Tax relief comes to Louisiana construction and general tool rental operators

Jun. 06, 2021

Louisiana rental operators who rent large construction and general tool equipment will be receiving much-longed-for tax relief now that Louisiana Gov. John Bel Edwards signed House Bill (HB) 50 into law on May 2, 2021.

This new legislation, which has been a priority of the American Rental Association (ARA) and the ARA of Louisiana for a long time, will exclude state and local sales and use-tax for certain re-leases or re-rentals for rental dealers who rent heavy and general tool equipment on a short-term basis. The law defines “short-term rental” as rental of an item for a period of less than 365 days, for an undefined period or under an open-ended agreement.

“This is an important win for our Louisiana members,” says John McClelland, Ph.D., ARA vice president, government affairs, and chief economist. “This new law eliminates the double sales taxation on re-rents. We worked with the team at Picard Group on the strategy and they executed it perfectly. Our final push was a letter we sent to the governor urging him to sign this bill, which passed in both houses unanimously.”

Kurt Degueyter, CEO, owner and founder, Bottom Line Equipment, based in Broussard, La., agrees that this is a big win for equipment rental operators.

“This new law eliminates double-taxation. Every other state that we do business in, we have a sales tax exemption certificate that applies to rental transactions. But in Louisiana, if we rent a piece of equipment from another rental company, we have to pay sales tax and then charge it again. It was double-taxation on one transaction. That basically eliminated some opportunities and made the markup too high for the end user,” he says.

Hunter Patin, Bottom Line’s director of finance and administration, adds that the new law “will make things easier administratively as well because we won’t have to accrue use tax for machines we get from Texas vendors for Louisiana rents.”

The new law will go into effect Oct. 1, 2021. To read the entire bill, click here.

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