Retailers Cheer House Bill to Fix Drafting Error, Kick-Start Investment

Retailers Cheer House Bill to Fix Drafting Error, Spur Investment
Passage of bipartisan legislation in the House and Senate would enable grocers to make much-needed improvements to their stores

Reps. Jimmy Panetta, D-Calif., and Jackie Walorski, R-Ind., have introduced bipartisan legislation to allow for immediate expensing of qualified improvements to retail establishments, including supermarkets and grocery stores, addressing a drafting error in the 2017 Tax Cuts and Jobs Act that inadvertently raised the cost of making such investments, and earning the enthusiastic approval of the retail industry. 

The House bill is a companion piece to bipartisan Senate legislation introduced earlier this month by Sens Pat Toomey, R-Pa., and Doug Jones, D-Ala., to correct what has been dubbed the "retail glitch."

Andrew Harig, senior director for sustainability, tax and trade at the Arlington, Va.-based Food Marketing Institute (FMI) noted that the trade association “applauds the House’s introduction of this bill. This legislation will allow food retailers to take advantage of immediate expensing for improvements made to our members’ stores. These investments not only create jobs and economic activity in the communities served by our membership, they also enhance the consumer experience through modernization and technology.”

Added Harig: “For the past year, many qualified improvements have been put on hold due to a drafting error in the Tax Cuts and Jobs Act that actually made these investments more expensive than before tax reform. [The] bipartisan legislation is a needed corrective that provides for full expensing without imposing any new obligations on the Treasury.”

He went on to observe that the swift passage of the legislation would “help create certainty for food retailers throughout the United States.”

Echoing Harig's words, Greg Ferrara, EVP of the Arlington-based National Grocers Association, which advocates for the independent food retail sector, observed: “The retail glitch has created uncertainty for independent grocers across the country and has inadvertently stifled their ability to upgrade and reinvest in their stores. NGA appreciates the bipartisan work done by Reps. Panetta and Walorski to resolve this issue in a timely manner so that grocers can continue to expand and drive economic growth in their local communities.”

Beyond food retailers, the wider industry was also pleased by the bill’s introduction.

Jennifer Safavian, EVP of government affairs for the Retail Industry Leaders Association (RILA), said that the Arlington-based organization “is thankful for Reps. Panetta and Walorski’s leadership in introducing bipartisan legislation that would update [the qualified improvement property provision]. Since the passage of comprehensive tax reform, retailers have followed through on their promise to invest in their workforce and their businesses. The drafting error in this provision has stifled growth and innovation across the industry. With bills now introduced in the House and Senate, we are hopeful that Congress will support retailers’ efforts as they continue to make improvements to stores, grow their workforce and enhance the overall customer experience.”

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