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JANUARY 2013



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All's Fair in Love, War and Taxes -
Part 1 of 3
by Mary Redmond

This is the first in a series of three parts that will help you separate your company and products from the less knowledgeable equipment dealers. Every sales organization says "We offer the best service."

If your service is limited to keeping the equipment running, you may be leaving your customer open to a competitor. You can become a trusted business partner and advisor when you assist customers with their equipment leasing.

There are three lease contract requirements that can create problems for lease customers. In the next three months we will explore three areas: Taxes, Insurance and Maintenance and how you can help customers avoid common lease traps.

Let's begin with Taxes

* The customer (Lessee) is responsible for all taxes on leased equipment. The three most common applicable taxes are sales, use and property.

* Leasing companies remit the tax monthly to the proper taxing authority. They invoice the Lessee for the taxes. For property taxes, the invoices may include a fee for tax collection and filing services.

* Some Lessors assess 1/12th of the property tax each month and bill it monthly. Others surprise the Lessee with an invoice for the full tax amount plus a fee at the beginning of the new year.

What Could Possibly Go Wrong?

1. Advise your customer that taxes will be added to their lease payment. It's better to be proactive than to have a customer find a "surprise" on their first lease invoice. They may blame you for not telling them the whole story.

2. In some states, customers may pay the sales or use tax at lease commencement. Find out the laws in your state. Let customers decide which works best for their business.

3. Each equipment dealer should know if the equipment you sell is tax exempt. You offer your customer a tremendous service and save them money when you know and share this information.

4. Recently I helped a Michigan printer receive a $2,000 use tax refund on a digital copier lease. Neither their equipment dealer nor the printer's accountant knew that digital copiers were tax exempt for printers. Once we provided our Michigan tax law research, the leasing company immediately remitted the refund.

5. Know the correct sales or use tax rate for your customers. One of my Texas clients was billed too much sales and property tax. Their business location had been identified by the dealer in an incorrect county and school district. This error triggered extra taxes. Neither the dealer nor the leasing company took responsibility for this error. Dealers---are you listening?

Go the extra distance for your customers. In 2013 we will all have to do more to stay in the game. Best selling to you in this bright shiny New Year.

{short description of image}Mary A. Redmond provides highly specialized information for corporations, managers and dealers who negotiate and manage leases. With 28 years in the leasing industry, including 21 working for the largest leasing companies in the U.S., Mary knows leasing. You may reach Mary at 913-422-7775 or mary@reviewyourlease.com

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