AROUND THE STATES By Dennis Brown and Megan Kueck State Legislation Focuses on Leasing T HE PACE OF LEGISL ATION AND REGUL ATION focused on leasing has increased sharply this year in comparison to state legislative sessions in 2014. Industry has acted proactively in Washington state while ELFA plays defense in other states. Motivations and issues vary, resulting in ELFA members with wide-ranging perspectives engaging in advocacy. Industry Promotes Washington TRAC Bill ELFA-backed legislation that would restore the Terminal Rental Adjustment Clause (TRAC) in Washington state, Senate Bill 5032, has received good support. Efforts by sup-porters of the bill to include a provision that would make it retroactive to when TRAC was unintentionally repealed were not successful. ELFA remains active with allied groups seeking enactment. ELFA members in Washington state are visiting the state capitol to promote enactment. Mintaka Financial and ELFA Executive Committee member David Schaefer participated in a pre-hearing meeting with the committee chairman, during which the need for restoring TRAC was outlined. Malcolm Lindquist of Lane Powell made a presentation at the hearing offering support of the Washington State Bar As-sociation. Lorren Dalesky of Orion First Financial attended the hearing as a resource able to discuss the commercial equipment lease financing marketplace with stakeholders and policymakers. Uniform Commercial Code Legislation ELFA supports the objective of curtailing the filing of financ-ing statements under the Uniform Commercial Code (UCC) intended to “harass or defraud.” However, bills filed in several states retrace provisions already available under UCC Arti-cle 9 while creating uncertainty or even opening the door to additional fraud. Analysis by legal counsel at ELFA mem-ber companies found Utah Senate Bill 93 creates a loophole permitting borrowers to defraud creditors of their property rights by selling the property to unsuspecting purchasers and would have the practical effect of constraining financing to entities headquartered in Utah or formed under Utah law. In Maryland, Senate Bill 77 also reopens issues resolved by UCC Article 9 while reprioritizing the respective rights of the secured party and purchaser. In each state, ELFA has sought to limit the scope of legislation to adding further sanctions or even criminalizing the filing of bogus filings designed to har-ass or defraud while not tampering with provisions of Article 9 that have served the industry well for years. Illinois Sales Tax Spurs Advocacy ELFA continues outreach to the Illinois Department of Rev-enue in search of an administrative solution to problems encountered with new regulations sourcing Illinois sales tax on a conditional sales agreement. In tandem, an ELFA workgroup assembled text of legislation should a revision of statute be the only way to effect change. Obtaining greater clarity in the regulations about how to determine equipment location for tax purposes was ham-pered by limitations of current Illinois law forcing the state to operate under an “occupation” based tax rather than a sales tax. A second challenge arose with introduction of Illinois Senate Bill 743, which would amend the Use Tax Act and the Retailers’ Occupation Tax Act by providing that, with respect to tangible personal property that is sold for the purpose of leasing the property in Illinois for a defined period, the term “selling price” means the consideration received by the lessor pursuant to the lease contract, in-cluding amounts due at lease signing and all monthly or other regular payments charged over the term of the lease. The bill provides that, for those items of tangible personal property, “selling price” also includes amounts received from the lessee that are not calculated at the time the lease is executed. 50 MARCH/APRIL 2015 EQUIPMENT LEASING & FINANCE MAGAZINE Texas Comptroller Proposal Challenged ELFA members in Texas are organizing advocacy to oppose new sales-and-use tax rules issued by the Office of the Comp-troller prior to newly elected Comptroller Glenn Hegar, who has indicated willingness to take another look prior to im-plementation. ELFA filed comments questioning the focus and process for implementation of Comptroller Rule 3.280, published in the Texas Register on Oct. 31, 2014 (39 Tex.Reg. 8503, et seq.). These comments highlighted that the sale for resale exemption for selected aircraft transactions were being pushed through in hurried fashion during a brief timeframe that included a major holiday. ELFA also pointed to other proposals, such as a new 34 TAC Rule 3.297 affecting exemp-tions that requires extensive research before the full impact on varied equipment categories can be assessed. ■ For more information, please contact Dennis Brown , ELFA Vice President of State Government Relations, at dbrown@elfaonline.org, or Megan Kueck , ELFA Director of State Government Relations, at mkueck@elfaonline.org.