The restaurant industry has suffered significantly with sales and job losses since the COVID-19 outbreak began. To show the economic impact to the industry, the National Restaurant Association prepared an infographic to report the results of a survey they conducted in April of more than 6,500 restaurant operators nationwide. 

On August 3rd the National Restaurant Association submitted a letter to Congress calling for important changes to Paycheck Protection Program (PPP) loans and seeking support for a number of components of the Blueprint for Restaurant Revival.

They have asked Congress to ensure that the second draw of PPP loans are available to restaurants sustaining economic losses. The current proposals would require businesses to demonstrate a 50% reduction in quarterly gross receipts over the previous year, which would deny access to 55 percent of restaurants. They are asking that the threshold be lowered to a 20% reduction, which would allow many more restaurants to qualify for a second loan, maintain their payroll, pay their expenses, and stay in business. 

They have also asked Congress to pass legislation codifying their original intent that business expenses paid with PPP loans would be tax deductible. At this point the IRS is giving conflicting guidance, which will lead restaurants to suffer surprise tax liabilities at a time when they are struggling to stay open.

If you are are a restaurant owner, you should be aware of these initiatives. You should also seek expert advice from your accountant before making any important business decisions, especially related to any government loans or tax deferrals. It's important to fully understand the ramifications of any special programs before making a decision.

Read our post about the President's Executive Order regarding the deferral of employee Social Security taxes.

As always, contact us with your questions. The health of our clients' businesses is our top priority.