Walorski’s bipartisan, bicameral bill aims to fix ‘retail glitch’ in federal tax code

U.S. Rep. Jackie Walorski (R-IN) is the lead original cosponsor of bipartisan, bicameral legislation aimed at spurring renovations and investments at local retail stores and restaurants by fixing a so-called ‘retail glitch’ in the federal tax code.

“This bipartisan, common sense bill will allow restaurants, retailers and other small businesses to unlock the full benefits of tax reform and continue driving our nation’s economic growth,” Rep. Walorski said on Tuesday.

The Restoring Investment in Improvements Act, H.R. 1869, sponsored on March 26 by U.S. Rep. Jimmy Panetta (D-CA), would tweak the federal tax code to permit the full cost of store, office or building improvements to be immediately expensed.

“Tax reform has helped businesses across the country invest, expand and hire more workers, but investments in interior improvements were inadvertently excluded from some tax benefits,” Rep. Walorski said. She was referring to the 2017 tax law that updated the Internal Revenue Code of 1986 and allowed businesses to immediately write off costs related to facility improvements rather than doing so over a 15-year period. 

Rep. Walorski said that a drafting error in the change actually required restaurants, retailers and other leaseholders to write off such expenses over 39 years, subsequently creating cost-prohibitive renovation projects and stalled investments.  

“The Restoring Investment in Improvements Act fixes that problem, known as the ‘retail glitch,’ by restoring the 15-year schedule for Qualified Improvement Property,” Rep. Panetta said. 

H.R. 1869, added Rep. Walorski, is “a small but critical fix for our job creators and technical corrections like this are a normal part of the process when Congress enacts major reforms.”

The Joint Committee on Taxation recently concluded that H.R. 1869 would not impact the federal budget deficit, according to the congresswoman’s office.

Among the 12 other original cosponsors who joined Rep. Walorski in signing on to H.R. 1869 are U.S. Reps. Mike Kelly (R-PA), Andy Barr (R-KY) and Mark Amodei (R-NV). 

The companion bill in the U.S. Senate, S. 803, was introduced earlier this month by U.S. Sens. Pat Toomey (R-PA), Pat Roberts (R-KS) and Doug Jones (D-AL), among others, and is under consideration by the U.S. Senate Finance Committee.

The House version has been referred for review to the U.S. House Ways and Means Committee.