Immigration Reform
The House and Senate must work together to enact comprehensive immigration reform. The Department of Homeland Security should reconsider the complex, confusing “no-match” regulations that are expected to be reissued in early 2008.

Background
• Comprehensive immigration reform: Congress’s efforts for comprehensive reform fell apart in June when the Senate couldn’t get enough votes to proceed. The vote was 46 yes, 53 no; 60 yes votes were needed to keep the bill alive. Although action is not likely this year, a House bill is pending — H.R. 1645, the STRIVE Act, by Reps. Luis Gutierrez (D-Ill.) and Jeff Flake (R-Ariz.). While not a perfect bill, this bipartisan legislation does contain the essential elements of comprehensive immigration reform.

• “No-match” regulations: The Department of Homeland Security issued a regulation in mid-August that lists steps employers should take if they get a “no-match” letter from the Social Security Administration citing discrepancies between the social security number provided by an employee and Social Security Administration records. These include terminating employees if the discrepancy cannot be resolved within 90 days. The rules were supposed to take effect Sept. 14, but a court put them on hold citing discrepencies in how the rules were made. DHS is expected to reissue new rules in early 2008.

• More crackdowns: Some in Congress want to pass stand-alone immigration bills specifically targeting employers who hire undocumented workers. And the DHS announced in August that it will soon propose regulations to increase fines by 25 percent for immigration-related hiring and paperwork violations, and require businesses with federal government contracts to use the “E-Verify” electronic system to verify employees’ legal right to work

Restaurant Depreciation
Permanently shorten the depreciation schedule for restaurant buildings to 15 years. The current 39 1/2-year depreciation schedule is onerous for restaurateurs because it doesn’t account for the daily wear and tear restaurants experience due to heavy customer traffic.

Background
Depreciation schedules for commercial real estate have not been significantly revised since they were established. Commercial real estate generally has a 39 1/2-year depreciable life in the federal tax code for the original building and for any subsequent renovations or improvements to the building.

Congress has changed the tax code in recent years to give certain industries — including some businesses that compete with restaurants — the benefit of shorter depreciation schedules. For example, food outlets in amusement parks qualify for seven-year depreciation schedules. Gas stations and convenience stores are able to depreciate buildings and improvements over 15 years.

At the urging of the National Restaurant Association and its members, lawmakers have made some changes in the restaurant depreciation schedule, but so far the changes have been temporary. In 2004, Congress authorized a 15-year depreciation schedule for restaurants that put qualified building improvements into place by the end of 2005. This provision spurred tremendous economic activity. According to the U.S. Census Bureau, the restaurant industry spent more than $7.4 billion on new structures and building improvements in 2005—a whopping 42 percent increase over the $5.2 billion spent in 2004. The extra spending created thousands of jobs in construction-related industries nationwide.

In 2006, Congress included in its Tax Relief and Health Care Act a provision that extends the 15-year depreciation schedule through 2007 for restaurants that lease space in larger buildings and restaurants that make improvements to existing restaurant structures. The provisions do not cover new restaurant construction in stand-alone buildings. This is unfortunate, considering that most restaurants are constructed as single-use structures in stand-alone buildings due to industry-specific design and construction requirements. For example, restaurants must include firewalls between kitchens and dining rooms.

In 2007, as part of the minimum-wage bill, the Senate voted to extend the 15-year schedule for restaurant improvements through March 2008 and for the first time apply the schedule to new restaurant construction. The Senate Finance Committee voted to extend that through the end of 2008. But all depreciation changes were removed from the minimum-wage/tax-relief package that ultimately became law.

The National Restaurant Association supports Congressman Kendrick Meek's legislation, HR 3622, that would make a 15 year depreciation schedule for restaurant improvements and new construction permanent. S. 2170 has also been introduced in the Senate by Kay Bailey Hutchison and Jon Kyl. We strongly urge passage of both bills.