Trade Group Seeks QIP Guidance Pending Technical Correction

October 9, 2018

The Honorable David J. Kautter
Assistant Secretary (Tax Policy)
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

The Honorable William M. Paul
Chief Counsel (Acting)
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

RE: Comments to Proposed Regulations Concerning the Additional First Year Depreciation Deduction Under 168(k) of the Code (REG-104397-18).

Dear Assistant Secretary Kautter and Chief Counsel Paul:

The International Council of Shopping Centers (“ICSC”) appreciates the opportunity to provide comments on the proposed regulations titled “Additional First Year Depreciation Deduction” under Section 168(k) of the Internal Revenue Code (hereinafter the “Proposed Regulations”).

Founded in 1957, ICSC is the global trade association of the shopping center industry. Our 70,000+ members in over 100 countries include shopping center owners, developers, managers, investors, retailers, brokers, academics, and public officials.

ICSC requests that the Department provide guidance to allow taxpayers to apply 15-year MACRS and 20-year ADS recovery periods for Qualified Improvement Property (“QIP”) as intended by Congress, until the technical correction is adopted.

The Tax Cuts and Jobs Act eliminated the separate definitions of qualified leasehold improvement, qualified restaurant, and qualified retail improvement and created a combined and expansive concept of qualified improvement property. As described in the legislation's accompanying Joint Explanatory Statement, the intent was to provide permanent 15-year (20-year ADS) accelerated depreciation life for such property. Regrettably, the actual statutory language in Section 168 did not list qualified improvement property as 15-year property under Section 168(e)(3)(E).

Republican members of the Senate Finance Committee sent a letter on August 16, 2018, to the Treasury Department and IRS reaffirming congressional intent regarding the treatment of QIP so that it could be reflected in future guidance and IRS' enforcement. Sixteen Democratic senators also signed a separate letter dated September 25, 2018, urging the Treasury Department to address the QIP errors through guidance.

Providing such guidance would give certainty to the retail real estate industry as businesses consider whether or not to undertake renovation and construction projects. Further, it would save taxpayer time and money by alleviating the need to file amended federal, state, and local income tax returns when the provision is later addressed by Congress.

ICSC thanks you for consideration of our concerns. We welcome the opportunity to discuss this issue in more detail. For further questions, please contact Phillips Hinch, Vice President of Tax Policy, at phinch@icsc.org or (202) 626-1402.

Sincerely,

Tom McGee
President & CEO
International Council of Shopping Centers
Washington, DC