THE LATEST: Last week, congressional Republicans and Democrats came to an agreement to fix several tax-related problems facing the construction industry. Despite overwhelmingly passing the House Ways and Means Committee by a 40-3 vote, some in Congress are now trying to prevent this important legislation from passing the House of Representatives this week.
Tell your U.S. representative that the Tax Relief for American Families and Workers Act (H.R. 7024) would help construction firms invest in R&D and technology, purchase equipment, and simplify their taxes.
WHAT TO DO: It takes less than 45 seconds to send the prewritten message telling your U.S. representative to support this legislation! You can also add your own personal comments about how this legislation would help your company.
WHY IT MATTERS: A number of tax provisions from the Tax Cuts and Jobs Act of 2017 began to expire in recent years.
One expired provision hurts construction firms that invest money and staff resources into research and development, by forcing them to pay taxes on expenses they’ve already incurred, and significantly increasing their tax complexity.
Another expired provision is “full expensing” which allowed construction firms to fully deduct the cost new and used equipment the year it is purchased, rather than depreciated over time.
The Tax Relief for American Families and Workers Act would restore these important provisions, along with other improvements to simplify taxes.
THE DETAILS: After negotiating for over a year, the Chairmen of the House Ways and Means Committee and Senate Finance Committee reached an agreement in January to advance legislation that would address a number of outstanding tax issues that AGC has advocated for over the past two years. The legislation would:
- Roll back a provision that forces construction firms to amortize their research and development expenses over five years, rather than writing them off in the year they are incurred. This can include costs, including staff salaries, for design/build project activities, developing and improving pre-fabrication methods and other ways to increase efficiency, performance, and reliability, and many other construction-related activities.
- Reinstate full expensing for new and used business equipment by allowing construction firms to fully deduct those expenses in the year the equipment is placed in service.
- Simplify tax preparation by increasing the threshold at which businesses have to issue certain informational tax returns (1099’s) to independent contractors, from $600 to $1000.
AGC supports this legislation, and it passed the Ways and Means Committee by a bipartisan vote of 40-3. A vote has tentatively been scheduled for the week of January 29.