Scenario:

1. Commissioner Precinct leases a piece of heavy equipment under an annual lease payment.
2. Lease agreement clearly passes to lessee any taxes incurred by lessor, including ad valorem taxes on personal property (since ownership in the property is not transferred).
3. Lessor invoices county-lessee for annual lease payment and adds on a substantial line item for ad valorem personal property taxes.

Question - Given that the contract is clear that these taxes are the responsibility of the lessee, is a political subdivision such as a county subject to these taxes under a lease agreement with a private business?

I am fairly certain that these taxes (or even an estimate of them) were not included in the proposal by the lessor to the Commissioner. The possibility of a fraudulent inducement claim is a discussion for another, perhaps follow up, topic.

Found the answer in 11.11 of the Tax Code.