‘Retail Glitch’ Fix Part of Senate’s Stimulus Package Bill

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‘Retail Glitch’ Fix Part of Senate’s Stimulus Package Bill

By Bridget Goldschmidt - 03/26/2020
‘Retail Glitch’ Fix Part of Senate’s Stimulus Package Bill
A drafting error in the Tax Cuts and Jobs Act of 2017 led to the so-called "retail glitch," which adversely affects retailers trying to make improvements to their stores

The U.S. Senate’s massive Coronavirus Aid, Relief and Economic Security (CARES) Act, which was approved overwhelmingly this week, includes a benefit for retailers in general and independent grocers in particular: a fix to the so-called “retail glitch,” a drafting error in the Tax Cuts and Jobs Act (TCJA) of 2017 that caused retailers making investments to improve their stores to face a more restrictive cost recovery period that’s twice as long as under the previous law.

The independent grocery sector hailed the move.

“This fix comes at a critical time, as grocers throughout the country are making tremendous sacrifices serving customers during the coronavirus (COVID-19) outbreak,” said Greg Ferrara, president and CEO of the Arlington, Va.-based National Grocers Association (NGA), which represents the independent grocery industry. “Independent grocers are the backbone of the U.S. economy and can now invest in their businesses and continue to serve communities during this challenging time.”

The TCJA included a provision providing businesses with a 100% bonus depreciation to be used to write off the full costs of short-lived investments immediately. Congress meant to help retailers invest in their businesses with the inclusion of this provision, but the drafting error excluded some categories of business investment, most notably qualified improvement property, or “QIP,” from being 100% eligible for bonus depreciation.

The $2 trillion relief package now goes to the U.S. House of Representatives, which is expected to hold a voice vote to avoid possible exposure to the virus  on the bill March 27.