The Restaurant Revitalization Tax Credit Act was reintroduced to provide payroll tax relief to eligible small businesses.
Senate bill would give payroll tax relief to some small businesses
The new legislation creates a special tax credit that is available to businesses that previously applied for the Small Business Administration’s Restaurant Revitalization Fund (RRF) program, but did not receive a grant because the program ran out of funds. It has been estimated that nearly 2 in 3 eligible RRF applicants were left without assistance, which equates to around 175,000 businesses.
Businesses eligible for a new tax credit
The credit available through the Restaurant Revitalization Tax Credit is available only to those businesses that applied for and were eligible to receive RRF grants. Eligible employers must have offset employment taxes of up to $25,000 per quarter in calendar year 2023.
Additionally, for businesses with 10 or fewer employees, the credit is refundable up to a total of $25,000 over the course of the year, and the refundable limit will be phased out for businesses with fewer than 20 employees.
Restaurant businesses ‘suffering for too long’
Senator Ben Cardin led the reintroduction of the bill, saying, “We haven’t forgotten about these restaurants. They have been suffering for too long. The Restaurant Revitalization Fund was a timely program that simply did not have enough funds to meet the intense demand.
“I have heard from many restaurant owners who, having lost these funds, used their personal retirement savings or put up their homes as collateral to keep their businesses afloat. This tax credit will help ease your burden. You will support the restaurants we love while helping boost our local economies.”
Additional Eligibility Criteria
Eligible businesses must have experienced average operating losses of at least 30% in both 2020 and 2021 compared to 2019, or losses of at least 50% in calendar years 2020 or 2021 compared to 2019.
To be eligible, businesses must also have been in business before March 14, 2020, and have paid employment taxes for at least two quarters in 2021.
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