December 23, 2022

New RRF legislation would provide tax credits for restaurants that did not receive money

Likelihood of bill passing both chambers before year’s end appears slim
Calculator, two pens, and a sheet of paper
For the thousands of restaurants that were approved but never received money from the Restaurant Revitalization Fund (RRF), the mere mention of the program invokes disappointment. Even after the Small Business Administration released the remaining $83M several weeks ago, more than 170,000 restaurants are still left without much-needed help, struggling to survive, serve their communities, and pay off debt accrued during the pandemic through no fault of their own.

Now, after efforts in Congress over the last two years to replenish the RRF were unsuccessful, a group of senators is working in the final days of this year to provide restaurants that did not receive RRF money with some type of relief. 

Sens. Ben Cardin (D-Md.), Chair of the Senate Committee on Small Business, Patty Murray (D-WA), Chair of the Senate Committee on Health, Education, Labor, and Pensions (HELP), and Sherrod Brown (D-Ohio) introduced the Restaurant Revitalization Tax Credit Act - legislation that would create a special tax credit available to businesses that applied for but were unable to receive an RRF grant because the program was woefully underfunded and quickly ran out of money. 

“I’ve heard from many owners who, having missed out on RRF, have had to draw down on their personal retirement savings or put their homes up as collateral to keep their businesses afloat,” said Cardin. “While the pandemic has receded for many Americans, and we have made great strides to regain a sense of normalcy, this is not the case for small restaurant and bar owners still struggling to repay debt accrued during the last two years while facing increasing labor and supply costs. This tax credit will help ease their burden.”

Under the proposed legislation:
  • A restaurant could receive the Restaurant Revitalization Tax Credit (RRTC) for up to 4 quarters during 2023. 
  • The credit would be for $25,000 for ten employees, and then be reduced by $2,500 for each subsequent additional employee. After 20 employees in total, the credit would no longer apply.
  • The RRTC is capped at 19 employees for a maximum quarterly value of $362,500.
  • Additionally, the RRTC would only apply to wages in 2023 and cannot be used for employee wages over $25,000 per quarter.
To be eligible for the tax credit, restaurants would have to show:
  • They were eligible for RRF.
  • They did not receive RRF money.
  • They paid employment taxes during at least two calendar quarters of 2021
  • Their gross receipts for either 2020 or 2021 were less than 50% of the gross receipts for calendar year 2019, or the average gross receipts for both 2020 and 2021 were less than 70% the gross receipts for the calendar year 2019 (losses of 30% or more).
A companion bill introduced in the House last week by Reps. Earl Blumenauer (D-Ore.), Brian Fitzpatrick (R-Penn.), and Dean Phillips (D-Minn.) would also provide a tax credit in 2023 but differs slightly in eligibility figures and requirements.
Unfortunately, the likelihood of either bill passing before the end of the year is slim. Congress still hasn’t passed major appropriations bills and is currently pouring through a 4,000+ page omnibus spending package to fund the federal government in FY2023. And congressional leaders are not keen on including many tax priorities in a year-end deal.

The Association will continue to seek relief for restaurants still struggling because of the COVID-19 pandemic and will monitor this legislation in case it is introduced again when the 118th Congress begins in January.