2018 is shaping up to be a year of implementation rather than major changes in the legal and regulatory landscape, but that doesn’t mean that it’s going to be dull.
It is possible, and perhaps even more likely than not, that Congress will pass some “technical” changes to the law, as it is nearly impossible that a bill this large, that moved as quickly as it did, will not have unintended consequences. One area that ELFA is already focused on is the application of 100% bonus depreciation and its expansion to include used equipment.
Equipment lessors and financiers, as well as their customers, are likely to make behavioral changes in 2018 to adapt to the new tax environment. Many of these changes, including 100% bonus depreciation, the limitations on interest deductibility and the loss of like-kind exchanges, will inevitably cause changes in the way that equipment is acquired. These changes are unlikely to be all in one direction. For example, 100% bonus depreciation could cause some transactions to shift from leasing to financing or buying outright. But at the same time, limitations on interest deductibility could cause transactions to shift from financing toward true leasing.
ELFA has already begun engaging with Washington decision makers on some of the unintended consequences and has created a new page on our website at www.elfaonline.org/industry-topics/tax-reform to act as a clearinghouse for information about how the industry is likely to adapt and is actually adapting. If you have information you would like to have included on this page, please let us know.
ELFA has already begun engaging with
On ELFA’s perennial issue of Section 1071 of Dodd-Frank, which when brought into effect through regulatory action will change fair lending rules to require commercial finance companies to collect certain demographic information about their customers, 2018 is expected to be another year of waiting. Due to a variety of factors, including leadership changes at the Consumer Financial Protection Bureau and the difficulty of regulating in this arena, action on implementing regulations is not expected to come in 2018. Considering the political environment, it is unlikely that any legislative relief is forthcoming. Accordingly, ELFA is still advocating that any regulatory efforts should be conducted with an eye toward making sure that any final regulations are minimally disruptive to the equipment leasing and finance industry.
2018 is shaping up to be an interesting year to say the least. Be sure to stay engaged to ensure that you stay abreast of how all of these developments will affect your company, and stay engaged with your current (and possibly future) elected representatives so that they know the importance of our industry to the nation’s economy.
Tax Reform
Late last year, the Congress passed, and the President signed into law, the most sweeping changes to the tax code in a generation. In light of these changes, 2018 is going to be a year of adaptation and clarification.It is possible, and perhaps even more likely than not, that Congress will pass some “technical” changes to the law, as it is nearly impossible that a bill this large, that moved as quickly as it did, will not have unintended consequences. One area that ELFA is already focused on is the application of 100% bonus depreciation and its expansion to include used equipment.
Equipment lessors and financiers, as well as their customers, are likely to make behavioral changes in 2018 to adapt to the new tax environment. Many of these changes, including 100% bonus depreciation, the limitations on interest deductibility and the loss of like-kind exchanges, will inevitably cause changes in the way that equipment is acquired. These changes are unlikely to be all in one direction. For example, 100% bonus depreciation could cause some transactions to shift from leasing to financing or buying outright. But at the same time, limitations on interest deductibility could cause transactions to shift from financing toward true leasing.
ELFA has already begun engaging with Washington decision makers on some of the unintended consequences and has created a new page on our website at www.elfaonline.org/industry-topics/tax-reform to act as a clearinghouse for information about how the industry is likely to adapt and is actually adapting. If you have information you would like to have included on this page, please let us know.
Regulatory Environment
In May of 2018 the new rules for determining beneficial ownership are scheduled to come into effect. ELFA is hopeful that FinCEN will issue clarifying guidance well in advance of the effective date that will make it easier for affected ELFA members to comply with these requirements.ELFA has already begun engaging with
Washington decision makers on some of the
unintended consequences of the new tax law.
On ELFA’s perennial issue of Section 1071 of Dodd-Frank, which when brought into effect through regulatory action will change fair lending rules to require commercial finance companies to collect certain demographic information about their customers, 2018 is expected to be another year of waiting. Due to a variety of factors, including leadership changes at the Consumer Financial Protection Bureau and the difficulty of regulating in this arena, action on implementing regulations is not expected to come in 2018. Considering the political environment, it is unlikely that any legislative relief is forthcoming. Accordingly, ELFA is still advocating that any regulatory efforts should be conducted with an eye toward making sure that any final regulations are minimally disruptive to the equipment leasing and finance industry.
Political Environment
There is a lot of discussion about changes in the partisan control of the House, and to a lesser degree the Senate. Regardless of which party is in control of the House and Senate, next year’s Congress will look very different due to an overwhelming slate of more than 50 retirements. And these aren’t just back benchers who are retiring. As of the writing of this column, 9 full committee chairmen and two subcommittee chairmen are not running for reelection, and that’s not including one powerful subcommittee chairman who has already retired this Congress. Imagine what would happen in your company if 12% of your workforce, including almost 40% of your C-suite leadership, changed over on the same day!2018 is shaping up to be an interesting year to say the least. Be sure to stay engaged to ensure that you stay abreast of how all of these developments will affect your company, and stay engaged with your current (and possibly future) elected representatives so that they know the importance of our industry to the nation’s economy.
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EL&F magazine article
TAX REFORM
Federal Insight
Column
2018