Advocating for Contractors Through Crisis and Towards Recovery
ACCA has served as HVACR contractors’ voice in Washington and across the country since the onset of the coronavirus pandemic. In April, we shared our successful efforts to ensure HVACR contractors were deemed essential workers as well as our work advocating for the passage of the CARES Act which provided much needed small business relief and included the PPP. Many of you had played a direct role in that success by participating in ACCA’s action alerts and amplifying our collective voice, and we thank you for that. While our early victories were a step in the right direction, there was, and still is more work to be done. We’ve shared some of our recent accomplishments below.
Small Tax Code Update Brings Huge Contractor Benefit
Included in the recently passed CARES Act was a much-needed technical correction to the tax code that allows for full and immediate expensing of interior HVACR units that are ‘qualified improvement property’ or QIP until 2022. After 2022, HVACR units that qualify as QIP will be subject to a 15 year depreciation period before they can be expensed. The 15 year period is still extremely preferable to the previous depreciation period of 39 years that was erroneously included in the 2017 Tax Cuts and Jobs Act (TCJA). ACCA pushed for this technical correction and is confident that it will bring significant benefits to our members and their customers.
QIP: is defined as any improvement to the interior of nonresidential real property. Interior HVACR units that qualify as QIP can be fully expensed in year one until 2022. It’s worth noting that rooftop units and adjacent concrete pad units are not covered by this change.
You may remember that for over a decade ACCA fought to turn the HEAT Act into law. The HEAT Act, which was ultimately included in the TCJA, allows small business owners to expense qualified energy-efficient HVAC equipment under Section 179 of the tax code. It also changed the depreciation schedule for covered units from 39 years to immediate. The recent technical change builds on these efforts by allowing all businesses, not just small business owners, to immediately expense HVACR equipment that qualifies as QIP until 2022. That means more business for HVACR contractors.
Working Through the PPP
Following the rollout of the PPP, many contractors contacted us with their experiences. Some were painless, while many were mired by dysfunction and inefficiency. We compiled ACCA members’ concerns with the program and sent them directly (while also anonymously) to the House and Senate Small Business Committees, where staff was happy to receive them. The offices informed us that the information we provided was exactly what they needed to conduct oversight and improve the program. While the initial rollout of the PPP was rocky, the funds were fully distributed over a relatively short period of time and have served as a vital lifeline for small businesses across the country that are struggling to survive.
A move by the IRS in late April threatened the relief that so many small businesses have received from the PPP, by increasing participants’ tax liability. They ruled that no deductions would be available for any business expense paid for using PPP funds. The decision was especially misguided because the members of Congress that wrote the bipartisan bill stated explicitly that the funds were never intended to be taxed. ACCA took immediate action, urging leaders in Congress to work with the IRS to reverse the decision, or to take matters into their own hands and fix it themselves. ACCA also rallied leading voices in the HVACR industry to directly push Secretary of the Treasury Steven Mnuchin and the IRS to rectify the situation. Our message was simple: your decision does not make sense and hurts HVACR contractors. We will continue to push for tax relief and economic stimulus for our members.
Workers Compensation Rules
In seeking to avert a national trend, ACCA has taken action to oppose an emergency rule imposed by the Illinois Workers Compensation Commission (IWCC) in Illinois and an executive order by Governor Gavin Newsom in California regarding workers’ compensation. The policies deem that any essential worker in Illinois or California who contract COVID-19 are assumed to have contracted it while on the job and therefore would be eligible to be compensated. These policies are problematic because they do not fully take into account the complexities of contracting a disease, like what activities workers engage in with their time outside of work. They also run contrary to over one hundred years of workers compensation law and precedent. Moreover, they have the potential to derail the system that distributes payments to workers with injuries of all types. ACCA was pleased to learn that a judge blocked the harmful policy in Illinois about a week after it was implemented. ACCA continues to oppose the policy in California at the time this article was written and will oppose similar policies that arise elsewhere.
If you have questions or concerns regarding ACCA’s government relations efforts, please feel free to email me at email@example.com.
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