NE 01-78-12 Sales and Use Tax 1978-06-16

Is a company that provides chemical (portable) toilets to customers renting tangible personal property, so its charges are subject to Nebraska sales and use tax?

Short answer: Yes. Providing chemical toilets is a rental or lease of tangible personal property that is subject to Nebraska sales and use tax. Under Revenue Ruling 01-78-12, chemical toilets are tangible personal property, and because the customer has the right to use the property and to exercise control over it, furnishing them is a taxable rental or lease rather than a nontaxable service.

Apply this to your situation

This page answers the general question as of 1978. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A common question for portable-sanitation businesses is whether renting out chemical (portable) toilets is a taxable rental of property or a nontaxable service. Nebraska treats it as a taxable rental.

The core holding: "The providing of chemical toilets is a rental or lease of tangible personal property subject to sales and use tax."

The Department's reasoning is short and turns on control:

A chemical toilet is tangible personal property.
When the company provides one, the customer has the right to use the property and to exercise control over it.
Handing over the use and control of tangible personal property for a charge is a rental or lease, not a service -- and Nebraska taxes rentals and leases of tangible personal property. So the charge is subject to sales and use tax.

What this means for you

Portable-toilet and sanitation-rental companies

Charges for providing chemical toilets are taxable rentals. You should be collecting Nebraska sales and use tax on the rental charge, not treating the arrangement as an exempt service, because the customer has use and control of the unit while it is on site.

Event organizers, contractors, and other customers

Expect Nebraska sales and use tax on your portable-toilet rental invoices. The tax attaches because you have use and control of the units during the rental period.

Accountants and tax professionals

The ruling is a clean illustration of Nebraska's use-and-control test for distinguishing a taxable rental of tangible personal property from a nontaxable service. Because it dates to 1978, confirm the current statutes and regulations on rentals and leases before relying on it.

Common questions

Q: Is renting out portable toilets taxable in Nebraska?
A: Yes. The Department holds that providing chemical toilets is a rental or lease of tangible personal property subject to sales and use tax.

Q: Isn't it a service rather than a rental?
A: No. Because the customer has the right to use the toilet and to exercise control over it, the Department treats the arrangement as a rental of tangible personal property, not a nontaxable service.

Q: Can I rely on this 1978 ruling today?
A: It states the Department's position and is "binding on the Nebraska Department of Revenue until amended," but it is decades old. Verify current law and consult a Nebraska tax professional.

Citations and references

Nebraska Revenue Ruling 01-78-12, "Sales and Use Tax -- Chemical Toilets" (Nebraska Department of Revenue, issued June 1978; approved by State Tax Commissioner William E. Peters).
Nebraska sales and use tax on rentals and leases of tangible personal property (Nebraska Revenue Act of 1967, as amended).

Source

Source-quality note: This ruling survives only as a low-quality scan, and the machine-extracted text below has minor OCR artifacts (for example "PBRSONAI" for "PERSONAL" and a garbled signature/date block). The holding and its use-and-control reasoning are legible and are the basis for this summary.

Original ruling text

Revenue Ruling L-78-I2

Sales and Use Tax - Chemical Toilets. THE PROVIDING OF
CHEMICAL TOILETS IS A RENTAL OR LEASE OF TANGIBLE PBRSONAI
PROPERTY SUBJECT TO SALES AND USE TAX.

Advice has been requested whether a company in the busíness
of providing chemical toilet,s is renting or leasing tangible
personal property subject to sales and use t,ax.
Chemical toilets are Èangible personal property. The
customer has a right to use the property and exercise control over the property. The providing of chemical toilets

is a rental or lease of tangible personal property subject
to sales and use tax.
D:

kr lliam E. Peters

State Tax Commissioner

June

, L97g

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