Contact Congress about needed fix to Tax Cuts and Jobs Act; Alabama Retail signs onto letter to Congress

April 29, 2019

The Alabama Retail Association and more than 870 other business groups and individuals signed a letter delivered this week to all members of Congress in support of bipartisan legislation currently before the U.S. Senate and House.

The Restoring Investments in Improvements Act (S. 803 and HR 1869) would restore incentives for investment in what is known as qualified improvement property, or QIP.

The letter reflects the urgency felt by the retail and restaurant communities to see an unintentional drafting error in the 2017 Tax Cuts and Jobs Act fixed soon.

>> IN THE NEWS: Lawmakers pressed to fix tax law glitch (thehill.com)

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.  Qualified improvement property, however, was inadvertently deleted from the list of 15-year depreciating categories, leaving restaurants, retailers and leaseholders in a 39-year recovery period and ineligible for bonus depreciation.

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, the drafting mistake means 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.

Projects excluded from the 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.

Please ask Alabama’s senators and your representative to support and co-sponsor this legislation (link is a sample communication) to correct the error in qualified improvement property depreciation in the Tax Cuts and Jobs Act. Links to email addresses for our delegation and key staff in Washington follow:

Senators

Representatives

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.