On March 25th, Congress passed the Coronavirus Stabilization Act of 2020. This legislation, which includes over $2 trillion in aid to combat both the virus and the negative economic impacts associated with social distancing, also includes a technical correction to the 2017 Tax Cut and Jobs Act (TCJA) that gives incentives to corporations that retrofit their businesses with fire sprinkler systems.
“Words cannot express the level of dedication that is at work across our nation from family-owned businesses that are ensuring fire & life safety are not compromised in the midst of this COVID-19 crisis that is our new normal,” states NFSA President Shane Ray. “I am in awe of those who are serving on the front lines during this crisis, from first responders (fire, EMS, and police, as well as health professionals) to our members ensuring that fire sprinkler systems are not compromised during this unprecedented national crisis.”
One of the provisions of the TCJA was intended to provide accelerated depreciation for what are known as real estate qualified improvement properties (QIP). Real estate qualified improvement property is defined as any improvement to an interior portion of a nonresidential building that’s placed in service after the date the building is first placed in service. In other words, it applies to all building upgrades and retrofits, with the exception of enlarging the existing building or installing an elevator or escalator. This definition includes fire sprinklers retrofits and would mandate a 15-year depreciation schedule for fire sprinklers and also make them eligible for bonus depreciation.
“This is a big win for our industry because we have been pushing since 2003 and the tragedy of the Station Night Club fire that claimed 100 lives and left over 200 with burn injuries” added NFSA President Shane Ray, who went on to say. “We have been educating and advocating for nearly two decades for incentives and we will continue to make our point that a fire sprinkler system is not a plumbing system and shouldn’t be treated as such in the tax code, as it is certainly not treated the same in the building and fire codes across the country and around the world.”
In the case of bonus depreciation, this would allow fire sprinklers to be depreciated over the next 10 years, even quicker than the 15-year schedule. After 10 years, fire sprinklers would permanently revert to the 15-year schedule. This is an enormous improvement over the legacy 39-year depreciation schedule for fire sprinklers in commercial buildings. Most importantly, it removes what is probably the single biggest hindrance property owners and local elected officials are faced with when deciding to either install sprinklers or mandate them – cost.
Unfortunately, due to a legislative drafting error, real estate qualified improvement property was not included in the list of 15-year properties, even though Congress clearly intended it to be. Since 2018, NFSA has worked diligently with our partners in both the fire service and building and construction industries to correct this error.
In the past two weeks, NFSA has been working to help its members respond to the coronavirus pandemic, with most responses directed at the state level regarding essential services. NFSA has also launched online training classes in response to most states passing shelter in place laws. You can access these resources by visiting www.nfsa.org/covid-19/ .
“As an NFSA member and Board Chair, I would like to thank NFSA members and staff who have worked so hard for the fire sprinkler industry,” added Kent Mezaros, NFSA Board Chair. “From responding to local, state and federal impacts of COVID-19, to this national effort that will see countless numbers of high-rise commercial buildings realize incentives to retrofit with fire sprinklers, NFSA has a made a difference for us all. I would encourage fire sprinkler industry companies who are not members of this association, to consider becoming one. You will see the member value immediately.”
NFSA’s mission is “To protect lives and property from fire through the widespread acceptance of the fire sprinkler concept.” NFSA wants to create a more fire safe world and works to heighten the awareness of the importance of fire sprinkler systems from homes to high-rise and all occupancies in between. The Association is an inclusive organization made up of dedicated and committed members of a progressive life-saving industry. This industry manufactures, designs, supplies, installs, inspects, and services the world’s most effective system in saving lives and property from uncontrolled structural fires. For more information about the National Fire Sprinkler Association, follow us via our social media presence on Twitter (@NFSAorg), Linked In (National Fire Sprinkler Association), and Facebook (National Fire Sprinkler Association).