SBA Hot Topic Tuesday – Senate Proposes Payroll Tax Relief for RRF Applicants

January 31, 2023

Delaney Sexton
Contributing Editor

SBA Hot Topic Tuesday – Senate Proposes Payroll Tax Relief for RRF Applicants

“While the American Rescue Plan saved thousands of restaurants, its Restaurant Revitalization Fund left too many behind. I believe we need to replenish the Fund and will keep pressing to do so. We are re-introducing the Restaurant Revitalization Tax Credit Act because we know it will help keep restaurants afloat until we are able to replenish the Fund. This tax credit would benefit every eligible restaurant that applied to the Fund, but never received a grant through no fault of their own. Washington state’s restaurants and small businesses deserve our ongoing support and I will continue fighting for them in the Senate,” says Senator Patty Murray of Washington.

Three senators reintroduced The Restaurant Revitalization Tax Credit Act, legislation that would create a tax credit for businesses that applied for the Restaurant Revitalization Program but did not receive funding. About 175,000 businesses, or two out of every three eligible RRF candidates did not obtain grants from the program.

The content of the bill proposed to establish the Restaurant Revitalization Tax Credit, a program that would be available to eligible employers. Recipients of the credit could offset payroll taxes of up to $25,000 each quarter in the calendar year 2023. Businesses with 10 or fewer employees would receive a refundable credit of up to $25,000 over the course of a year, and the cap on refundability would be phased out for businesses with fewer than 20 employees.

If the bill passes, recipients would have to have applied for the RRF but did not receive a grant. Also, the businesses needed to experience an average operating loss of at least 30% in 2020 and 2021 when compared to 2019 or losses of at least 50% in 2020 or 2021 as compared to 2019. Lastly, the businesses need to have been operating prior to March 14, 2020, and paid payroll tax in at least two quarters of 2021.

“We have not forgotten about these restaurants. They have been hurting for too long,” says the Chair of the Senate Committee on Small Business & Entrepreneurship, Senator Ben Cardin. “The Restaurant Revitalization Fund was a timely program that simply did not have enough funds to cover the intense demand. I’ve heard from many restaurant owners who, having missed out on these funds, used their personal retirement savings or put their homes up as collateral to keep their businesses afloat. This tax credit will help ease their burden. It will support the restaurants we love while helping to boost our local economies.”

Senate Press Release