"We were taken aback by some of the language used in the Frontline segment and ELA wishes to clarify some of the statements used," said Michael Fleming, ELA president. "The industry welcomes a policy discussion around the appropriate role for leasing to tax-exempts. But, calling a legal business practice a scheme or fraud, that is inappropriate. Inflammatory statements, such as the ones made in the television segment, make it difficult for policy makers and an industry to address a very serious policy subject."

Fleming said the equipment leasing and finance industry provides significant, much-needed capital and jobs across many different industries, companies and organizations.

"Calling an industry that contributes so much 'a bunch of hucksters', isn't appropriate," said Fleming. "If current law doesn't work, then let's have a civil discussion about what would work. We certainly are willing to address the issues."

Critics of leasing have attempted to depict some finance leasing to tax-exempt entities negatively to justify efforts to change longstanding and well-established tax principles surrounding the leasing industry.

"Leasing levels the economic playing field between profitable taxable entities and non profitable or tax-exempt entities with regard to the cost of acquiring equipment," said Fleming. "Tax depreciation allows an entity to recover the investment made in an asset. Congress and the courts have affirmatively provided for lessors to utilize tax depreciation when leasing to taxable corporations as well as tax-exempt entities."

The current policy debate on lease financing to tax-exempts has focused increasingly on the nature of the asset, the geographic location of the asset and the nature of the lessee, as was the focus of the Frontline segment.

"However, all of these considerations have been and should remain unimportant under well-established legal and tax principles," said Fleming. "The appropriate tax treatment of a sale and lease of a transit facility by a governmental entity in Frankfurt, Germany, for example, should be no different than the sale and lease of a transit facility by a governmental entity in Frankfurt, Kentucky."

Said Fleming, contrary to what the PBS story depicted, the leasing industry is not opposed to the doctrine of economic substance. The economic substance doctrine is already the law, established by regulation and court decisions and is enforced through the IRS. The industry, said Fleming, is opposed to the statutory codification of the doctrine, not to the doctrine itself, because it will make the doctrine too rigid and create enforcement headaches.