Policy Matters – Government Relations

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Neal Cohen, Don Coleman, Bobby Bush

UFAC discusses next step in furniture safety

What’s a tag worth? It might be “the best liability insurance policy you could buy for the price,” Don Coleman says. 

The tag comes from the Upholstered Furniture Action Council, the 40-year-old nonprofit organization dedicated to fire safety. Coleman, UFAC’s president, is now leading efforts to address new problems.

The UFAC board of directors met in High Point, N.C., April 5 to talk about the anticipated launch later this year of its “UFAC Plus” program. It’s the next step following the council’s initial efforts to promote home furnishings products that are tested and certified to be more resistant to smoldering fires.

UFAC contracts with independent laboratories to test foam and fabric submitted by participating manufacturers. UFAC sells tags to manufacturers whose products meet the testing standard. In turn, retailers can assure their customers that furnishings bearing those tags pose lesser fire dangers. 

UFAC hangtag
UFAC hangtag

“Furniture doesn’t just spontaneously combust,” UFAC counsel Neal Cohen said at the board meeting. “But it’s one of the most dangerous things when it does catch fire.” 

While materials in home furnishings products generally have become more fire-resistant over time, another concern has arisen: Some flame-retardant chemicals have been found to be toxic. That has alarmed consumers who worry that these substances can migrate from the products and harm themselves or their children. Firefighter associations also are concerned about the potential release of toxins during fires. Several states – led by California – have legislated bans or restrictions on the use of many flame retardants. 

The Home Furnishings Association opposes the state-by-state approach to regulating fire-retardant chemical use, which creates an inconsistent patchwork across the country. It prefers the approach outlined in SOFFA – the Safer Occupancy Furniture Flammability Act – which was introduced in the U.S. Senate last year by Sen. Roger Wicker (R-Miss.) and Sen. Richard Blumenthal (D-Conn.). The legislation didn’t advance, but is likely to be introduced again this year. It would apply a national standard to the issues of both flammability and toxic chemicals in home furnishings products.

UFAC isn’t waiting. It plans to certify products that are both fire-resistant and free of the most commonly used flame-retardant chemicals. “What we’re going to be doing doesn’t exist right now,” UFAC Technical Director Bobby Bush said. 

UFAC President Don Coleman discusses why furniture safety is important

States taking legislative action to regulate flame retardants don’t require product testing. That’s exactly what the UFAC Plus program will do. Once it establishes testing protocols and identifies labs with the proper capabilities, UFAC will offer a second certification program with a separate green tag, distinguishable from its familiar blue tag. In addition to promoting fire safety, ”the Make Life Safer Project aims to independently verify that the most common of these toxic chemicals are not in your family’s furniture,” the proposed tag would declare.

The success of the program depends on participation by manufacturers, but furniture retailers have the power to encourage that. “Hopefully, we will have retailers who will help us highlight the program,” Cohen said. 

The advantage for retailers will be their ability to address customers’ questions about product safety. Materials that are tested and certified by independent labs contracted by UFAC will be safer — not necessarily “safe,” which no one can promise, but less likely to burn and relatively free of toxic chemicals. That’s important to families, and to retailers. And it could be a kind of insurance policy. 

Tax swap in Texas riles HFA members

Some Home Furnishings Association members in Texas aren’t happy about a proposed tax swap that one retailer compared to “playing games.”

Gov. Greg Abbott, joined by Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen (pictured above), unveiled a plan April 10 to raise the statewide sales tax from 6.25 percent to 7.25 percent and use the additional revenue “to buy down property tax rates for all Texas homeowners and businesses.”

The three top leaders see the tax swap as a means of slowing what they called “skyrocketing property taxes.”

“In 2017, Texans paid $59.4 billion in property taxes, up from $40.3 billion in 2010 and $22.5 billion in 2000, state records show,” the Fort Worth Star-Telegram reported April 10.

Some furniture retailers, however, are wary of the proposed tax swap, predicting that higher sales-tax rates will widen the price advantage enjoyed by out-of-state online sellers.

“Property taxes are high, but so is our sales tax, and it gives people one more reason to go shop online especially since we have such a high threshold for the online sales tax law, which means more lost revenue,” said Brad Schweig, vice president of operations for HFA member Sunnyland Furniture in Dallas.

Later this year, Texas will begin requiring out-of-state online sellers to collect sales taxes on purchases by Texas residents – but the law will exempt their first $500,000 in sales.

“This will affect brick-and-mortar stores in Texas negatively if the internet tax threshold is not reduced to zero,” Chris Pfeiffer, owner of Homestead House Furniture in Conroe, said. “Pushing the sales tax to 9.25 percent only increases the pressure to buy products online to avoid paying sales tax,” he added, referring to a 7.25 percent statewide rate plus as much as 2 percent more in local taxes in some areas.

Last year in South Dakota v. Wayfair, the U.S. Supreme Court ruled that states could require online sellers to collect and remit sales taxes even if they did not have a physical presence in the taxing states. Most states, including Texas, have moved to take advantage of the opportunity to increase revenues.

The decision delivered a victory to brick-and-mortar retailers, which lose business to online competitors that don’t collect sales taxes from their customers. The disparity gives online sellers an automatic price advantage. So, the Wayfair ruling helps level the playing field. But it tilts again when a seller is given an exemption on initial sales – a highest-in-the-country threshold of $500,000 for Texas.

Brick-and-mortar retailers also pay property taxes, so easing those levies would help, but some don’t see the tax swap as even.

It doesn’t make sense to Schweig.

“If a tax increase is really needed — for example, the gas tax — then let’s do the right thing instead of playing games like this,” he said.

If the Texas House and Senate pass tax swap legislation, the proposal then would go to voters for their approval in a statewide referendum. 

CPSC prodded to take stronger action on furniture safety

A divided Consumer Products Safety Commission was given a hard push this week to take stronger action against furniture tip-overs.

“I’ve been really disappointed at the speed at which we’ve seen these dangerous products taken off the market,” U.S. Rep. Jan Schakowsky (D-Ill.) said Tuesday during a CPSC oversight hearing held by a consumer protection subcommittee of the House Energy and Commerce Committee. “Every 14 days a child dies from a tip-over.”

All five commissioners appeared before the panel, which Schakowsky chairs. She quickly noted that they were split last month when Commissioners Elliot Kaye and Robert Adler proposed accelerated rulemaking to set mandatory safety standards for children’s dressers but were opposed by the other three.

The faster timeline could have seen new regulations established within months rather than years, Adler told the subcommittee.

Kaye concurred. “In my mind, this is one of those issues where we should be pursuing every authority we have,” he said. “Whatever tools are available to us, we should be doing that.” That “would send a signal to the industry that we are not leaving any tool unused.”

CPSC relies on voluntary standards written by ASTM International, formerly known as the American Society for Testing and Materials. Schakowsky asked Ann Marie Buerkle, CPSC’s acting chairwoman, whether the agency monitors compliance and “how soon can we have a more robust mandatory standard to make sure kids are safe?”

Buerkle explained steps SPSC has taken recently. On Feb. 27, the agency’s deputy executive director, DeWane Ray, sent a letter to furniture manufacturers, retailers and other industry groups advising them to comply with the voluntary standards.

“Children face an unreasonable risk of serious injury or death from clothing storage units that fall within the scope of the ASTM F2057-17 standard but do not meet its requirements,” Ray wrote. “Should we encounter such products, we shall initiate an investigation and will seek the corrective action we believe is appropriate.”

The same day, Buerkle wrote to ASTM expressing support for proposed revisions to the ASTM standard. One would lower the minimum height of units covered from 30 inches to 27 inches. The second would raise the stability test weight from 50 pounds to 60 pounds.

To meet the ASTM furniture safety standard, units must pass two stability tests. The first is to remain upright when all drawers and doors of an empty unit are fully opened. In the second test, the top drawer or door of the unit is opened and weight is gradually applied to it. The test must be conducted without the use of anchoring devices, which are recommended for units at risk of falling over.

The Home Furnishings Association recently joined ASTM’s consumer products committee and furniture safety subcommittee and will vote on the proposed revisions. Ballots are due by April 22. HFA’s Government Relations Action Team will decide how the association will vote.

Any HFA member can apply for ASTM membership. Application for membership, at an annual cost of $400, is here. Select F15 Consumer Products Committee, F15.42 Furniture Safety Subcommittee and User as primary activity.

HFA also strongly supports CPSC’s Anchor It! campaign, which seeks to increase consumer awareness of the dangers of furniture tip-over and encourage parents to secure furniture to a wall.

Schakowsky has said she will again introduce what she calls The STURDY Act, for Stop Tip-overs of Unstable, Risky Dressers on Youth Act. A similar bill in 2016 failed to advance, but its chances this year are better in the House because Democrats are now in the majority. The measure would require CPSC to adopt new rules unless it determines the ASTM voluntary furniture safety standard is effective in preventing accidents and is met by manufacturers. During Tuesday’s hearing, she urged commissioners to support the bill.

A video of the hearing is here.

Doug Clark is content manager and government relations liaison for the Home Furnishings Association. Contact him at 916-757-1167 or dclark@myhfa.org

Roman Columns on Government Building

Bill would give online sellers and purchasers a $10 million sales-tax break

A veteran congressman again has introduced legislation to curtail online sales-tax collections by states. 

TheOnline Sales Simplicity and Small Business Relief Act was filed March 27 by 21-term U.S. Rep. James Sensenbrenner Jr. (R-Wis.) and several co-sponsors. A similar measure failed to advance in the previous Congress. 

The bill proposes to bar states from requiring online sellers to collect and remit sales taxes on their behalf until each seller reaches $10 million of sales into a state. This limit would be imposed until “states produce a compact, approved by Congress, to simplify collection to the point where no small business exemption is necessary,” a Sensenbrenner news release said. 

“I’ve heard from online sellers in Wisconsin and across the country who are concerned with the complexity of the post-Wayfair tax regime,” Sensenbrenner said. “Small business owners, in particular, have shared fears that they will be unable to bear the new compliance burdens and may have to shutter their businesses. I’m proud to introduce this bipartisan legislation to provide clarity and certainty to all online sellers as well as relief to the small businesses that need it the most.” 

“Wayfair” refers to last year’s U.S. Supreme Court ruling that cleared the way for states to demand that remote online sellers collect taxes on sales made to their residents. Since the decision, states are setting sales-tax collection requirements. None has set a sales threshold higher than $500,000, and some have set that floor as low as $10,000. 

The Home Furnishings Association applauded the Supreme Court ruling because it allows states to create a more level playing field for brick-and-mortar retailers who always have had to add sales tax to customers’ purchases. At the same time, online competitors did not – giving them a price advantage on every sale. 

Sensenbrenner’s proposal to exempt the first $10 million in sales would restore the advantage enjoyed by online sellers at the expense of businesses such as furniture retailers that operate out of fixed spaces, not only collecting sales taxes owed to state and local governments but also paying property taxes, income taxes and utilities, as well as complying with various regulations. 

The association does support congressional action to set a uniform national policy for online sales-tax collections, but not one that exempts large amounts of sales from taxation. 

Sensenbrenner’s bill was co-sponsored by Reps. Anna Eshoo (D-Calif.), Jeff Duncan (R-S.C.), Zoe Lofgren (D-Calif.) and Ann Kuster (D-N.H.).  

U.S. House of Representatives

Bipartisan House bill would help furniture retailers recover expansion costs

A bipartisan bill to fix a tax error was introduced in the U.S. House of Representatives March 26. The measure would help furniture retailers recover some of the costs of expanding or renovating their showrooms, offices, warehouses and other facilities. 

Identical legislation was filed March 14 in the Senate, also with sponsors from both parties. 

The House bill, titled the Restoring Investments in Improvements Act, was introduced with 14 sponsors – seven Democrats and seven Republicans – led by Reps. Jimmy Panetta (D-Calif.), Steven Horsford (D-Nev.), Jackie Walorski (R-Ind.) and George Holding (R-N.C.). It would correct a drafting error in the Tax Cuts and Jobs Act of 2017. That sweeping legislation meant to accelerate tax write-offs for retail businesses investing in renovations or expansions of their property. Instead, the provision limited the tax break and stretched it out over 39 years – well beyond the expected lifetime of most improvements. The result was to discourage business growth. 

The Home Furnishings Association is part of a coalition of business groups that joined to urge Congress to take this important step. Many HFA members have contacted their representatives and senators to ask for support.  

“This error affects my business by not allowing me to deduct certain improvements in a timely fashion and therefore keeps me from wanting to make improvements to my business,” Shane Spiller, president of HFA member Spiller Furniture & Mattressin Tuscaloosa, Ala., wrote to Sen. Doug Jones (D-Ala.), a primary sponsor of the Senate bill. “It also keeps me from hiring more people because of the high cost of construction.”  

Spiller also contacted Rep. Terri Sewell (D-Ala.), to request her support. She subsequently signed on as a co-sponsor of the House bill. 

“The loss of immediate expensing has hurt many of our family owned small businesses that are critical to the success of our Central Coast economies and communities,” Rep. Panetta said in a news release.“The Restoring Investment in Improvements Act fixes that problem, known as the ‘retail glitch,’ by restoring the 15-year schedule for Qualified Improvement Property (QIP) and making these improvements eligible for immediate expensing as was originally intended.  Our bill will allow restaurants, retailers and other businesses to make the improvements they need to keep their stores competitive and safe and plan for the future.” 

“Tax reform has helped businesses across the country invest, expand and hire more workers, but investments in interior improvements were inadvertently excluded from some tax benefits,” Rep. Walorski said.  ”The Restoring Investment in Improvements Act is a small but critical fix for our job creators, and technical corrections like this are a normal part of the process when Congress enacts major reforms. This bipartisan, commonsense bill will allow restaurants, retailers and other small businesses to unlock the full benefits of tax reform and continue driving our nation’s economic growth.” 

Other original House sponsors are Reps. Susie Lee (D-Nev.), Andy Barr (R-Ky.), Joyce Beatty (D-Ohio), David McKinley (R-W.Va.), Dina Titus (D-Nev.), Mark Amodei (R-Nev.), Lou Correa (D-Calif.) and Kenny Marchant (R-Texas).