Independent Grocers Back Legislation to Fix ‘Retail Glitch’

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Independent Grocers Back Legislation to Fix ‘Retail Glitch’

By Bridget Goldschmidt - 02/14/2020
Independent Grocers Back Legislation to Fix ‘Retail Glitch’
Independent grocers' ability to make important investments in their stores is negatively affected by a drafting error in the Tax Cuts and Jobs Act

The National Grocers Association (NGA) has expressed its support for the “Accelerate Long-Term Investment Growth Now (ALIGN) Act,” introduced Feb. 13 by Sen. Pat Toomey, R-Pa., to make permanent a key provision in the Tax Cuts and Jobs Act (TCJA) enabling full and immediate expensing of certain properties, which is set to phase down after 2022.

According to Arlington, Va.-based NGA, which represents the independent grocery sector: “Full and immediate expensing significantly enhances independent grocers’ ability to make important investments in their stores, which spurs investment in the local communities they serve. In addition to creating permanency for full and immediate expensing, Sen. Toomey’s legislation also seeks to add qualified improvement property (QIP), or interior remodels to stores, to the types of property eligible for full and immediate expensing. QIP was inadvertently omitted from the expensing provision in the TCJA, resulting in grocers having to expense interior store improvements over 39.5 years instead of immediately as Congress intended.

“Before the TCJA, QIP qualified for a 15-year recovery period,” Noted Molly Pfaffenroth, the organization’s director of government relations. “But due to an unintentional drafting error, grocers are in a worse position to make store improvements than before the TCJA took effect. It is critical that Congress works together to fix the ‘retail glitch’ and make QIP eligible for full and immediate expensing. Permanency for full and immediate expensing and fixing QIP will spark investment in family-owned grocery stores, which are the cornerstones of many communities across the nation in urban and rural areas.

The NGA threw its support behind earlier legislation from Toomey and Sen. Doug Jones, D-Ala., the 2019 Restoring Investments in Improvements Act, which would also have resolved the TCJA drafting error. The bill was read twice and referred to the finance committee, where it stalled.