By  on March 12, 2018

Retail’s quick and steadfast support for hasty tax reform legislation has hit a snag.It seems lawmakers’ decision last fall to push through sweeping tax changes mainly aimed at cutting taxes for corporations has left a string of inadvertent errors and typos that could prove more challenging than usual to be amended, given the heightened politicization in Washington. The most concerning for retailers is the section dealing with the tax recovery period for real property, which, as the code reads now, only allows business investments in owned property, like renovations, to be written off over a period of 39 years. The previous law read 15 years, and that was apparently meant to stay, but with Republicans’ rush to vote on the bill by year’s-end while they were still sure to maintain a majority in both the House and the Senate, the mistake went unnoticed until after the bill’s passage.It’s little wonder that a bill which was voted on with many handwritten changes and additions in draft margins had some things fall through the cracks, but Rachelle Bernstein, vice president and tax counsel and the National Retail Federation, said the wheels are already in motion to secure a technical amendment to the recovery period, as well as to other incorrect sections of the bill.“It was a basic mistake in drafting, that’s what we’ve been clearly told by all the [finance] committee staff on the Hill, as well as the Treasury Department,” Bernstein said. “When they get a corrections bill together, this will be in it.”But that bill will need at least some Democratic votes, and the hyper-political climate in Washington, not to mention all Democrats having voted "no" on the bill’s initial passage, has Bernstein unsure of timing on when any corrections could come up for a vote. The possibility of the corrections being tacked onto the upcoming omnibus appropriations bill is unknown at the NRF, considering the “very, very high-level” politicking surrounding it.“We’re hopeful it will be able to go on legislation [lawmakers] are working on soon, but I can’t tell you when exactly,” Bernstein said. “I don’t know what will work or not, because it's all very, very political.”While the corrections are likely headed for some partisan wrangling — a tactic spearheaded by Republicans during the Obama administration, including a party-wide refusal to allow technical corrections to the Affordable Care Act after its passage in 2010 — retailers could be left in the lurch.Earlier this year, NRF executive David French lauded the tax bill as a “major victory” for the industry, and one that was “already beginning to increase the pace of retail sector investment in workforce, technology and stores.” Should the law stay as it is, with retailers’ store renovation costs having to be written off over the course of nearly four decades, effectively increasing the costs associated with such investments, it will affect cash flow, at least in the interim. And the severity of the effect will depend on  the size of the retailer. Whenever the changes are made, and the NRF is holding confident that they will be, companies will be able to amend their tax returns to reflect the retroactive effective date of the investment recovery period. “It’s not like they’re never going to get the money back,” Bernstein said.For More, See:Retail, Fashion Industries Worried by New Trump TariffsTrump’s State of the Union Leaves Retail, Fashion Groups Wanting SpecificsIvanka Trump Still Improperly Promoting Brand, Group Claims

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