If I, as a business owner, were to stop selling items to customers and instead rented the items for thousands of years, would my customers still have to pay sales tax.
For example: Guy comes in to buy a CD. He comes to the counter and says, “I want to buy this CD for $12.99.” To which I reply, “Well, I’m not going to sell you this but I will rent it to you for 10,000 years for $12.99. And since it is a rental there is no sales tax.”
Sure, you could try that.
Some states would come after you for fraud.
The really nasty states would simply demand to see your purchase records and charge you tax on all the property that you still owned (and on which you were no longer collecting income) for the next 1,000 years.
You sure there’s no sales tax? I seem to recall when I worked at a video store (keep in mind this was aeons ago) the rentals were taxed as well.
In Washington state, sales taxes must be collected on anything rented except housing.