties terminate the rental contract. They then enter into a lease agreement under which "Y" leases the same car from "E" for 2 years. Because the second transaction is a lease agreement and not a rental, the lease payments are not subject to the VRT.

(B) "Z" rents a rental vehicle from "D" car dealership, which has only three rental vehicles available for rental. Because "D" has fewer than five rental vehicles available for rental, "D" is not a vehicle rental company and the rental payment is not subject to the VRT.

(C) "M" manufacturer rents a truck used exclusively to deliver "M's" own manufactured products to "M's" customers. The rental payments are not subject to VRT as "M's" products qualify as commercial freight.

(d)Exclusions. If the rental of a rental vehicle is exempt from State Sales or Use Tax, the rental is also exempt from the VRT. A purchaser shall support a claim for exemption from the VRT by submitting a completed Pennsylvania exemption certificate setting forth a valid basis for exemption. A purchaser may use the same exemption certificate used to claim an exemption from State sales or use tax, but the exemption certificate shall clearly indicate that the purchaser is claiming an exemption from the VRT. The purchaser shall make that indication either by checking the appropriate blocks for the VRT on the exemption certificate form or by checking the paragraph labeled "other" on the older exemption certificate form and explaining that an exemption is being claimed from the VRT.

(e)Annual reconciliation reports.

(1)General. A vehicle rental company that has remitted the VRT and is claiming a refund shall file an annual reconciliation report. An annual reconciliation report shall be on a form prescribed by the Department. An annual reconciliation report is not required if the vehicle rental company is not claiming a refund. An annual reconciliation report shall be filed on or before February 15 of the subsequent calendar year.

(2)Date of filing. The United States Postal Service postmark date will be used to determine the date of filing of an annual reconciliation report. When the envelope containing the report does not reflect a United States Postal Service postmark date, the date of receipt by the Department shall determine the date of filing.

(3)Contents. An annual reconciliation report shall set forth the amount of both:

(i) The VRT remitted during the previous calendar year.

(ii) The total amount of licensing and title fees imposed by the Commonwealth on a vehicle rental company's rental vehicles and paid to the Department of Transportation by the vehicle rental company in the previous calendar year.

(4)Refund. The Department will refund to a vehicle rental company that has remitted the VRT an amount, not including interest or penalties that may have been paid by the vehicle rental company, equal to the total amount of licensing and title fees paid to the Department of Transportation on the rental vehicles. The amount of refund cannot exceed the amount of the VRT remitted by the vehicle rental company in the previous calendar year.

(5)Example. "R" owns a vehicle rental company that "R" sells to "S" on July 30, 1995. Prior to the sale, "R" pays licensing and title fees on a portion of its fleet of vehicles. "R" also files tax returns and remits the VRT on January 20, April 20 and July 20, 1995. Under paragraph (4), "R" may claim a refund up to the amount of the VRT remitted by "R" with the three tax returns. After acquiring ownership of the vehicle rental company, "S" pays the licensing and title fees due between August 1 and December 31, 1995, on the other vehicles in the fleet, and remits the VRT for the third quarter on October 20, 1995. "S" may claim a refund of the licensing and title fees paid from August to December. The amount of the refund to "S" may not exceed the amount of the VRT "S" remitted in October. To claim a refund, both "R" and "S" shall file their respective annual reconciliation reports on or before February 15, 1996.

61 Pa. Code § 47.20

The provisions of this §47.20 adopted October 30, 1998, effective 10/31/1998, 28 Pa.B. 5492.

The provisions of this §47.20 issued under section 270 of The Tax Reform Code of 1971 (72 P. S. § 7270).