Who wants to file their taxes twice next year?
The answer, or course, is nobody. But that’s what business owners and individuals who want to take advantage of certain tax provisions might be forced to do just that if Congress doesn’t take action to renew several key tax extenders before the year ends. Congress has historically renewed them for two years at a time, but gridlock and dysfunction has so far delayed action in the current session despite bipartisan bills to renew the tax extenders being introduced in the House and Senate.
If Congress waits until 2015 to take action, restaurateurs who have already filed their taxes would likely have to file them again to benefit from the renewed tax extenders.
While more than 50 tax provisions expired at the end of last year, the National Restaurant Association (NRA)has been aggressively pressuring Congress to renew three that stand to have a significant impact on restaurants:
- A 15-year depreciation schedule on restaurant-building improvements and new construction, retail improvements, and leasehold improvements. Without congressional action, the depreciation schedule will remain at 39.5 years.
- Work Opportunity Tax Credit, which offers businesses tax credits of $2,400 to $5,600 for hiring employees from demographic groups who historically have a hard time finding employment.
- The enhanced tax deduction for businesses and individuals that donate food inventory to charity.
NRA research has found that uncertainty surrounding the tax depreciation schedule is a factor in restaurateurs’ decisions to take on new renovation or construction projects. About three in 10 operators who responded to an NRA survey on the topic said they were delaying projects because of uncertainty over the tax treatment of those projects. Most restaurants remodel and update their buildings every six to eight years, according to NRA research.
The NRA joined 30 state restaurant associations and more than 500 other groups in sending a letter to Congress on Tuesday, urging members to vote to renew and permanently extend the tax provisions during the current lame duck session.
“Failure to extend these provisions is a tax increase,” the letter stated. “It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace…A delay in the tax filing season will delay tax refund checks and spending decisions, resulting in an immediate negative impact on the economy.”