Washington, D.C. - In case you missed it, The Hill highlighted a bipartisan bill introduced by Senators Pat Toomey (R-Pa.) and Doug Jones (D-Ala.) to ensure restaurants and retailers can take full advantage of the 2017 tax law provision meant to spur renovations and investment on Main Street. The Restoring Investments in Improvements Act is cosponsored by five Republicans and five Democrats. Read about the new legislation here.
Senators Offer Bipartisan Bill to Fix ‘Retail Glitch' in GOP Tax Law
By Naomi Jagoda
March 14, 2019
Sens. Pat Toomey (R-Pa.) and Doug Jones (D-Ala.) on Thursday introduced legislation to fix a provision in President Trump's 2017 tax-cut law that adversely affects the retail and restaurant industries.
"The federal tax code should not make it more difficult for a restauranteur or a retailer," Toomey said in a statement. "Capital invested in a company should be fully deductible at the time of the investment."
Before the law's enactment, retail stores and restaurants could write off the costs of their renovations over a span of 15 years. The authors of the 2017 tax legislation intended for the statute to allow businesses to write off the full costs of those renovations in the year they were made.
But as a result of what's been called a drafting error, or the "retail glitch," stores and restaurants now have to write off the costs of renovations over the course of 39 years.
The measure offered by Toomey and Jones would allow businesses to immediately deduct the full cost of renovations. The fix would apply retroactively, as if it had been included in the 2017 tax law, and the Joint Committee on Taxation has said the change would not have an impact on federal revenue.
"Making sure our local small businesses can invest in themselves is critical for the economic success of Alabama's communities," Jones said in a statement. "That's why this bipartisan legislation is so important: to make sure the tax code works as intended, and restaurants, retailers, and other businesses can make the improvements they need to make their stores competitive, vibrant, and safe."
The legislation is co-sponsored by Sens. Angus King (I-Maine), Joe Manchin (D-W.Va.), Rob Portman (R-Ohio), Pat Roberts (R-Kan.), Jeanne Shaheen (D-N.H.) and John Thune (R-S.D.). It is also backed by a number of industry groups, including the Alliance to Save Energy, the National Restaurant Association and the National Retail Federation.
While the provision is a priority for a number of lawmakers and businesses, it's unclear whether the bill will make it to President Trump's desk.
The House in December passed a year-end tax package, with a fix to the error, when Republicans controlled the chamber. That legislation wasn't taken up by the Senate before the end of the 115th Congress, meaning the bill expired.
Many congressional Democrats have said they don't want to make technical corrections to Trump's tax law unless those changes include more substantive changes.