National Restaurant Association Achieves Passage of Tax Provisions for Restaurants and Employees

 
(Washington, DC) The National Restaurant Association today applauded the House and Senate for passing legislation that provides tax provisions for restaurants and small businesses aimed at repealing the out-dated depreciation schedule for restaurants, as well as tax credits and health savings benefits to assist restaurants and their employees.
 
The legislation will extend through 2007, the expired 15-year recovery period for restaurant improvements.
 
“The building depreciation legislation is good, common-sense tax policy. The current 39-year depreciation schedule is unrealistic and particularly punitive to restaurants since many are expanded and renovated more frequently than other businesses due to high-volume consumer traffic and daily wear-and-tear. While we are pleased with the provision, we encourage Congress to go beyond extending the recovery period of improvements as well as new construction of restaurants, and instead make them permanent,” said Steven C. Anderson, Association president and chief executive officer.
 
“The nations 935,000 restaurant locations will serve over 70 billion meals and have an overall economic impact of more than $1.3 trillion in 2006. By allowing restaurateurs to deduct the cost of renovations on a shorter schedule, this legislation will help enhance that impact as restaurateurs will be in a position to grow their businesses and create more jobs,” Anderson commented.
 
Restaurant buildings are specialized, single-purposed structures, unlike other non-residential property. The industry-specific design and construction requirements restrict their use to the restaurant industry. For example, restaurants must install a firewall between the kitchen and dining room. Restaurants maintain longer hours than the average business and many are open seven days a week, roughly 18 hours a day. This daily assault causes a rapid deterioration in restaurant buildings systems, from its entrances and lobbies to its flooring, restrooms and interior walls.
 
Other provisions included in the bill that are important for the restaurant industry are as follows:
 
*          Extension of Work Opportunity Tax Credit (WOTC) and Welfare-to-Work (WTW) Tax Credit. WOTC and WTW tax credits will be extended through 2006 and combined in 2007. These incentives will enable employers to devote more time and resources to recruiting, hiring, training and retaining disadvantaged workers.
 
In addition, the provisions will provide more flexibility in completing paperwork by extending the filing deadlines by one week.
 
*          Improving Health Savings Accounts (HSAs). Expands current contribution levels enabling employees to contribute more of their incomes to HSAs. In addition, employees will have more flexibility to roll over funds from other existing health savings vehicles.
 
“We are pleased that the House of Representatives and Senate have acted to extend and improve upon these important tax provisions,” said Anderson. “As one of the nation’s largest private sector employees, the restaurant industry serves as the cornerstone of rewarding career and employment opportunities. These incentives will enable restaurants and other businesses to continue effectively planning for the recruitment and training of employees, and improve health care benefits.”