Congress’ passage of a bill to renew four tax provisions that stand to have a direct impact on restaurant operations was a welcome relief after a year of uncertainty.
But unfortunately, the move only provides a temporary fix. While President Obama is expected to sign the bill into law soon, the tax provisions—commonly known as “tax extenders”—were renewed only for 2014 and will expire again when the year ends.
“While we are relieved by the Senate’s action and Congress’ decision to retroactively renew these key tax extenders and appreciate the members of Congress who secured this outcome, a return to the uncertainty surrounding taxes that has persisted over the past year is unfortunately only weeks away," said Scott DeFife, National Restaurant Association executive vice president of policy and government affairs. "This uncertainty is causing restaurateurs across the country to postpone decisions that would help them expand their business and create jobs."
Included in the bill were four of the NRA’s tax priorities:
- 15-year depreciation schedule: This allows restaurant operators to depreciate the cost of certain renovations, improvements, and new construction over 15 years. Had the bill not passed, any projects launched in 2014 would have been depreciated over 39.5 years.
- Work Opportunity Tax Credit: Businesses will be able to claim tax credits of $2,400 to $5,600 for hiring employees from demographic groups who historically have a hard time finding employment.
- Enhanced charitable food donation: All restaurants can utilize this deduction to help offset some of the costs of storing and transporting food they’re donating to charity.
- Section 179 expensing: Restaurants and other businesses can qualify for up to $500,000 in new deductions if they financed less than $2 million worth of new or used business equipment, software and qualified real property in 2014. Without the renewal, the deduction would have been capped at $25,000.
Congress has historically renewed tax extenders with little fanfare, but dysfunction and gridlock over the past two years put renewal on the back burner until the final days of business for both houses of Congress.