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The National Restaurant Association and its 52 state-level affiliates have asked the Internal Revenue Service (IRS) to adjust its tax collection process for restaurants that have not yet received the advance refunds promised to employers. as a form of pandemic-related financial assistance. .

The Employee Retention Tax Credit entitles businesses whose operations were disrupted by the COVID crisis in 2020 to a credit of up to 50% of each full-time employee’s compensation, up to a maximum $5,000 per worker kept on the payroll. Under the CARES Act, the comprehensive COVID relief bill passed in March 2020, the IRS was obligated to provide the credit in the form of a cash advance. Employer tax bills for 2021 would be adjusted accordingly.

Essentially, the law was to extend the upfront money to help employers’ cash flow. Instead of waiting for their tax bills to be reduced by $5,000 for each employee, companies received the money up front.

But the IRS has lagged in processing applications to get the credit up front. According to the restaurant association, 83% of restaurants that applied for the tax relief at least six months ago have yet to receive the money. Many intended to use the funds to pay the rest of their taxes.

In a letter to IRS Commissioner Charles Rettig and his boss, Treasury Secretary Janet Yellen, the association and its affiliates cite the example of a Texas operator still waiting for funds. Without those dollars, the communication says, the anonymous restaurateur will have to find $1.1 million to cover his tax bill by April 18, the deadline for all federal filers.

Because of situations like this, the association asks that automatic tax collections be suspended until the backlog of ERTC applications has abated. It also implores officials to push back the April 18 date for restaurants waiting for their credits and to give filers a grace period without requiring additional paperwork. His final request is that the IRS communicate when an ERTC request could be processed.

“The ERTC has been a critical recovery tool for hundreds of thousands of restaurants, but far too many are still awaiting reimbursement from the federal government,” said Sean Kennedy, executive vice president of public affairs at the association, in a press release. “As tax day approaches, many restaurants are about to be told to overpay their taxes, with the promise of a refund later. The system may work better for an industry on the ropes, and we urge the IRS and Treasury to act on our common sense solutions.

The ERTC has proven to be widely used in the restaurant industry, according to the restaurant association. The tax relief provides early repayment to businesses whose operations were suspended from March 2020 to January 1, 2021 due to the pandemic.

In addition to restaurant associations in all 50 states, signatories to the letter included industry representatives from Puerto Rico and the District of Columbia.

The National Restaurant Association is the majority owner of Restaurant Business.

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