Mechanical Insulation Installation Incentive Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1987 To amend the Internal Revenue Code of 1986 to provide a tax incentive for the installation and maintenance of mechanical insulation property. IN THE HOUSE OF REPRESENTATIVES MARCH 28, 2019 Ms. SA´NCHEZ (for herself and Mr. REED) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide a tax incentive for the installation and maintenance of mechanical insulation property. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Mechanical Insulation 4 Installation Incentive Act of 2019’’. 5 SEC. 2. EXPENSING OF MECHANICAL INSULATION PROP- 6 ERTY. 7 (a) IN GENERAL.—Part VI of subchapter B of chap- 8 ter 1 of the Internal Revenue Code of 1986 (relating to 9 itemized deductions for individuals and corporations) is 10 VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1987 IH amended by inserting after section 179E the following new 1 section: 2 ‘‘SEC. 179F. MECHANICAL INSULATION PROPERTY. 3 ‘‘(a) TREATMENT AS EXPENSES.—In addition to any 4 other deduction in this subtitle, there shall be allowed as 5 a deduction an amount equal to the applicable percentage 6 of the cost of mechanical insulation property placed in 7 service during the taxable year. 8 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 9 subsection (a)— 10 ‘‘(1) IN GENERAL.—The term ‘applicable per- 11 centage’ means the lesser of— 12 ‘‘(A) 30 percent, and 13 ‘‘(B) the reduction in energy loss (ex- 14 pressed as a percentage) from the installed me- 15 chanical insulation property compared to ref- 16 erence mechanical insulation property which 17 meets the minimum requirements of ASHRAE 18 standard 90.1–2007. 19 ‘‘(2) SPECIAL RULE RELATING TO MAINTE- 20 NANCE.—In the case of mechanical insulation prop- 21 erty placed in service as a replacement for insulation 22 property— 23 ‘‘(A) paragraph (1)(B) shall not apply, and 24 VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1987 IH ‘‘(B) the cost of such property shall be 1 treated as an expense for which a deduction is 2 allowed under section 162 instead of being 3 treated as depreciable for purposes of the de- 4 duction provided by section 167. 5 ‘‘(c) DEFINITIONS.—For purposes of this section— 6 ‘‘(1) MECHANICAL INSULATION PROPERTY.— 7 The term ‘mechanical insulation property’ means in- 8 sulation materials, facings, and accessory products— 9 ‘‘(A) placed in service in connection with a 10 mechanical system which— 11 ‘‘(i) is located in the United States, 12 and 13 ‘‘(ii) is of a character subject to an al- 14 lowance for depreciation, and 15 ‘‘(B) utilized for thermal requirements for 16 mechanical piping and equipment, hot and cold 17 applications, and heating, venting and air con- 18 ditioning applications which can be used in a 19 variety of facilities. 20 ‘‘(2) COST.—The cost of mechanical insulation 21 property includes— 22 ‘‘(A) the amounts paid or incurred for the 23 installation of such property for that incre- 24 mental portion above the minimums in 25 VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1987 IH ASHRAE standard 90.1–2007 and the total in- 1 sulation cost for maintenance applications, 2 ‘‘(B) in the case of removal and disposal of 3 the old mechanical insulation property, 10 per- 4 cent of the cost of the new mechanical insula- 5 tion property (determined without regard to 6 this subparagraph), and 7 ‘‘(C) expenditures for labor costs properly 8 allocable to the preparation, assembly, and in- 9 stallation of mechanical insulation property. 10 ‘‘(d) COORDINATION.—Subsection (a) shall not apply 11 to the cost of mechanical insulation property which is 12 taken into account under section 179D or which, but for 13 subsection (b) of section 179D, would be taken into ac- 14 count under such section. 15 ‘‘(e) ALLOCATION OF DEDUCTION FOR TAX-EXEMPT 16 PROPERTY.—In the case of mechanical insulation prop- 17 erty installed on or in property owned by an entity de- 18 scribed in paragraph (3) or (4) of section 50(b), the per- 19 son who is the primary contractor for the installation of 20 such property shall be treated as the taxpayer that placed 21 such property in service. 22 ‘‘(f) CERTIFICATION.—For purposes of this section, 23 energy savings shall be certified under regulations or other 24 VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1987 IH guidance provided by the Secretary, in consultation with 1 the Secretary of Energy. 2 ‘‘(g) TERMINATION.—This section shall not apply to 3 any property placed in service after the end of the 5-year 4 period beginning on the date of the enactment of this sec- 5 tion.’’. 6 (b) DEDUCTION FOR CAPITAL EXPENDITURES.— 7 Section 263(a)(1) of such Code (relating to capital ex- 8 penditures) is amended by striking ‘‘or’’ at the end of sub- 9 paragraph (J), by striking the period at the end of sub- 10 paragraph (K) and inserting ‘‘, or’’, and by adding at the 11 end the following new subparagraph: 12 ‘‘(L) expenditures for which a deduction is 13 allowed under section 179F.’’. 14 (c) TECHNICAL AND CLERICAL AMENDMENTS.— 15 (1) Section 312(k)(3)(B) of such Code is 16 amended by striking ‘‘or 179E’’ each place it ap- 17 pears in the text or heading thereof and inserting 18 ‘‘179E, or 179F’’. 19 (2) Paragraphs (2)(C) and (3)(C) of section 20 1245(a) of such Code are each amended by inserting 21 ‘‘179F,’’ after ‘‘179E,’’. 22 (3) The table of sections for part VI of sub- 23 chapter B of chapter 1 of such Code is amended by 24 VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1987 IH inserting after the item relating to section 179E the 1 following new item: 2 ‘‘Sec. 179F. Mechanical insulation property.’’. (d) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to property placed in service after 4 the date of enactment of this Act. 5 Æ VerDate Sep 11 2014 01:37 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H1987.IH H1987 pamtmann on DSKBFK8HB2PROD with BILLS