Restaurant Sales Climb

In March, restaurant sales seen a 1% increase in comparison to the prior month. The National Restaurant Association (NRA) notes that registered total sales for the month of March came in at $75.4 billion based on preliminary data retrieved from the U.S. Census Bureau. In comparison to January, this was a 3% increase in total sales. While this is a nice change of pace for the industry, the coming months will be more telling. Between July 2021 and January 2022, restaurant and bar sales were for the most part stagnant. Consumers continue to shrug off record gas prices, increasing food costs, and are back at a point to where dining versus takeout is becoming the norm once again. Think about it, the pandemic made it to where many consumers remained at home and with this, said consumers had an increasingly pent-up demand for dining out when restrictions began to ease. This demand has not fallen quite yet and is expected to be around for some time.

Ask the Senate to Allocate Additional Funding to the RRF

Recently, the House voted to replenish the Restaurant Revitalization Fund (RRF) with an injection of $42B. The bill will soon head to the Senate who can in turn either make or break the deal. Many restaurants across the country applied for the RRF and were even approved; however, when push came to shove, the funds never arrived. Meanwhile, increasing food costs, labor shortages, and other factors continue to plague the industry with no end in sight. With additional funding on the cusp of being approved, it is more important now than ever to ask the Senate to approve the replenishment of the RRF. The NRA has made an easy to use email submission tool that can be found here. You are able to send your officials an email with a singular click. In joining the grassroots campaign, you will be contributing to the potential passing of the replenishment of the RRF. Act today.

Alphabet Soup of Tax Credits

While the replenishment of the RRF is in motion, take advantage of other covid relief and tax credits that are available to you today. Since the start of the pandemic, the tax credit landscape has become quite complicated. Having said this, there are opportunities available for you that you do not want to miss out on.

ERC, WOTC, FICA Tip Credit --- these are all tax credits that you should be taking advantage of for your business. Of the group, the Employee Retention Credit (ERC) has proven to be the most lucrative.

ERC

The Employee Retention Credit (ERC) is a tax credit that is worth up to $5,000 per employee you had on payroll in 2020 and worth up to $21,000 per employee you had on payroll in 2021. Restaurant operators are seeing 6-figure credits and in some cases, 7-figure credits depending on the size of the establishment in question. Available through the CARES Act, the ERC has been a gamechanger for many employers. This is yet another injection of cash for businesses across the country similar to the Paycheck Protection Program (PPP) loans that you may have received in 2020 and/or 2021 respectively.

Employers, including organizations that are tax-exempt, are eligible for the credit if they were in operation during calendar year 2020 and experienced either:

  • a full or partial disruption of their operation during any calendar quarter due to governmental orders that limited capacity, commerce, travel, of group meetings due to COVID-19, or
  • a significant decline in gross receipts

ERT Credit has calculated the ERC credit for hundreds of employers across the country and continues to actively process both computations and amended returns for employers. We can answer your questions and assist you with the employer retention credit, CARES Act, tax consulting, and filing options. Do not hesitate — contact us to make sure you receive all credits your business qualifies for. Click here to reach out to us for more information.

WOTC

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that employers are able to receive for hiring job applicants from specific groups that face barriers to employment. Given the current labor shortage, employers are ripe for the WOTC and should take advantage. To qualify for the credit, a new hire must fit a specific target group that has been identified by the U.S. Department of Labor. Examples include qualified veterans, food-stamp recipients, youth hires, long-term unemployment recipients, individuals with felonies, and more. Restaurant operators are able to receive a credit of up to $2,400 for each eligible individual that falls under WOTC guidelines. For additional information, please view IRS Form 8850.

FICA Tip Credit

The Federal Insurance Contributions Act is available to employers that are considered to fall within the food and beverage industry and employ tipped servers. Your tipped employees that made more than the federal minimum wage ($7.25/hour) may be eligible for the FICA Tip Credit.

The credit equals the amount of Social Security and Medicare taxes the employer paid on the tips received by said worker. To qualify for the tax credit, employers need to make sure that their employees are making at least the federal minimum wage. If the state minimum wage is higher, then the wages must hit the state minimum wage instead. If the aforementioned scenario is true, you as an employer can claim the tax credit. Claim the FICA tip credit by utilizing IRS Form 8846.

The formula is as follows:
Hours x (hourly rate + reported tips) = Weekly wages
Hours x federal wage rate = Wages paid at minimum wage
Weekly wages – (Wages paid at minimum wage x FICA 7.65%) = FICA Tax Credit
FICA Tax Credit x 52 Weeks = Total tax credit you can receive per employee