Today, the National Grocers Association (NGA), the trade association representing the independent supermarket industry, released the following statement from NGA president and CEO, Greg Ferrara, on Congress’ lack of action to resolve the retail glitch, a drafting error in the Tax Cuts and Jobs Act (TCJA) of 2017.
“NGA is disappointed that Congress failed to fix the retail glitch, a flaw in the tax law that prevents independent grocers from making important investments in their stores. The supermarket industry is a competitive marketplace and Main Street grocers deserve the full benefits of tax reform intended by Congress. NGA will continue to advocate for a fix to the retail glitch so that independent grocers can invest in their businesses and communities for years to come.”
Bipartisan legislation to fix the retail glitch has been introduced in the U.S. House and Senate (The Restoring Investment in Improvements Act, H.R. 1869/S. 803). Both bills have overwhelming bipartisan support in the House and Senate.
The TCJA included a provision providing businesses with a 100 percent bonus depreciation to be used to write off the full costs of short-lived investments immediately. Congress intended to help retailers invest in their businesses with the inclusion of this provision. However, due to a drafting error, some categories of business investment, most notably qualified improvement property, or “QIP,” were excluded from being 100 percent eligible for bonus depreciation. Due to this error, retailers making investments to improve their stores now face a more restrictive cost recovery period that is twice than under the prior law.