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NRF seeks to extend tax rule allowing retailers to depreciate store remodels

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Washington, D.C. The National Retail Federation Wednesday asked the House to extend a tax rule that allows retailers to depreciate remodeling and other improvements to their stores over 15 years rather than the previous 39, saying the move would help save “critically needed” jobs.

“If the depreciation provision is not extended, the cost of making needed improvements to a retail store or restaurant must be written off over nearly four decades,” NRF senior VP Government Relations Steve Pfister said. “This would have a significant negative impact on a retailer’s decision to make improvements and in this economic climate could result in more store closures, costing retail industry jobs.”

With tax treatment often affecting the bottom line when businesses make spending decisions, Pfister said renewal of the 15-year period would “provide retailers, restaurateurs and myriad other industries the certainty needed to create critically needed jobs in this recovering economy.”

In addition to the retail jobs affected, the Bureau of Economic Analysis estimates that every $1 million spent in the construction industry creates more than 28 jobs in the overall economy.

Pfister’s comments came in a letter to members of the House, which is expected to vote this week on H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. The “tax extenders” bill would retroactively renew about 50 temporary-but-perennial tax provisions that expired at the end of 2009, keeping them in place through the end of 2010. The measure also deals with unemployment benefits, COBRA health benefits and other issues added since the original version of the bill was passed in December.

Included in the legislation is a provision that allows improvements to retail stores, restaurants and leased commercial property -- along with new restaurant construction -- to be depreciated over 15 years. The depreciation period was previously 39 years, but was reduced to 15 in 2004 for leased property and restaurants, and expanded in 2008 to include owned retail stores and new restaurant construction.