It was a mistake with big consequences.
A drafting error in the Tax Cuts and Jobs Act of 2017 excluded qualified improvement property (QIP) from bonus depreciation, which the bill writers had intended. Instead of allowing 100 percent write-off on 15-year property for the cost of renovations that a furniture retailer might make to his or her showroom or warehouse, the tax benefit was greatly reduced.
The mistake requires a technical correction, but Congress failed to make that correction in 2018. Now, a broad coalition of more than 200 trade groups representing retailers, restaurants, real estate companies, manufacturers and suppliers, including the Home Furnishings Association, has assembled to urge Congress to fix the problem it created. Known as the QIP Coalition, it has warned lawmakers of unintended, negative consequences of the errant change in tax law. Without the opportunity to claim a depreciation for legitimate business expenses, furniture retailers might have to scrap or delay plans to invest in expansions or improvements to their property. In turn, that could result in less spending for building supplies and labor. And it could impair the ability of retailers to grow their businesses and contribute to a stronger economy in their communities.
Republicans and Democrats alike know that a correction is needed and would be good for businesses – especially the small businesses they all say they support. A fix should be neither complicated nor controversial – except that achieving bipartisan cooperation in Washington these days isn’t easy.
Easy or not, the HFA’s Government Relations Action Team (GRAT) is working on this problem. As a member of the QIP Coalition, HFA participates in weekly conference calls to follow updates and join strategy sessions. The HFA team has called members in specific states and congressional districts to contact their senators and representatives by phone, mail, email or in person and ask them to back a correction, telling them this is critical to their furniture businesses.
Members of the GRAT also will meet with important decision-makers when they visit our nation’s capital May 13-15 for the annual Washington Fly-In. And not just the GRAT. All HFA members are invited to participate in this event.
The benefits are twofold, according to Eric Blackledge, a member of the GRAT and owner of Blackledge Furniture in Corvallis, Ore. First, it gives participants a better understanding of the policies and legislation that are likely to affect their businesses so that they can make informed planning and investment decisions. Second, it provides access to leaders and the opportunity to inform and influence them.
“Sometimes we can make a difference,” added GRAT member Jim Kittle, chairman of Kittle’s Furniture in Indianapolis, Ind. Kittle, long active in Indiana politics, has many contacts in government, but it never hurts to add more. The Fly-in also presents a chance for members to get to know each other better and to work with a kindred organization, the American Home Furnishings Alliance, which represents manufacturers.
The HFA portion of the Fly-in begins with a dinner on the evening of Monday, May 13, in Washington. HFA activities on May 14 include appointments in congressional offices arranged by HFA lobbyist Chris Andresen of Dutko GR. On the morning of May 15, HFA members join an AHFA breakfast at the Marriott Marquis Hotel and participate in AHFA meetings with key leaders. The event ends with a lunch on that day.
Any HFA member is welcome to join the GRAT and participate in its monthly conference calls and receive its regular communications about issues that affect the retail furniture industry – like a botched tax provision that could curtail your next expansion.
The GRAT is led by Wogan S. “Wogie” Badcock III of WS Badcock Corp. in Mulberry, Fla. The HFA staff liaison is Doug Clark. To join the GRAT, or to participate in the Fly-in, contact Clark at 916-757-1167 or firstname.lastname@example.org. Fly-in reservations are needed before April 22.
Your business is important, and your voice should be heard in the halls of government. Help the GRAT make sure that happens.