Who is responsible for taxes related to possession and use of the equipment?

• A. The lessor.
• B. The lessee is responsible for all taxes of any kind levied on possession, use, value, or payment, including personal property taxes, with provisions to pay directly if required.
• C. Taxes are not addressed.
• D. Taxes are shared equally.

Answer: (B)

Taxes related to possession and use of the equipment are typically assigned to the party who benefits from and uses the equipment—the lessee. The standard lease clause puts all taxes of any kind arising from possession, use, value, or payment on the lessee, including personal property taxes, and allows for direct payment to the taxing authority if required. This aligns the tax burden with the actual use and ownership rights exercised during the lease term and helps avoid shifting those ongoing costs to the owner. If the clause said the lessor pays taxes, it would detach the burden from the user of the equipment; if taxes aren’t addressed or are shared, there’s ambiguity or an unusual allocation that doesn’t reflect who is in possession and gaining the benefit.