The American Institute of Architects (AIA) has announced it was encouraged by changes made to the tax reform legislation contained in the House-Senate Conference Agreement.
The conference agreement that will now go to the House and Senate for a vote allows for a 20 percent deduction for businesses organized as pass-through entities like S-corps, sole proprietorships and Limited Liability Partnerships, subject to income limitations. The Senate bill would have restricted this deduction for service businesses like doctors, lawyers, architects and financial services firms. The final conference package now contains specific language stating that architecture and engineering firms are not subject to the limiting provision that applies to other service businesses.
The original House bill abolished the Historic Tax Credit (HTC) altogether, which is so vital to the design and construction communities’ efforts to revitalize Urban America. The Senate bill kept the HTC though it eliminated the current 10 percent credit for pre-1936 structures and diluted the current 20 percent credit for certified historic structures by spreading it over a five-year period. The conference agreement both keeps the HTC and improves on the language of the Senate bill by adding some flexibility for architects wishing to utilize the 20 percent credit.
The following statement is from AIA 2018 President Carl Elefante, FAIA:
“This is a complex piece of legislation that will affect each and every architect and architecture firm differently, depending on how they do business.
“The AIA lobbied hard and successfully to improve this bill, and to ensure that architects continue to be major job creators in the American economy. Gaining tax relief for architects who organize as pass through companies, which includes the majority of U.S. architecture firms, is an improvement over earlier drafts. So is preserving at least in part the Historic Tax Credit, which was totally abolished by the original House tax reform bill.
“We owe a debt of gratitude to our members for their efforts in reaching out to their elected representatives to make our views known and to make this legislation better for architects and the country. It’s clear that the conferees listened to our members, who showed the power of our profession to effect change even when the obstacles to change are huge.”