A nonprofit publication of the Kentucky Center for Public Service Journalism

Keven Moore: Politicians finally get something right in Washington — as it relates to safety


The Tax Cuts and Jobs Act was signed into law on Dec. 22, 2017, making it the nation’s most comprehensive reform of the U.S. tax code in more than 30 years.

But did you know that the tax reform bill also included a huge tax savings incentive to business and property owners that will undoubtedly save the lives of countless American workers and families?

Yes, that’s correct, just like anything coming out of Washington, you have to read the fine print to learn what else was added into any new piece of legislation. As it turns out, the Bill included particular language that directly affects the fire sprinkler industry – incentivizing business and property owners to retrofit their properties with new fire sprinkler systems.

Fire sprinklers have been saving lives for more than a century, but for years cost considerations have prevented many business and property owners from making this important investment to retrofit existing properties, wherever local and state codes haven’t already required such action.

Fire sprinklers have been saving lives for more than a century, but for years cost considerations have prevented many business and property owners from making this important investment to retrofit existing properties.

Sprinklers systems are now included in Section 179 H.R. 1, which provides an important incentive to install fire sprinkler system which allows the cost of sprinkler retrofits to be deducted as a Section 179 expense. This tax-policy change will allow numerous occupancies — including businesses, restaurants, retail spaces, high rises and other establishments — to protect their employees and customers.

Section 179 of the United States Internal Revenue Code (26 U.S.C. § 179) allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated.

The final bill expands the definition of qualified real property eligible for Section 179 by expensing improvements to nonresidential real property such property was first placed in service. In addition, new Section 179 language allows the following types of building improvements to be eligible for the immediate write-off for roofs included – heating, ventilation, and air-conditioning property, Fire protection and alarm systems, and security systems.

This was obviously included to help stimulate the economy, but as a risk management and safety professional I find this to be an enormous investment on life safety in American moving forward.

The fact is that despite all of our technological advancements people are still being killed every year due to fires in commercial buildings, night clubs, warehouses, restaurants, high rises, etc., because of the lack of sprinkler systems. A classic example of this was the 2003 Rhode Island fire at The Station nightclub, which was one of the worst disasters in that state’s history, killing 100 concertgoers. Tragically, many if not all of these deaths could have been prevented had the nightclub had a sprinkler system installed.

According to NFPA, in 2016 there were 1,342,000 fires reported in the United States, leading to 3,390 civilian fire deaths; 14,650 civilian injuries; and $10.6 billion in property damage. When you include the indirect cost of fire, such as lost economic activity, the cost is closer to $108 billion annually. Studies by NFPA have concluded that buildings outfitted with sprinklers reduce the death rate per fire by 81 percent and decrease the property damage by up to 68 percent.

Property owners and business owners have known that sprinkler systems save lives, but for some due to the cost of these renovations it just didn’t make it economically feasible. Many understood that over time there would be a return on investment (ROI), in the way of property insurance premium deduction but such a yield on that return took years and in some cases decades to recoup.

With this new tax incentive property owners and business owners can now see an immediate ROI just from a tax incentive and then they can still reap the ROI over the long term with their future lower insurance premium costs.

According to an article in APSFireCo.com small businesses will now be able to fully expense installation of fire sprinklers under section 179 of the tax code up to a cap of $1 million in each year of expense. In addition, small businesses that may need to borrow money to pay for the retrofit will be able to fully deduct the interest expense on the loan.

Larger entities can fully expense capital expenses over the next five years. Starting in 2023, the amount that can be expensed will slowly taper down. This part of the provision means that fire chiefs and local policy officials can now ensure business owners have five years for full expensing, which we believe will provide the opportunity for many high-rise and other high-risk occupancy buildings to improve their fire safety features.

The very first automatic sprinkler system was patented by Philip W. Pratt from the state of Massachusetts in 1872 and was first system installed in a piano factory in 1874. Prior to this invention, property owners had to rely on bucket brigades to help put out a fire.

They say that you should never throw out your old buckets, until you know the new bucket holds water and in this case, this has been proven over and over going back before the turn of the 1900s. Through the years this century-old technology has proven to save thousands of lives and millions of dollars in property damage, but the fact is it sometimes still takes a governmental incentive to further justify installing today’s life-saving technology.

Be Safe My Friends

Keven Moore works in risk management services and is an expert witness. He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He lives in Lexington with his family and works out of both the Lexington and Northern Kentucky offices. Keven can be reached at kmoore@roeding.com.


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