National Restaurant Association Praises Bipartisan Bill to Clarify Expensing Rules for Small Businesses

Washington, D.C. — The National Restaurant Association today endorsed bipartisan legislation clarifying the depreciation rule around business improvements known as “qualified improvement property,” or QIP. The bill, introduced by U.S. Senators Pat Toomey (R-PA) and Doug Jones (D-AL), is titled the Restoring Investments in Improvements Act and has been referred to the Senate Finance Committee.

“There is longstanding bipartisan and bicameral agreement that restaurant renovations should depreciate over 15 years, not 39 years as is current law. Just imagine the customer experience if restaurants across America hadn’t renovated since 1980,” said Matt Walker, Vice President of Government Affairs at the National Restaurant Association. “We applaud Senators Toomey and Jones for their continued leadership in pressing their colleagues to address this problem, which not only harms restaurant operators, but all who benefit from updating our establishments – including employees, customers, manufacturers, and those employed during the renovation process.”

Currently, due to a drafting error in the 2017 tax bill, restaurants are prohibited from expensing – over the intended 15 years – improvement projects such as interior facelifts and upgraded lighting and plumbing systems. Instead, business owners must depreciate the improvements over a 39-year period. Moreover, because of the error, they are also prohibited from availing themselves of bonus depreciation, which was intended to allow immediate and full expensing over years 2018-2022. According to representatives of the restaurant industry, this locks up needed cash, restricts business growth, and harms small business owners’ ability to fully invest in their employees and facilities.

“Restaurants operate on razor thin margins and in Pennsylvania we’ve seen first-hand the impact of restaurant owners’ inability to expense safety improvements and other renovations to their businesses. It’s a deterrent, limiting the degree to which restaurants can invest, which ultimately impacts the customer experience,” said Jim Fris, Pennsylvania Restaurant & Lodging Association Chairman of the Board and President & CEO of PJW Restaurant Group. “This proposed legislation will not only benefit restaurant owners and workers in Pennsylvania, but around the country.  We commend Senators Toomey and Jones for championing this critical fix.”

Terry Humphreys, who owns several popular restaurants in Alabama, agreed: “This bipartisan legislation is exemplary of how, in such a fractured political climate, lawmakers can work across the aisle to address problems affecting their constituents. Business owners and workers, including those in Alabama, need this fix as soon as possible. The hospitality sector is a large part of Alabama’s economy, and we appreciate Sen. Jones’ recognition of that and his efforts to return restaurant improvements to a 15-year depreciation.”

Other sponsors of the legislation include Sens. Angus King (I-ME), Joe Manchin (D-WV), Rob Portman (R-OH), Pat Roberts (R-KS), Jeanne Shaheen (D-NH), and John Thune (R-SD).