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S. 803 (116th): Restoring Investment in Improvements Act


An accidental mistake in 2017’s tax reform prevented this from occurring as intended, but now it might happen in 2020.

Context

Republicans’ tax reform law, the Tax Cuts and Jobs Act of 2017, permitted most businesses to write off facility improvement costs from their taxes immediately. This marked a change from prior law requiring them to write off such expenses over the course of 15 years.

However, the law inadvertently read that “nonresidential real property” would have a tax writeoff period of 39 years. This includes small local stores, businesses, and restaurants.

What the legislation does

The Restoring Investment in Improvements Act would allow such business to deduct the full costs of facility improvements to their taxes immediately, rather than over 39 (or 15) years.

A press release from the Senate cosponsors lists several such examples, including renovating the dining space in a restaurant or improving the interior of a retail store.

The Senate version was introduced on March 14 as bill number S. 803, by Sen. Pat Toomey (R-PA). The House version was introduced two weeks later on March 26 as bill number H.R. 1869, by Rep. Jimmy Panetta (D-CA20).

What supporters say

Supporters argue the original version of the law was essentially an accidental mistake, inadvertently enacted over the intentions of its drafters.

“The loss of immediate expensing has hurt many of our family-owned small businesses that are critical to the success of our Central Coast economies and communities,” Rep. Panetta said in a press release. “Our bill will allow restaurants, retailers, and other businesses to make the improvements they need to keep their stores competitive and safe and plan for the future.”

“As a former restaurant owner, I know keeping a small business alive is always a challenge. The federal tax code should not make it more difficult for a restauranteur or a retailer,” Sen. Toomey said in a separate press release. “Capital invested in a company should be fully deductible at the time of the investment. This helps make the investment affordable. Our simple, bipartisan fix recognizes the economic benefits from immediate expensing and will help grow the economy and create jobs.”

GovTrack Insider was unable to locate any explicit statements of opposition.

Odds of passage

The House version has attracted 300 bipartisan cosponsors: 156 Republicans and 144 Democrats. That’s the eighth-most cosponsors of any House bill this Congress. It awaits a potential vote in the House Ways and Means Committee.

The Senate version has attracted 61 bipartisan cosponsors: 48 Republicans, 12 Democrats, and one independent. That’s the 12-most cosponsors of any Senate bill this Congress. It awaits a potential vote in the Senate Finance Committee.

The large bipartisan cosponsorship seemingly makes this a more likely candidate for enactment into law.

Last updated Feb 27, 2020. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Mar 14, 2019.


Restoring Investment in Improvements Act

This bill confirms that the applicable recovery period for qualified improvement property (nonresidential real estate) for depreciation purposes is 15 years under the modified accelerated cost recovery system (MACRS) and 20 years under the alternative depreciation system (ADS).