The Home Furnishings Association and industry allies have written to key lawmakers in Washington, D.C., to thank them for their work in enacting an important tax break. Furniture retailers can utilize the new provision to help them upgrade interior portions of their stores and warehouses.
“On behalf of the undersigned companies and associations, we write to thank you for your outstanding leadership in working to fix the qualified improvement property (QIP) drafting error,” the letter says. “From your introduction of the Restoring Investment in Improvements Act, in both chambers, to your tireless support to get this fix done, we appreciate all of your efforts and success.”
The letter was sent to Sen. Pat Toomey, R-Pa., Sen. Doug Jones, D-Ala., Rep. Jackie Walorski, R-Ind., and Rep. Jimmy Panetta, D-Calif. Other organizations signing the letter include the National Retail Federation, Retail Industry Leaders Association, National Restaurant Association, National Grocers Association, American Hotel and Lodging Association and National Auto Dealers Association.
Provision creates incentives for investments
“The unintended error in the 2017 tax law – which resulted in the QIP depreciation period defaulting to a 39-year schedule – has for years disrupted a wide range of businesses that drive economic activity in their communities,” the letter added. “There was never a disagreement about the underlying policy of this asset class having a 15-year depreciation period, and we’re thankful that through your efforts, Congress has finally corrected this mistake. Restoring the 15-year period gives businesses a realistic depreciation timeline for their improvements, in addition to being able to immediately write off many improvements due to bonus depreciation. Your efforts will help to support local economies nationwide in a meaningful way.”
Toomey, Jones, Walorski and Panetta introduced bills in the U.S. Senate and House last year to correct the error. Although the bills drew bipartisan support in both chambers, leaders in the House and Senate did not allow votes. However, the provision was included in the $2.2 trillion CARES Act because it was seen as another means to help businesses weather the current crisis and to provide incentives for new investments.
Furniture retailers who made interior improvements during 2018 and 2019 and already paid their taxes for either year can file amended returns and claim deductions for the value of the work – and receive a refund.
Priority for the HFA
The QIP was a primary topic an HFA delegation pressed during its Washington Fly-in in May 2019. HFA members met with Rep. Walorski, among others. The HFA also urged other representatives and senators to support the legislation. While it took a crisis to finally prevail, it’s not too late for this provision to help furniture retailers and their communities.
HFA’s 2020 Washington Fly-in, which had been scheduled for May 12-14, has been canceled because of the coronavirus outbreak.