The Restaurant Revitalization Tax Credit Act

Blog Post

On April 13, 2023, the Restaurant Revitalization Tax Credit Act (Act) was introduced in the House of Representatives to amend the Internal Revenue Code to provide a partially refundable credit against payroll taxes for certain restaurants affected by the COVID-19 pandemic. The Act proposes to create a special tax credit available to businesses that applied for the Small Business Administration’s (SBA) Restaurant Revitalization Fund (RRF) program, but were unable to receive a grant because the program ran out of funding.  

Created as part of the American Rescue Plan, the RFF provided $28.6 billion for restaurants, bars, food trucks, caterers, tasting rooms, and taprooms to recover from the COVID-19 pandemic. The RFF was available to entities with twenty or fewer affiliated locations and award amounts were equal to the difference between 2019 and 2020 revenues, minus any PPP funds received. Within days of opening the RFF, the SBA received requests for more funding than was available. Just three weeks after opening, the SBA received more than 362,000 applications requesting more than $75 billion in funding – nearly triple the available funding under the RFF. The SBA closed the application portal if the RFF on May 24, 2021, leaving 177,000 applicants without any aid.

Under the proposed Act, a tax credit may be used to offset employment taxes up to $25,000 per quarter in 2023 and is refundable up to a total of $25,000 for all four quarters for employers that had an average of ten or fewer employers in the fourth quarter of 2022. The cap on the refundable amount is reduced by $2,500 for each additional employee over ten. The Act would be open to RRF applicants that:

  • Were eligible for, but did not receive an RRF award due the program running out of funding.
  • Experienced an average reduction in gross receipts in 2020 and 2021 of greater than 30 percent as compared to 2019 or a reduction in gross receipts of greater than 50 percent in either 2020 or 2021, as compared to 2019.
  • Were in operation prior to March 14, 2020.
  • Paid payroll taxes in at least two quarters during 2021.

The SBA would “coordinate with and provide information to the Secretary of the Treasury (or the Secretary’s 22 delegate) to assist in identifying employers that are eligible for the credit.” 

The text of the proposed Act can be found here.

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