NGA Hails Intro of Senate Bill to Fix ‘Retail Glitch’

The National Grocers Association (NGA) expressed its support for the introduction in the U.S. Senate 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 sponsored by Sens. Pat Toomey (R-Pa.) and Doug Jones (D-Ala). 

Passed in December 2017, the TCJA included a provision giving businesses a 100 percent bonus depreciation, which was intended to allow them to write off the full costs of short-lived investments immediately. Congress wanted to help retailers invest in their businesses with this provision, but some categories of business investment, most notably retail, restaurant and leasehold improvements, comprising a category known as qualified improvement property (QIP), were inadvertently excluded from eligibility for 100 percent bonus depreciation, because of a drafting error. The result of this error was that retailers investing in improvements to their store interiors now face a more restrictive cost-recovery period — more than twice that under the previous law – and don’t qualify for the benefit. This has in turn led to considerable cash-flow concerns and retailers’ inability to make major improvements to their stores.

“We thank Sens. Toomey and Jones for bringing forward a bill to resolve an issue that has negatively impacted independent supermarkets across the country,” said Greg Ferrara, EVP at Arlington, Va.-based NGA. “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."

Co-sponsors of the bill are Sens. Joe Manchin (D-W.V.), Angus King (I-Maine), Jeanne Shaheen (D-N.H.), Rob Portman (R-Ohio), John Thune (R-S.D.), and Pat Roberts (R-Kan.).