Regulatory and Tax Reform Update
By: Craig Brightup, The Brightup Group LLC
When President Trump took office, he signed Executive Orders 13771 and 13777 to cut federal regulations. EO 13771 says no new rules can be issued without cutting two existing regulations, and EO 13777 put White House monitors in the agencies to enforce deregulation efforts. As a result, the 2017 Federal Register contained 61,308 pages of regulatory actions, which is the lowest count since 1993 and a 36% drop from 95,894 pages in 2016, the highest level ever recorded.
Unfortunately, one of the rules finalized under President Obama that went into effect under President Trump is the Occupational Safety and Health Administration’s (OSHA) silica rule. However, the federal government’s Spring Regulatory Agenda was released in May and an OSHA entry announces it will publish a Request for Information (RFI) to revise the construction silica standard’s Table 1 engineering controls.
Though publication of the RFI in the Federal Register is probably a few months down the road, OSHA’s commitment to do an RFI could ultimately lead to a reopening of the rule. This positive development is a result of negotiations with the Construction Industry Safety Coalition, which is also working with OSHA to develop a series of Frequently Asked Questions (FAQs) about the rule’s complex set of requirements.
OSHA also appears not to be aggressively enforcing the rule while negotiations are ongoing, at least in Fed-OSHA states, and hopefully President Trump’s pick to head the agency, Scott Mugno, will soon be confirmed by the Senate in order to be involved in the RFI before it’s published.
On the tax reform front, it bears repeating that IRC Sec. 179’s new expensing provisions in the Tax Cuts and Jobs Act are a big victory for the roofing industry and WSRCA members. In fact, WSRCA members can have their cake and eat it, too!
Sec. 179 allows businesses to purchase needed equipment and write-off the full amount, or a major portion of it, on their taxes for that year. Qualifying property includes certain vehicles and virtually all construction equipment and machinery. But, an even bigger breakthrough for the roofing industry and its customers is that Sec. 179 qualified property now includes improvements to nonresidential roofs!
The new limit on the total amount of Sec. 179 property a business can purchase each year before the deduction is totally phased-out is $2.5 million, and the annual limit for the deduction is now $1 million. As such, a roofing contractor can use Sec. 179 to buy qualifying business equipment and then sell a commercial roof to a property owner who can write-off up to $1 million in the year the roof is purchased. And the $1 million annual deduction and $2.5 million maximum business investment limits are permanent and indexed for annual inflation starting in 2019.
Also, don’t forget the IRC Sec. 168(k) Bonus Depreciation Deduction, which has been raised to 100 percent for qualifying property. This generally covers property with a depreciable tax life of 20 years or less and the IRS is expected to clarify eligibility for full bonus depreciation in June.
The Western Roofing Expo will also take place in June, and I look forward to seeing you at the Legislative Luncheon on Monday, June 11, where I’ll be joined once again by NRCA CEO Reid Ribble to discuss these and other industry issues.