Congress 2019 Tax Agreement Update
Yesterday, negotiations concluded between the White House and Congress on the assembly of a limited tax package that will be added to a spending bill. This legislation is expected to pass Congress and be signed into law later this week. The National Restaurant Association, along with TRA, vigorously advocated for a number of issues important to the restaurant industry. Below is a short summary of the agreement.
While we are disappointed that the QIP fix did not pass, rest assured that both NRA and TRA are teaming up with key stakeholders to double efforts for 2020. For more information on next steps, details on the agreement or any other questions, please contact Rebecca Robinson, TRA Advocacy Manager.
Technical Corrections to the Tax Cut and Jobs Act
- No Action on QIP: The spending bill did not include a long-sought fix to the drafting error on the Qualified Improvement Property (QIP) and bonus depreciation problem in 2017 tax reform bill. Congress needed to enact a technical correction to clarify that restaurants can depreciate construction and building improvement costs over 15 years, rather than 39 years, which also eliminated bonus depreciation. Known as a "retail glitch," this error affects Qualified Improvement Property (QIP) and has caused many businesses to delay improvements, cancel renovations and postpone other investments.
Repeal of Health Care Taxes
- Full Repeal of Health Insurance Tax: Permanently repeals the estimated $15.5 billion annual fee imposed on health insurance providers, imposed by the Affordable Care Act.
- Full Repeal of “Cadillac Tax”: Permanently repeals the Affordable Care Act tax intended to target high-cost health care plans, which is scheduled to take effect in 2022. The tax was originally set to take effect in 2018 and apply to employer-sponsored health plans that in that year cost more than $10,200 for individuals and $27,500 for families.
Finding, Training, and Retaining Employees
- One-Year Extension of the Work Opportunity Tax Credit (WOTC): WOTC is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The restaurant industry is the second largest beneficiary of this tax credit, which was worth $3.6 billion, for all industries, in 2019.
- H-2B Visas: Authorizes the Secretary of Homeland Security, after consultation with the Secretary of Labor, to increase the cap on the number of temporary foreign workers who can enter the U.S. through the H-2B visa program, after determination that the needs of American businesses cannot be satisfied in fiscal year 2020.
- Expansion of Apprenticeship Funds: The spending bill contains $175 million, an increase of $15 million, to expand opportunities through apprenticeships only registered under the National Apprenticeships Act (NPA). This provision and increase will benefit the National Restaurant Association Educational Foundation’s Hospitality Apprenticeship Program, which is a registered program under the NPA.