Theory and Practice
Typical outcome: sales tax is outside lease measurement
US sales and use taxes generally lack a VAT‑style input credit mechanism. As a result, they are often a real cost. Where the lessee is legally obligated to remit sales tax (common in many states), the tax is typically treated as a separate period cost and excluded from lease liability measurement under ASC 842’s framework for separating lease and non‑lease items (PwC, 2023).
Pass‑through taxes and reimbursements (lessor‑owed costs)
When the lessor is legally responsible for a tax and the contract requires the lessee to reimburse the lessor, the reimbursement is evaluated under ASC 842’s component model. If the reimbursement is treated as a non‑lease component or non‑component, it may be separated and expensed, or included in lease measurement depending on elections and how the contract consideration is accounted for (PwC, 2023).
Practical expedient: combining lease and non‑lease components
ASC 842 permits a lessee, by class of underlying asset, to elect a practical expedient to not separate non‑lease components from lease components. This can result in fixed pass‑through amounts being included in the measurement of the lease liability, increasing recognized lease assets and liabilities compared with separation (AICPA & CIMA, 2022; PwC, 2023).
Key takeaway
US GAAP complexity is primarily a policy election and component separation issue, not a different conceptual view of sales tax as lease consideration (PwC, 2023; AICPA & CIMA, 2022).