February 23, 2022

National Restaurant Association and State Partners Warn IRS that ERTC Filing Backlog Creating Cash Flow Issues for Restaurants

Associations ask for greater transparency and certainty as restaurant industry continues to face COVID-19-related financial challenges.
Washington, D.C. – The National Restaurant Association and the 52 State Restaurant Associations today sent a letter to Secretary of the Treasury Janet L. Yellen and Internal Revenue Service (IRS) Commissioner Charles P. Rettig, urging the IRS to improve the filing process for the Employee Retention Tax Credit (ERTC). The recommendations outlined in the letter are focused on providing restaurants with more certainty and flexibility this tax season.

The letter highlights that many restaurants have applied for ERTC but still have not received aid. A recent poll found 83 percent of operators who applied for the tax credit over six months ago still have not received any funds. Additionally, the letter highlights that this issue is “compounded by a loss of their normal tax deduction for payroll in their 2021 tax filing,” creating a cash flow issue, as some restaurant operators will not have received corresponding credits by the time they have to file and pay taxes. 

“The ERTC has been a critical recovery tool for hundreds of thousands of restaurants, but far too many are still waiting for their refund from the federal government,” said Sean Kennedy, executive vice president for Public Affairs at the National Restaurant Association. “As Tax Day approaches, many restaurants are about to be told to overpay their taxes, with the promise of a refund later. The system can work better for an industry on the ropes, and we are pressing the IRS and Treasury to act on our common sense solutions.” 

To provide more certainty for restaurants this filing season, the letter urges the IRS to:
  • Halt automated collections, including the lien/levy issuance, until the IRS can certify the Form 941 backlog has been resolved.
  • Delay the collection process for filers until any mail that may include an abatement request is processed. 
  • Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence.
  • Communicate the status of amended returns and ERTC refunds, including expected dates for when tax documents will be processed.

Read the full letter to the IRS

About the National Restaurant Association

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises more than 1 million restaurant and foodservice outlets and a workforce of 15.5 million employees. Together with 52 State Associations, we are a network of professional organizations dedicated to serving every restaurant through advocacy, education, and food safety. We sponsor the industry's largest trade show (National Restaurant Association Show); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart). For more information, visit Restaurant.org and find @WeRRestaurants on Twitter, Facebook and YouTube.