Arlington, VA – The National Grocers Association (NGA), the national trade association representing the independent supermarket industry, and others in the business community today urged Congress to fix a drafting error in last year’s tax law (H.R. 1) that prevents retailers from receiving 100% bonus depreciation for qualified improvement property.
“While we greatly appreciate efforts to simplify the tax code and alleviate tax burdens on American businesses and families, this particular error in the overall tax reform effort is unintentionally stifling investment, job creation, and other important economic and community benefits,” business groups, including NGA, said in a letter to members of the House and Senate tax-writing committees.
The tax law, which was enacted last December, included a provision known as “100% bonus depreciation” that allows businesses to immediately write off the full costs of short-lived investments. However, due to a drafting error in the bill, the language excludes some categories of business investment, most notably qualified improvement property, from being eligible for 100% bonus depreciation. This drafting error now defaults the write off period for qualified improvement property to periods as long as 39 years as opposed to the 15-year period that existed under the old tax code.
“The supermarket industry is a high taxed industry with the majority of independent grocers operating on just one to two percent net profit margins, meaning any opportunity to fully depreciate improvements made to stores will significantly help these entrepreneurs upgrade their stores, and more importantly, expand offerings, and hire additional staff,” said Greg Ferrara, NGA EVP of advocacy, public relations, and member services. “The drafting error is considered a true technical correction with no associated cost to fixing it. On behalf of America’s independent supermarket operators, we urge Congress to fix this drafting error as quickly as possible to limit any harmful impact it may have on main street grocers.”