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Tuesday, April 1, 2003
Tuesday, April 1, 2003
This Border ##### Denotes Press Release (Not Written By Leasing News)
Classified Ad----Help Wanted—
Sales National: Medical & IT Equipment- Plus. Seeking professionals w/solid book of business & strong work ethics. Exceptional support, commissions & expenses. Email: email@example.com UAEL EAEL 800-968-5000
About Chase Industries, incorporated in 1993, currently has six regional offices throughout the United States. We work to provide a straightforward - honest approach to offering the best financial services to our vendors and their customers - without all the surprises. www.chaseindustries.com
Pictures from the Past---1997---Thomas J. Depping
Looking out upon Houston, Texas
Sitting behind his desk, drinking Diet Coca Cola
Thomas J. Depping Announces Formation of First Bishop/Hawk Leasing
“The leasing industry is turning around, and I want to be back in
the swing of things, “said Thomas J. Depping, former chairman of
First Sierra/Sierra Cities and president of SunAmerica Financial. “ Our main funding source, Bank of France, just received a large investment from the Middle East, giving us a really, really, really low cost of funds. We therefore can offer
minus 5% interest leases.”
Calling it “below wholesale leasing,” there is no interest rate,
and the monthly payment is determined by dividing the months
of the lease into invoice cost over the term, then taking five percent off the monthly payment to determine the “below wholesale cost” payment to First Bishop/Hawk Leasing.
“No interim rent, either, “ he added. The lessee can chose any day
of the month they want to make payments.
As an added bonus, the first three months of new lessees who
sign up for this program, First Bishop/Hawk will not only waive the purchase option, but pay the lessee at the end of the lease what they purchase option would have been. This also applies to “fair market value” leases.
“That’s right, in addition to the 5% off each payment, at the
end of the lessee, we will pay the lessee the purchase option
amount, plus they get to keep the equipment.”
In addition, there is no late charge if paid within the first 60 days
of the payment due date.
First Bishop-Hawk will not be adding any documentation fees, insurance
is not required ( “what do we care?” Depping said )plus the personal property
tax payment is waived as his company is located in Costa Rica, where
they are tax exempt.
Mark McQuitty is in charge of establishing alliances or partners who want to set up a Bishop/Hawk Leasing office in their region. ( His partner Jim Raeder has
retired to become “Mr. Mom,” taking care of his triplets.)
U.S.Post Office Enters Leasing Fray
“We have a low cost of funds and many loyal customers, “ US Postmaster General
Peter Eaton announced at a Washington, DC news conference.. “ We plan to offer not only mail delivery, but personal service in expediting credit applications.”
Located in every major city in the United States, an office will be set-up by
former leasing executives who have lost their stock and pensions from
defunct leasing companies.
“When you use Priority,” Eaton said, “ I will personally deliver it on my motorcycle.”
Chevron Leasing at the Pump
“ In addition to filling up your car, Chevron will also lease any piece of
equipment that costs more than $100, “ said Jim Merrilees, vice-president
of Chevron Leasing. “Use your telephone, Blueberry or Palm Pilot to laser in your
order, and just punch in the code on the pump and you can get oil, a soda,
gas, stp, and lease any equipment over $100.”
A new division is being established for pre-approved leases over $50,000 with
use of the Chevron credit card.
“You’ve got to think out of the box, “Merrilees said.
Gates Buys GE Capital, Names McCommon CEO
Microsoft founder William Gates purchased controlling interest in
General Electric, gaining control of GE Capital, naming his golfing partner
Jim McCommon of McCommon Leasing the chief executive officer.
“The first thing I am going to do, no ‘personal guarantees’, “ McCommon exclaimed. “We’ll do start-up restaurants, tanning salons, and computer
leasing for 84 months.”
He denied rumors that he received the position because he signed the golf
card witnessing Bill Gates shooting a hole in one at Bremerton County Club.
“John Kruse was with me, and also was a witness, “ McCommon stated,
naming Kruse as sales manager to the newly formed company, which he
said was coincidental to the golf game.
They are looking for a fourth, as the play at Bremerton as a three-some.
Sudhir Amembal, president, Amembal and Association, both anointed a
Duke and made a knight by Queen Elizabeth for solving the war in Iraq.
“It is with great honor that I recognize Sir Duke Sudhir Amembal for
conducting a class on equipment leasing and mesmerizing Saddam Hussein
entire staff with his explanation of a synthetic lease using an HP 110 calculator,”
the Queen lady said. “ He not only showed Saddam Hussein how to calculate
the tax lease, but gave him the idea to start another business and leave running
a country, particularly with bombs going around him all the time and being
shot at from the sky and from troops on the ground.”
The Queen also gave him East Pakistan.
Hussein has decided to start his own international leasing company and will
Now for the News of the Day----- (Not April Fool)
(Note: Chase Industries Classified Ad is not “April Fools.”)
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Leasing Partners Capital is pleased to announce the addition of Allan Heinrich and Earvin Hicks as Territory Managers to the LPC Team.
Allan Heinrich has over 30 years experience in the equipment leasing business, most recently as principal of Elite Equipment Leasing and formerly with Lease Acceptance Corp., USA Capital, Imperial Capital Corp., Amcom Equipment Leasing, American Phone Centers, Inc. (APC Leasing Division), Contel Credit Corp., Chandler Leasing Corp., Pitney Bowes Credit Corp., Equilease Corporation, FNC Leasing, and Greyhound Leasing & Financial Corp. Allan earned his Bachelor of Business Administration degree from Pace University and resides in Atlanta, GA.
Earvin Hicks has over 25 years experience in the equipment leasing business, most recently as the principal of EHT Leasing and Blue bell Capital. He was formerly with Financial Resource Company, Manufacturers Hanover Leasing and Westinghouse Credit Corp. Previous to entering the financial services business, Earvin worked with his uncles in the trucking and transportation industry. Earvin has a BS in Education from Cheney State College, as well as, a Masters Degree from the University of Pittsburgh in Higher Education/Administration and Educational Psychology. Earvin resides in Absecon, NJ and also maintains a satellite office in Pittsburgh.
Leasing Partners Capital, Inc. (LPC) is a small-to-middle market equipment lessor located in Wayne, NJ. We are still looking to add an additional 20-25 Territory Managers between now and the end of the year in order to fulfill its nationwide growth plans.
National Sales Manager
Leasing Partners Capital, Inc.
Phone: (877) 333-5864
BofA Reports Growth in Use of Internet Banking, EBP
BANK TECHNOLOGY NEWS BULLETIN
Bank of America says its customers are becoming more comfortable with using its Internet banking and e-Billing services. In the last year, the
Charlotte-based banking company says the total number of BofA customers using its Internet banking has grown from 3.1 million to a current
total of five million users. Of that customer base, roughly two million BofA customers are said to be using the bank's on-line bill pay service, up
from 900,000 users a year ago. The total number of electronic bills sent to customers is now three times what it was at the end of 2001, growing
from 300,000 to nearly one million.
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Shannon M. Green, CLP Joins Orion First Financial
(Gig Harbor, WA) -- Orion First Financial, LLC (Orion) announced that Shannon M. Green has joined the company in a senior management position. She will be responsible for managing the credit and funding functions as well as refining the overall procedures of the company.
Shannon Green was with Financial Pacific Leasing, LLC for 17 years most recently serving as the Vice President of Operations. Shannon's professional history includes management in the areas of Customer Service, Credit, Funding and Syndications. In addition, she was responsible for creating, testing and managing an on-line application processing and credit decision system with great success.
David T. Schaefer, President and Managing Member said: "With Shannon's commitment to service and her experience in small ticket equipment leasing she is a welcome addition to Orion's management team. As we develop and implement our joint venture funding program she will be an invaluable asset and resource to our joint venture partners. Her experience in developing and managing highly efficient processes with an emphasis on service fits well with the company's goals."
About Orion First Financial, LLC
Orion First Financial provides a complete and comprehensive suite of services to assist lending institutions and lessors successfully compete in the commercial equipment leasing industry. With a concentration in small ticket leasing Orion provides consulting and advisory services, lease servicing and complete portfolio management. The company has developed a funding mechanism by creating joint ventures with lease originators and arranging warehouse and permanent financing. Orion First Financial located in Gig Harbor, Washington employs state of the art technology combined with years of management experience to insure that lease portfolios are managed in an effective manner.
Contact: David T. Schaefer at (253) 851 8778 or firstname.lastname@example.org
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HPSC Closes $323 Million Asset Backed Term Securitization
BOSTON----HPSC, Inc. (AMEX:HDR), a leading non-bank provider of financing for healthcare practitioners, announced the completion of a $323 million asset-backed securitization. The securitized assets, which consist of equipment leases and loan contracts with licensed medical and other professionals, were originated by the company and were previously included in the Company's commercial paper conduit and its revolving line of credit.
The offering was made in seven classes of Asset-Backed Notes.
The Notes have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Act.
John W. Everets, Chairman and Chief Executive Officer, commented, "We are pleased to have completed this financing in a favorable interest-rate environment."
HPSC, Inc. is a leading non-bank financial service company, which provides leasing and other financing opportunities to medical and dental professions in all fifty states.
John W. Everets, 617/720-3600
SOURCE: HPSC, Inc.
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PDS Gaming Year-End Loss $3.3 million/Three Month Ending $1,669,000 Loss
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LAS VEGAS----PDS Gaming Corporation (Nasdaq:"PDSG"), a company that finances, leases and sells gaming equipment for the casino industry and operates Rocky's Casino & Sports Bar in Reno, Nevada, today reported its operating results for the fourth quarter and year ended December 31, 2002.
For the three month period ended December 31, 2002, the Company reported a loss from continuing operations of $624,000, or $0.16 per diluted share, compared with income, before extraordinary item, of $32,000, or $0.01 per diluted share, for the three months ended December 31, 2001. The prior year quarter benefited from certain non-recurring items. Revenues from continuing operations were $14.8 million and $7.0 million in the fourth quarters 2002 and 2001, respectively. The 2002 quarter included an early lease termination and sale of the related equipment to the lessee that resulted in revenues of $8.6 million. Finance income declined from $1.9 million in the 2001 quarter to $1.2 million in 2002 and operating lease rentals increased from $2.6 million in the 2001 quarter to $4.1 million in the 2002 quarter, reflecting a shift in the mix of the Company's portfolio from notes and direct finance leases to operating leases. The Company completed $14.3 million in originations during the fourth quarter 2002, compared with $1.8 million in the fourth quarter 2001.
Selling, general and administrative costs declined approximately 50%, or $687,000, in the fourth quarter 2002 as compared to the fourth quarter 2001. The 2001 quarter included approximately $360,000 in non-recurring transaction related expenses. Additionally, the 2002 quarter reflects approximately $230,000 in increased capitalized initial direct costs due to significantly higher originations in the current year quarter.
Casino operations resulted in a pre-tax loss, before depreciation, of $211,000 in the fourth quarter 2002, compared to a pre-tax loss, before depreciation, of $118,000 in the fourth quarter 2001. The loss reflects higher operating costs related to the expansion of the casino to include food services, and increasingly unfavorable conditions in the Reno gaming market.
At the end of the first quarter 2002, the Company discontinued operations of its Table Games division and certain components of its Casino Slot Exchange division, due to unacceptable operating results. Accordingly, the Company has reclassified these activities as discontinued operations in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. For the fourth quarter 2002, the results of discontinued operations were a loss of $1.0 million, or $0.28 per diluted share, compared to a loss of $455,000, or $0.12 per diluted share, in the fourth quarter 2001. The larger loss in the 2002 quarter reflects the loss incurred in disposing of certain parts and other assets of the discontinued operations.
For the year ended December 31, 2002, the Company reported a loss from continuing operations of $1.1 million, or $0.29 per diluted share, compared to income from continuing operations (before extraordinary item) of $2.3 million, or $0.58 per diluted share, in the year 2001. The decrease in net income primarily reflects lower levels of finance income and fee income in 2002 compared with 2001. The year ended December 31, 2001 benefited from the completion of certain large financing transactions and the recognition of the resultant finance and fee income. Revenues from continuing operations were $40.3 million in the year 2002, compared with $39.1 million in the prior year. The Company completed $51.8 million in originations in 2002, compared with $44.1 million in 2001. Approximately 4,200 and 5,900 gaming devices were shipped to customers in 2002 and 2001, respectively.
For the year ended December 31, 2002, the results of discontinued operations were a loss of $3.3 million, or $0.86 per diluted share, compared to a loss of $1.3 million, or $0.33 per diluted share in 2001.
PDS Gaming Corporation provides customized finance and leasing solutions to the casino industry in the United States. The Company also operates Rocky's Casino & Sports Bar in Reno, Nevada. PDS Gaming Corporation is headquartered in Las Vegas, Nevada, and its common stock trades on The Nasdaq Stock Market under the symbol "PDSG".
For additional information, please contact:
Peter D. Cleary, President and Chief Operating Officer
of PDS Gaming Corporation, at (702) 736-0700
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GRAND RAPIDS, Mich.----Steelcase Inc. (NYSE:SCS) today reported revenue totaling $637.8 million for its fourth quarter ended Feb. 28, 2003, a decrease of 3.4 percent compared with $660.4 million in the same quarter last fiscal year, and a sequential quarter decrease of 1.4 percent. The fourth quarter of fiscal 2003 included an extra shipping week and average weekly revenue for the quarter was $45.6 million. Acquisitions contributed revenue of $5.8 million in the quarter.
Steelcase reported net income of $17.6 million, or $0.12 per share for the fourth quarter of fiscal 2003, compared with a net loss of
$(34.3) million, or $(0.23) per share in the prior year quarter. Fourth quarter results benefited by approximately $2.2 million, or $0.01 per share from the change in accounting for goodwill effective at the beginning of fiscal 2003.
Net income excluding non-recurring items was $2.8 million, or $0.02 per share in the fourth quarter. This compares with a net loss excluding non-recurring items of $(14.2) million, or $(0.10) per share in the fourth quarter last year. These results exceeded the company's previous outlook due to higher than forecasted sales volume and faster realization of cost savings initiated throughout the fiscal year.
Non-recurring items totaled a net gain of $14.8 million after-tax in the fourth quarter. The company realized after-tax gains of $10.9 million on the sale of real estate, $9.5 million related to reduced post-retirement benefits triggered by a substantial reduction in plan participants and $3.9 million on the sale of leased assets. These gains were offset by charges related to restructuring activities in the North America and International segments totaling $(9.5) million after-tax.
"I'm proud of the Steelcase employees around the world who have worked so hard to return the company to profitability this quarter despite less volume than in the same quarter last year," said Jim Hackett, president and chief executive officer. "We are successfully managing through the challenging impacts of record low levels of business capital investment and the worst-ever downturn in our industry."
"This quarter's profit demonstrates the improved leverage in our operating model today," said James Keane, chief financial officer. "Overall, the company has reduced its quarterly breakeven point to approximately $590 million, reduced debt to its lowest level in four years and continues to generate positive cash flow."
Fiscal Year 2003 Results
The company reported revenue of $2.6 billion for its fiscal year 2003, a decline of 16.3 percent from last year. Fiscal 2003 included an extra shipping week. Acquisitions contributed revenue of $157.1 million in the year.
Steelcase reported a net loss of $(266.1) million, or $(1.80) per share in fiscal 2003 compared with net income of $1.0 million, or $0.01 per share in the prior year. Reported net loss reflects a non-cash, after-tax charge of $(229.9) million, or $(1.56) per share associated with adopting SFAS 142 "Goodwill and Other Intangible Assets." Net loss also reflects net non-recurring items totaling
Excluding the cumulative effect of the accounting change and net non-recurring items, the company incurred a loss of $(15.2) million, or $(0.10) per share in fiscal 2003.
Full year results reflect a correction of the first quarter charge related to the adoption of SFAS 142. The company originally recorded a non-cash charge of $(170.6) million related to impairment of goodwill in its International business segment. The company and a valuation consultant worked together to perform the original calculation, which the company's auditors reviewed at that time. At year-end, an error in the original calculation was identified and corrected, resulting in a revised first quarter non-cash charge of $(229.9) million. As a result, the company is not in compliance with one of its debt covenants affecting obligations of $94.1 million, and is in process of securing a temporary waiver with its lenders, who have indicated confidence that this will be approved. The SFAS 142 adoption charge has no effect on revenue, operating income, or cash flow, and does not affect net income in any other quarter. The company plans to reflect this correction in its Form 10-K filing.
Steelcase increased cash on hand to $128.9 million at the end of fiscal 2003 compared with $69.4 million in fiscal 2002. Debt outstanding declined to $324.2 million compared with $593.7 million last year. Debt, net of cash, declined $329.0 million since last year. Year-end debt included $249 million of fixed rate term notes. The company had no outstanding borrowings against its revolving credit facility.
Net income excluding non-recurring items represents a non-GAAP financial measure. A table reconciling this measure to the appropriate GAAP (Generally Accepted Accounting Principles) measure, is included in the Notes to the condensed consolidated financial statements included in this release.
Steelcase expects revenue in the first quarter of fiscal 2004 to be as much as 5 percent lower than the fourth quarter, after adjusting for the extra shipping week. Order rates and bid activity have strengthened since mid-January, which may reflect the beginning of the seasonal rebound typical of the first quarter. Therefore, the company expects first quarter order rates to track at or above fourth quarter levels. Global economic uncertainty, the conflict in Iraq, and other factors could negatively affect this outlook.
The company has already implemented several actions in anticipation of lower first quarter revenue. In March, Steelcase reduced its salaried workforce by 250 positions and issued notices of possible layoff to 250 hourly employees. Additionally, the company's North America manufacturing and office operations will be idled for one week in April.
The company anticipates first quarter net earnings, before non-recurring items, in the range of breakeven to $(0.05) per share. The company estimates net non-recurring charges in the first quarter in the range of $(7.0) million to $(10.0) million after-tax for restructuring activities. Therefore, the company is expecting reported net earnings to be in the range of $(0.05) to $(0.12) per share.
Mr. Hackett concluded, "At the same time that we've worked hard to cut costs, we've stayed focused on our strategies. We know that pressures and changes within our industry are certain to continue. However, we are confident in the strength of our product portfolio and user-centered solutions. Together with the cost structure we now have in place from the profit improvement initiatives implemented in the past two years, we believe we are on track to leverage sales growth into earnings improvement as the industry recovers."
About Steelcase Inc.
Steelcase Inc., a Fortune 500 company, helps individuals and organizations around the world to work more effectively by providing knowledge, products and services that enable customers and their consultants to create work environments that harmoniously integrate architecture, furniture and technology. Founded in 1912 and headquartered in Grand Rapids, Michigan, the company has led the global office furniture industry in sales every year since 1974. Its product portfolio includes interior architectural products, furniture systems, technology products, seating, lighting, storage and related products and services. Fiscal 2003 revenue was approximately $2.6 billion. Steelcase Inc. and its subsidiaries have dealers in more than 830 locations, manufacturing facilities in over 40 locations and approximately 16,000 employees around the world. The company's Class A Common Stock trades on the NYSE under the symbol SCS. For more information, visit www.steelcase.com.
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Lessors Network Closes 2003 Membership Season
Atlanta, GA - Membership in the Lessors Network became even more exclusive today as the private network confirmed closing the 2003 membership season early. Open enrollment for the 2004 membership season is not scheduled to begin until September 1, 2003.
This is the first time the Lessors Network, an ABF network for corporate and public finance professionals, has closed membership during a membership season. The reason has to do with the organization's policy to limit attendance to invitation only networking events.
In order to greatly enhance networking benefits for an exclusive group of professionals in the asset based finance markets, the Lessors Network issues a limited number of invitations to theme specific events held through out the year. Lessors Network members are guaranteed priority access; therefore, the total number of members during any membership season must also be restricted.
About The Lessors Network
The Lessors Network is a privately managed asset based finance network of corporate and public finance professionals.
Web Site Address - www.lessors.com
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ELA Dennis Brown Streamlined Sales Tax Project Report
The Streamlined Sales Tax Project met in Nashville on Thursday, March 27 and Friday, March 28. The next meeting is Monday, May 19 and Tuesday, May 20 at the Adams Mark Hotel in Indianapolis, Indiana. Agenda information will soon be posted on the redesigned SSTP web site at http://www.streamlinedsalestax.org
More Internet sellers have stepped forward to begin collections for all Streamline states commencing on June 1. Attendees were also encouraged to learn Kentucky, South Dakota, West Virginia and Utah have enacted the Streamlined Sales and Use Tax Agreement with more states soon to join them. To track states adopting the Agreement visit
Issues covered in this report are:
* New Governing Board
* Interpretation of the Agreement
* Base Broadening
* Audit Issues
* Pilot Project
* Sourcing of Services
Mind-numbing hours have been spent debating what states are expected to do before compliance with the Agreement is achieved. Such compliance is required for entrance to the new sales tax system and Governing Board. Now the public and private sector are attempting to track the compliance level as states adopt the Agreement. Consensus has been reached for volunteers from the private sector working within the Council On State Taxation (COST) to cooperatively assume this task with the Streamlined Sales Tax Project (SSTP or Project).
COST and SSTP will develop a spreadsheet for outlining compliance by individual states to help untangle this imprecision. Revenue departments in states adopting the Agreement will have the opportunity to fill out the spreadsheet to validate compliance with each provision while private sector volunteers will make a separate assessment. The manner in which compliance with each section of the Agreement was reached will be indicated since states may adopt individual sections through previous law, new legislation or by rule at the revenue department. The Project will be a constructive forum for resolving any discrepancies between the public and private sector assessments. Additionally, SSTP and COST websites may post the spreadsheets for public access.
Conformity to elements of the Agreement as depicted in these spreadsheets will become important to states, as they may not join the new sales tax system unless they are in "substantial compliance" with each section. But what is substantial compliance? Within the political world it might be seen as the closest proximity to the intent of a provision that can obtain the votes necessary to enact the Agreement in a particular state legislature. This may not allows equal the level of compliance expected by SSTP or the private sector. Also, spreadsheets completed by the public and private sector may not always agree on compliance. To review specific features of the Agreement that would be included on spreadsheets you can download a copy of the Agreement at http://www.streamlinedsalestax.org
Verifying the proper level of compliance will be critical in determining which states are admitted to the new Governing Board comprised of representatives of each state that adopts the Agreement. Incomplete adoption deemed not substantially in compliance with provisions of the Agreement would block a state from joining the system. This will have significant impact, as only those considered in compliance would be allowed to collect sales tax from the Internet if the system becomes mandatory. Wrangling over defining the term "substantial compliance" will likely be one of the enduring features of the system.
New Governing Board
As each state adopts the Agreement it builds toward a threshold that will trigger establishment of a permanent Governing Board. At this point in time, the Governing Board is intended to be responsible for administering the Streamline system, interpretations of the Agreement, amendments to the Agreement, and issue resolution. To track movement toward formation of the Governing Board visit
Determining when Implementing States might vote to establish the Governing Board and the powers granted to representatives of conforming states in the interim was a technical but important discussion. I'll attempt to convey the conversation realizing you may find it exceedingly bureaucratic. Nonetheless, it is an important aspect of establishing this new sales tax system.
Once a state has amended its statutes to concur with terms of the Agreement, the state will send a petition to the Co-Chairs of Streamlined Sales Tax Implementing States with proof of compliance. After the Co-Chairs of Implementing States receive petitions from at least 10 states representing no less than 20% of the population of the 45 states and Washington, D.C. [counted as a state in the Agreement] with sales tax, they will convene a meeting of these initial states.
At the meeting each petitioning state will be judged in compliance with the Agreement by a three-fourths vote of the delegates from the other initial states. If sufficient states are found to be in substantial compliance with provisions of the Agreement, the Implementing States organization dissolves, the interstate Agreement becomes effective and the permanent Governing Board is established. Each member state will be entitled to one vote on the Governing Board. The Streamlined Sales Tax Project will become an advisory body to this new Governing Board.
States are enacting the Agreement with different effective dates. Some will implement their statute this year while others target January 1, 2004. Hypothetical: Suppose states enacting the Agreement exceeded the population threshold by July 1, 2003 but the effective dates of some would prevent reaching inception of the Governing Board until January 1, 2004. Should Implementing States convene in 2003 to receive petitions from these states and vote on their compliance to establish the Governing Board but not convene the Governing Board until a date in 2004 when the population threshold is crossed? Generally speaking, I thought those in Nashville considered this a useful approach but no decisions have been made.
Negotiations with the Certified Service Providers are one reason to empower representatives of the initial states after sufficient enactments are achieved to cross the population threshold but before the effective dates allow the Governing Board to be officially inaugurated. This will help ensure the technology is ready to implement when the Governing Board is established but no contracts would be signed until that time. Under my hypothetical the Delegates to Implementing States could meet in the second half of 2003 and presumably find sufficient compliance to vote the Governing Board into existence effective January 2, 2004. During the intervening period technology essential to the system and other administrative features of the system could be made ready with assurance decisions will be effective and contracts signed on January 2, 2004.
Interpretation of the Agreement
Will each state interpret provisions of the Agreement in the same manner? For instance, several states currently have nearly identical definitions of tangible personal property but revenue departments issue differing interpretations in audit. What will happen in audits when the Agreement becomes effective?
Some state legislatures are enacting defined terms in the Agreement not currently in their statute resulting in a broadening their base. Is it OK if done as an offset for taxable items made exempt under the Agreement to maintain overall revenue neutrality? Those gaining an exemption from provisions of the Agreement are apt to see it as acceptable while anyone facing new taxation to balance the revenue impact would assuredly point to the new tax levy as demonstrating Streamline is a contrivance to raise revenue. I suspect that Delegates to Implementing States would be asked to look at the entirety of the circumstances. This conclusion represents personal speculation on my part and not official SSTP tenet for how such a situation will be handled.
What if the defined term is adopted in legislation unconnected to conforming state law to the Agreement? After all, in a time of growing deficits there will be new taxes. Enacting a new tax in legislation separate from the bill conforming state law to the Agreement would remove the offending base broadening from considerations about compliance with the Agreement.
Initially each state will audit separately with future consideration given multiple state audits. Private sector attendees generally saw this suggestion as perhaps a worthy move toward efficiency. It also revived fears in industry that the Multistate Tax Commission might assume audit management functions of the Governing Body.
Alabama local government representatives are pointing out consumers use tax is not part of the Agreement and these audit powers can be retained after conforming legislation is passed. This clarification of continued local authority under Streamline is under the long standing principle that Streamline is focused on simplification for sellers; use tax due from purchasers remains a state and local sovereign matter just as it did before Streamline.
Kansas, Michigan, North Carolina and Wisconsin participated in a pilot project that assessed if current technology would allow a third party to calculate, collect, report and remit applicable state and local sales and use taxes on behalf of a retailer.
Contracts were awarded to esalestax.com; Pitney Bowes (Vertex as subcontractor); Taxware (Hewlett-Packard as subcontractor); and Taxware (Pitney-Bowes as subcontractor). Taxware had retailers collecting and remitting while others participated through online websites that each made available for test transactions. With states lacking tax calculations software program expertise the testing consisted of verifying that the proper amount of tax was being charged on selected items and that the sales were being sourced properly.
Results showed states may need to adapt processing systems to accommodate a Certified Service Provider (CSP). An area where vendors had to expend considerable time and effort was integration of the vendor's systems with retailers. Integration issues caused some potential retailers reportedly to back out of the pilot project. Nonetheless, the pilot established that the use of a third party provider was viable.
Sourcing of Services
A Work Group has been established to interpret how the current sourcing rules apply to services. SSTP has developed a destination-based system with general sourcing rules found in Section 310 and lease sourcing covered under Section 310: (C). Every state taxes services of some variety whether consumer or professional. Thus, it is a logical step in the evolution of the Streamlined Sales Tax System.
Equipment Leasing Association
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