The Wisconsin Tax Appeals Commission ("Commission") recently determined that taxicab rental fees were subject to the state rental vehicle fee. A taxicab company rented driverless vehicles licensed as taxicabs to independent contractor licensed taxi drivers. The taxicab company obtained revenue from the lease rate fees paid by drivers under the lease agreement as well as through fees to cover marketing and software costs associated with delivering taxicab transportation services and administrative fees.
Wisconsin imposes a rental vehicle fee on short term rentals of Type 1 motor vehicles. A "short term rental" refers to a period of 30 days or less. "Type 1 motor vehicles" are motor vehicles designed and used primarily to carry people, but cannot be classified as motor buses, motorcycles, mopeds, or motor bicycles. The company only rented its taxicabs to drivers for periods of 6 to 12 hours. The Commission determined that a taxicab qualified as a Type 1 motor vehicle. The Commission also concluded that the subsequent marketing, software, and administrative fees charged by the company did not alter the nature of the taxicab rental transaction. So, the state rental vehicle fee applied to the taxicab lease agreements.