By Doug Clark
The Home Furnishings Association, with other business groups, today urged congressional leaders to support a critical tax correction.
Identical bipartisan bills filed in the House and Senate promote “investment in local businesses, job creation and other important economic and community benefits,” according to a letter sent today to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, House Minority Leader Kevin McCarthy and Senate Minority Leader Chuck Schumer.
Put simply, the mistake has discouraged businesses from undertaking renovations, updates and remodelings.
A tax mistake
A drafting error in the Tax Cuts and Jobs Act of 2017 dropped qualified improvement property – generally, improvements to the interior of existing commercial buildings, such as furniture store showrooms, offices and warehouses – from eligibility for a 15-year depreciation recovery period. Congress meant to accelerate depreciation opportunities but instead lengthened the recovery period to 39 years, far longer than the expected lifetime of such improvements.
The Restoring Investment in Improvements Act would implement the depreciation schedule intended by Congress. The measure was first introduced in the Senate in March by Sen. Pat Toomey (R-Pa.) and Sen. Doug Jones (D-Ala.). It has a dozen co-sponsors – six Republicans, five Democrats and one independent – and is waiting for consideration in the Senate Finance Committee. The House bill, filed by Rep. Jimmy Panetta (D-Ca.) and Rep. Jackie Walorski (R-Ind.), has 47 other co-sponsors, including 19 Democrats and 28 Republicans. It is in the House Ways and Means Committee.
“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 & Mattress in Tuscaloosa, Ala., wrote to Sen. Jones. “It also keeps me from hiring more people because of the high cost of construction.”
“In the past year, our family furniture business has undergone significant growth and made large investments with the opening of two new furniture stores in Erie and Pittsburgh,” Matt Schultz, president of HFA member John V Schultz Furniture in Erie, Pa., said. “This investment has nearly doubled our employment with the addition of over 100 jobs to our company.
Future growth on hold
“Now future growth has been put on hold as a result of the current tax language not allowing us to deduct these building improvements on our tax return as in the past,” Schultz said. “This change has caused us to put on hold a large office construction project at our warehouse, as well as building out future furniture stores needed in the Pittsburgh market.”
Some individual HFA members, including Spiller Furniture & Mattress and John V Schultz Furniture, have signed on to the letter with HFA and business groups. Others are W S Badcock Corporation in Mulberry, Fla., Blackledge Furniture in Corvallis, Ore., and Diakon Logistics in Warrenton, Va.
Those companies have worked with HFA’s Government Relations Action Team in pushing for this tax change. HFA members also will carry the message to policymakers in the nation’s capital during the annual HFA Washington, D.C., Fly-in May 13-15.
HFA is just one of many business groups representing restaurants, grocers, builders and others seeking a remedy to this tax mistake. Technical corrections normally are routine, but very little can be called routine in Washington today.
Please look for updates on this and other issues of concern to HFA members on our Policy Matters blog.
Doug Clark is content manager and government relations liaison for the Home Furnishings Association. Contact him at 916-757-1167 or firstname.lastname@example.org