Global Public Policy
A group of about 800 retailers, grocers, restaurants and trade groups, including ICSC, sent a letter to congressional leaders on April 29 urging lawmakers to co-sponsor legislation that would fix an error in the 2017 tax-reform law that inadvertently lengthened the depreciation period for interior renovations.
Tax reform combined several separate categories of property improvements – leasehold, restaurant and retail — under a new definition called “qualified improvement property” (QIP). QIPs were intended to be depreciated over 15 years. Due to a drafting mistake, however, these improvements must be depreciated over 39 years instead, far longer than the economic life of these investments.
The bipartisan Restoring Investment in Improvements Act (S. 803/H.R. 1869), introduced by Sen. Toomey (R-Pa.) and Rep. Panetta (D-Calif.), would fix this error — the “retail glitch” — and apply retroactively to any improvements made since passage of the tax-reform law. The bill has roughly 60 co-sponsors in the House and 22 in the Senate.
Because the error qualifies as a “technical correction,” the legislation does not need to be offset with revenue from other tax increases or spending reduction. Nonetheless, Congress has been slow to address the problem.
ICSC members will be urging Congress to fix QIP during our Strategic Leadership Summit, in June.
Join us to help educate lawmakers about this important issue. You can find more information about SLS here.
Vice President, Tax Policy