Arlington, VA- The National Grocers Association (NGA) today applauded the introduction of the “Restoring Investments in Improvements Act,” a bipartisan bill that aims to resolve a drafting error known as the “retail glitch” in the Tax Cuts and Jobs Act (TCJA) The bill is championed by Senators Pat Toomey (R-PA) and Doug Jones (D-AL).
The TCJA included a provision providing businesses with 100 percent bonus depreciation, which intended to allow them to write off the full costs of short-lived investments immediately. Congress intended to help retailers invest in their businesses by the inclusion of this provision; however, some categories of business investment, most notably retail, restaurant, and leasehold improvements together comprising a category called qualified improvement property, or “QIP,” were accidentally excluded from being eligible for 100 percent bonus depreciation due to a drafting error. Because of this error, retailers making investments to improve the interiors of their stores now face a more restrictive cost recovery period — more than twice under the prior law – and do not qualify for the benefit intended by Congress. The retail glitch has caused significant cash flow concerns and has prevented retailers from making important improvements to their stores.
“We thank Senators Toomey and Jones for bringing forward a bill to resolve an issue that has negatively impacted independent supermarkets across the country,” said Greg Ferrara, NGA EVP. “The supermarket industry is a competitive marketplace operating on 1-2 percent profit margins and Main Street grocers deserve to be eligible for the full benefits of tax reform intended by Congress, including 100 percent bonus depreciation for qualified improvement property, so that they can make important investments in their stores. It is important to remember when independent supermarkets invest in themselves, those dollars spread to local contractors and provide local jobs, further benefitting the community at large.”
NGA would also like to thank the following cosponsors: Senators Joe Manchin (D-WV), Angus King (I-ME), Jeanne Shaheen (D-NH), Rob Portman (R-OH), John Thune (R-SD), and Pat Roberts (R-KS).