Two government economic stimulus packages include provisions that may be of special interest to ATM deployers, especially as they consider buying new ATMs or upgrading their current installed base to comply with regulatory mandates like Triple DES.

Thanks to the Jobs and Growth Tax Relief Reconciliation Act passed last month, businesses purchasing ATMs are eligible for a first-year bonus depreciation of 50 percent for equipment acquired and installed between May 5, 2003 and Jan. 1, 2005.

That's 20 percent more than the 30 percent bonus depreciation that was included in the Job Creation and Worker Assistance Act, which was passed in March 2002 to encourage companies to make capital expenditures in an unsteady economy following 9/11. The 30 percent bonus depreciation was retroactive to Sept. 1, 2001, said George Manousos, a taxation specialist with the Treasury Department's Office of Tax Policy.

Because the two Acts overlap, Manousos said that deployers can choose either a 50 percent or 30 percent bonus -- or no bonus at all. Noting that companies moving into a higher tax bracket might prefer to forgo the bonus, for example, he said, "The benefit is out there if you want it, but you are not required to do it."

Reviewing the rules

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The 50 percent bonus would not apply to ATM contracts signed before May 5, Manousos said. The rules specifically prohibit buyers from canceling an existing contract and entering into a new one -- or having a related party do so -- in order to get the added 20 percent depreciation.

Manousos, speaking to an assembly of some 150 bankers attending NCR's second ATM Channel Planning Seminar in Washington, D.C., earlier this week, said that most upgrades, in addition to new ATMs, should be eligible for the tax breaks.

"If the upgrade involves installing new software or some other new part into the equipment, then the bonus depreciation should apply," he said. In addition, it's possible that land upgrades such as modifications to an island in an ATM drive-through lane would be eligible.

Most refurbished ATMs will not qualify, however -- unless a buyer refurbishes the machines himself. ATMs in New York may qualify, Manousos said, based on the more liberal economic incentives included in its state and local tax regulations. Those rules simply require an ATM -- or other equipment -- to be used for the first time in New York.

That's not all...

An added benefit under the Jobs and Growth Tax Relief Reconciliation Act gives companies that purchase less than $400,000 worth of equipment a year an off-the-top tax deduction of $100,000, Manousos said.

"If you purchased $200,000 worth of ATMs, you'd get the $100,000 deduction off the top and then the 50 percent bonus depreciation on the remaining $100,000," he said. "Assuming that you got the standard depreciation of $10,000 on the remaining $50,000, you could expense $160,000 -- or 80 percent of the purchase price -- in the first year."

Act now

Not just ATMs qualify for the bonus. Manousos said items such as PCs and other office equipment are covered by the Act as well.

However, it may be particularly relevant when it comes to ATMs, said Rob Evans, director of industry marketing for NCR's Financial Solutions division.

"We've seen a lot of people deferring ATM investment during the past 18 months. Many folks are waiting for certain regulations to be firmed up or for their profit pictures to look a little better," Evans said. "With this tax break, there's a real benefit to spending money now. If you have to do an upgrade for Triple DES anyway, or you're considering audio improvements, or you want to replace an older machine because it's coming off lease, this gives you a solid dollar benefit for doing so."