Shaheen & Bipartisan Group of Senators Introduce Legislation to Amend Tax Law Provision that Penalizes Main Street

March 18, 2019

**Bipartisan Bill Would Amend a 2017 Tax Law Provision that Hurts Local Restaurants & Retailers**

(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH) worked with a bipartisan group of Senators led by Senators Doug Jones (D-AL) and Pat Toomey (R-PA) last week to introduce the Restoring Investments in Improvements Act, bipartisan legislation that ensures restaurants and retailers can take full advantage of a 2017 tax law provision. 

The Tax Cuts and Jobs Act made significant changes to the federal tax code, including allowing businesses to immediately write off costs associated with improving facilities instead of having to depreciate those expenses over 15 years. However, a drafting error required restaurants, retailers, and other leaseholders to instead write those expenses off over a much longer period of 40 years, resulting in cost-prohibitive renovation projects and stalled investments. The Restoring Investments in Improvements Act would ensure the full cost of store, office, or other interior building improvements can be immediately expensed as was originally intended. The Joint Committee on Taxation has concluded that this legislation would have no impact on the federal budget deficit. 

“The tax law was written in secret and rushed through Congress by Republicans, so unfortunately, this mistake was overlooked and is having a serious impact on our local businesses in New Hampshire and across the nation. I’m glad to join this bipartisan bill and right this wrong, and hopefully, this will be the beginning of a number of efforts where Democrats and Republicans can work together to fix our tax law,” said Shaheen. “Our tax code affects all Americans, including our small businesses, so it’s critical that there be thoughtful consideration and an open legislative process as we move forward.” 

This legislation is also cosponsored by Senators Angus King (I-ME), Joe Manchin (D-WV), Rob Portman (R-OH), Pat Roberts (R-KS), John Thune (R-SD), Kyrsten Sinema (D-AZ) and Martha McSally (R-AZ). 

Background

When enacted, the Tax Cuts and Jobs Act allowed businesses to deduct the cost of certain investments under a provision known as “100 percent bonus depreciation.” 

However, the new tax law does not allow “qualified improvement property” (QIP) to take advantage of immediate expensing. Projects excluded from this new 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.

Without the Restoring Investments in Improvements Act, these projects could be cost-prohibitive, and those already in progress may be stalled or ended altogether.

The list of organizations supporting this legislation includes: 

  • Alliance to Save Energy
  • American Institute of Architects
  • Associated General Contractors
  • Commercial Real Estate Development Association
  • International Association of Fire Chiefs
  • International Council of Shopping Centers
  • National Association of Convenience Stores
  • National Association of Real Estate Investment Trusts
  • National Electrical Manufacturers Association
  • National Franchisee Association
  • National Grocers Association
  • National Restaurant Association
  • National Retail Federation
  • Petroleum Marketers Association of America
  • Real Estate Roundtable
  • Retail Industry Leaders Association