Retail and restaurant renovations and investment will benefit from bipartisan legislation before the U.S. Senate and House.
S. 803, the Restoring Investments in Improvements Act, corrects a typo in the 2017 Tax Cuts and Jobs Act. The Senate measure was introduced Thursday, March 14. Companion legislation – HR 1869 – was introduced in the U.S. House of Representatives, Tuesday, March 26.
The Tax Cuts and Jobs Act, which became effective in 2018, allows businesses to immediately write off costs associated with improving their buildings instead of having to write off those expenses over an extended period. An inadvertent drafting error left restaurants, retailers and other leaseholders from taking full advantage of the updated expensing rules.
Under the federal tax reform, remodeling and other improvements to stores or buildings were supposed to be fully depreciated in the first year the work is done. Instead, a mistake in the legislative language requires that depreciation occur over 39 years. As a result, companies can only deduct 2.5 percent of costs in the year the investment is made and deduct the remaining 97.5 percent over the following 38 years.
The drafting error does not allow “qualified improvement property,” or QIP, to take advantage of immediate expensing. Projects excluded from this full and immediate expensing rule could include:
- Improving the interior of a retail store;
- Renovating the dining space in a restaurant;
- Installing new signs for the business;
- Upgrading lighting fixtures to more energy-efficient products; and
- Modernizing common areas in office buildings.
Alabama Sen. Doug Jones is the Democratic lead sponsor of the bipartisan Senate bill.
Please ask Alabama’s senators and your representative to support this legislation to correct the error in qualified improvement property depreciation in the Tax Cuts and Jobs Act. Email addresses for our delegation in Washington follow:
- Richard Shelby – https://www.shelby.senate.gov/public/index.cfm/emailsenatorshelby and/or email@example.com
- Doug Jones – https://www.jones.senate.gov/contact/email-doug and/or firstname.lastname@example.org (Thank him for his sponsorship)
- Bradley Byrne – https://byrne.house.gov/contact and/or email@example.com
- Martha Roby – https://roby.house.gov/contact and/or firstname.lastname@example.org
- Mike Rogers – https://mikerogers.house.gov/contact/ and/or email@example.com
- Robert Aderholt – https://aderholt.house.gov/contact-robert and/or firstname.lastname@example.org
- Mo Brooks – https://brooks.house.gov/contact-me and/or email@example.com
- Gary Palmer – https://palmer.house.gov/contact and/or firstname.lastname@example.org
- Terri Sewell – https://sewell.house.gov/contact/email-me and/or email@example.com
If you use the representatives’ online contact link to email them, they are going to first ask you to verify that you are in their district. To find out who your representative is, see “Contact Your U.S. Representative” at this link.