The Restaurant Act

The Restaurant Act, recently enacted as part of the American Rescue Plan, provides $28.6 billion in grants for the restaurant industry which is struggling to make it through the pandemic.  The bill aims to provide grants up to $5 million to individual restaurants and up to $10 million for restaurant groups.  Grant process will be managed by the Small Business Administration.

The bill provides that any restaurant, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premises of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink that owns or operates 20 or fewer establishments is eligible to apply for a grant.

The Grant is calculated by subtracting the 2020 revenues of the entity from the 2019 revenue.  For those not in operation for the entirety of 2019, the entity can receive the difference between 12 X the average monthly revenue for 2019 and revenue of the eligible entity in 2020 or a formula determined by Treasury.  For those not in operation until 2020, the entity can receive a grant equal to the amount of expense incurred by the entity (which would be covered expenses by the grant) minus any revenues received.  The grant amount will be reduced by the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL) funds spent.

The Treasury is expected to implement the process within 15 days after the enactment.

American Rescue Plan Act

The House-passed legislation, the “American Rescue Plan Act” (the “Bill”), is expected to be considered by the Senate this week.  The Bill includes provisions to provide financial relief to struggling families and ramp up vaccination distribution across the country.  Some of the major provisions included in the Bill are:

Child tax credit

The Bill will modify a refundable child tax credit for the tax year 2021, increasing the amount to $3,000 per child from $2,000.  The credit amount will be $3,600 for children under the age of 6.

Stimulus payments

The Bill includes the third stimulus payment, equal to $1,400 per person, to individuals with an AGI of $75,000 (or $150,000 for married couples) or less.

Unemployment insurance

The Bill extends unemployment programs through August 29, increasing federal payments from $300 per week to $400.

Child and dependent care credit

The Bill makes changes to the Section 21 child and dependent care credit, including making it refundable for 2021.

Family and sick leave credits

The credits for sick and family leave enacted by the Families First Coronavirus Response Act would be extended to September 30, 2021. It increases the limit on the credit for paid family leave to $12,000.

Employee retention credit

The Bill extends the employee retention credit through the end of 2021.  This credit allows eligible employers to claim a credit for paying qualified wages to employees.

Tax exempt EIDL grants

The Bill provides that EIDL grants received from the US SBA are not included in gross income and that this exclusion from gross income will not result in a denial of a deduction.