A coalition of retailers and restaurants on Tuesday asked the U.S. Congress to fix a "drafting error" in December`s tax-cut bill that they said is deterring companies from investing in their stores.
In the latest instance of mistakes turning up in the hastily drafted tax law, the coalition said the mistake "has caused economic hardship for some retailers and restaurants and is also delaying investments across the economy.”
Lawmakers had intended to change the law so that costs of remodelling or improving stores or restaurants fully depreciated in the first year the work was completed, the coalition said.
Instead, the law requires that the depreciation be stretched out over 39 years, which the retail and restaurant groups say members of Congress have admitted was an error. Depreciation is an accounting concept in which the value of an asset is reduced over time, and depreciation expense has historically been allowed as a tax deduction against revenue.
In a Tuesday letter to members of Congress, the National Retail Federation, National Council of Chain Restaurants and the Retail Industry Leaders Association asked for changes.
Among companies represented by the groups are McDonald`s Corp
"This very large difference in the after-tax cost of making improvements is causing a delay in some store and restaurant remodelling projects, as well as causing some retailers to decline opportunities to purchase or lease new store locations that would require substantial improvements,” the letter said.
The tax cuts were signed into law by President Donald Trump in December, culminating a process that Democrats, who unanimously opposed it, criticized as too rapid.
Congress has already acted to correct one problem, dubbed the "grain glitch," that was affecting farmers and reducing competition for agriculture products.
The coalition also said a second error makes it difficult for companies with low cash reserves because "the legislation got the effective date of carryback eligibility wrong."
Officials at the tax-writing panels of the Senate and House of Representatives were not immediately available for comment.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)