KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** Right to repair and tax issues / reserve spot for private or group meeting at ISC March 8, 2023 ********************* Right to repair and tax issues ********************* Ken, As Right to Repair Bills start to gain popularity I am wondering how they will affect the sales taxability of leases. Many states don’t tax equipment that is leased and monitored so long as the ownership stays with the Alarm Company and is ancillary to the monitoring service. In the case of Alarm Services Corporation v. Comptroller of the Treasury (¶201-049. Maryland Tax Court, Sales Tax No. 138, March 21, 1985.). The Court found that leases of burglar and fire alarm systems weren’t taxable (rather the Alarm Company was required to pay tax on the materials upon purchase from its distributor) so long as the …company's charges to its customers for protection services were exempt. Fees paid for personal service transactions which involve sales as inconsequential elements for which no separate charges are made are exempt. The systems which the taxpayer installed were custom designed to meet the needs of the particular buildings they were to serve. The Ruling goes on to state: Significantly, the contracts Petitioner signs with its customers characterize them as “Subscribers” and repeatedly refer to “operating and service charges.” Furthermore, Petitioner maintains full control of the alarm systems. Customers may not handle them in any manner except to turn them on and off. Weighing all these factors together, we conclude that the primary intent of the agreement between Petitioner and its customers is a contract for protection services as opposed to the leasing of equipment. Note that the Decision states Customers may not handle them in any manner except to turn them on and off. If a state rules that the customers have some sort of ownership interest in the systems (right to repair), this could possibly make them personalty and cause the leases in these states to be taxable. It is critical for the Industry to fight these Bills. The first line of defense is the ESA, SIA, and the state and local associations. If your readers aren’t involved in their associations, this is a good time to do so. Mitch Reitman 817-698-9999 ext 101 Reitman Consulting Group Fort Worth, TX 76133 *********************** Response *********************** Mitch is going to be participating in our group and private meetings in Las Vegas during ISC, so contact Stacy Spector,Esq [see below] to reserve your private or group spot. I raised the issue of dealer and distributorship arrangements whereby manufacturers won’t sell their products except to authorized dealers. With Right to Repair we may see more alarm companies dealing with products that were not previously available to them. Those dealers providing the equipment and probably the programming will find use for the Fire Alarm Parts and Smarts Agreement. ***************** ISC West group and private meetings ********************** Private meetings and discussion groups forming - call today to participate. I am going to schedule group discussion meetings and private meetings. To reserve a spot at a group or private meeting please contact Stacy Spector,Esq. 1 516 747 6700 x 304 or SSPector@Kirschenbaumesq.com, K&K’s Concierge Program coordinator [you don’t have to be a Concierge Client to reserve a spot]. Topics, private meetings and schedule are TBD. I will be available for private meetings and consultation. I will also coordinate and attend, if you like, private meetings with some of those who will be participating in group discussion meetings. Anyone who wants to lead a group discussion or have ideas for a discussion should contact me to be included in the schedule. The following are some of the group meetings I am planning [and will coordinate private meetings with these industry experts] Still time for lenders, brokers, consultants, central stations and other vendors to sign up schedule private or group meetings. We will coordinate. Call Stacy today 1 516 747 6700 x 304 * What buyers look for and how they evaluate your business. * How lenders view your company and decide on financing your business or your acquisition. * How the value of your alarm RMR is calculated and how non-RMR is calculated. Discuss multiples and what your company is worth * What you should expect from your central station * Employee Retention Credit: meet with tax expert to discuss if you’re eligible * Alarm contracts: which ones you need and which ones you should have. Group or private meeting with Ken Kirschenbaum * Buy-Sell deals: Thinking about or ready to sell? Meet with Ken Kirschenbaum to discuss best ways to increase value and get ready to sell or buy. * AIN buying group. Meet with Stan Matysiak in group or privately, time well spent * How to engage alarm Brokers: discuss options and what to expect * E&O coverage: What's available; what do you need; where to get it ********************* STANDARD FORM AGREEMENTS: To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at www.kirschenbaumesq.com/page/alarm-articles updated daily ************************* THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily. https://www.kirschenbaumesq.com/page/alarm-exchange ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our email list / Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. ************************** Ken Kirschenbaum,Esq Kirschenbaum & Kirschenbaum PC Attorneys at Law 200 Garden City Plaza Garden City, NY 11530 516 747 6700 x 301 ken@kirschenbaumesq.com www.KirschenbaumEsq.com
