“Qualified improvement property,” or QIP is any improvement to the interior portion of an existing nonresidential building, including restaurant, retail, grocer, or other commercial property.
Examples of these improvements include:
Due to a drafting error in the Tax Cuts and Jobs Act of 2017, the period over which restaurant owners, retailers, grocers, and other small businesses can expense these facility improvements has nearly tripled – from 15 to 39 years.
The error also excludes these improvements from a benefit called bonus depreciation—which intended to allow businesses full deductions of certain investments over a period of time.
Lawmakers and the Trump Administration recognize that this was a drafting error, and there is bipartisan support to correct the mistake. However, Congressional efforts to fix this provision have stalled, and Treasury officials are not pursuing regulatory or enforcement relief.
As it stands, this QIP glitch is making it more expensive for these businesses to renovate existing facilities and refurbish the insides of new locations.
Unfortunately, if Congress and the White House do not work together to fix this drafting error, many industries will experience unintended consequences, including:
These consequences are contrary to policymakers’ goals of creating jobs, increasing investment and promoting economic growth via meaningful tax reform.
We are calling on Congress to fix this error and pass the Restoring Investment in Improvements Act (S. 803/H.R. 1869) as soon as possible.