What This Bill Does
This bill creates a tax credit for restaurants affected by the COVID-19 pandemic. The credit lets eligible restaurant owners reduce their payroll taxes (taxes on employee wages) and potentially receive refunds if the credit exceeds their tax liability.
##
Who It Affects
- Restaurants that were established before March 14, 2020
- Restaurants that applied for pandemic relief grants but did not receive funding
- The Small Business Administration
- The Secretary of the Treasury
##
Key Provisions
- Eligible employers receive a credit equal to 100 percent of wages paid to employees per calendar quarter, but the credit cannot exceed $25,000 per quarter (Sec. 3135(a) and (b)(1))
- The credit first reduces applicable employment taxes (the payroll taxes restaurants owe); if the credit is larger than these taxes, the excess can be partially refunded to the employer (Sec. 3135(b)(2) and (3))
- The maximum $25,000 refund per quarter is reduced by $2,500 for each full-time employee the restaurant employs above 10 employees (Sec. 3135(b)(3)(C))
- To qualify, a restaurant must have paid employment taxes in at least 2 calendar quarters during 2021 and must show that its revenue declined significantly compared to 2019 (Sec. 3135(c)(2))
- The Secretary of Treasury must issue regulations to prevent employers from improperly claiming credits, including through employee leasing arrangements (Sec. 3135(i))
##
What Changes
If this becomes law, certain restaurants will be able to claim a tax credit against their payroll taxes starting with wages paid after December 31, 2022. Restaurants may receive refunds if their credit exceeds their tax liability. The Small Business Administration will share information with the Treasury Department to identify eligible restaurants.
##
Important Definitions
- **Eligible employer**: A restaurant that is an eligible entity under an earlier pandemic relief law, was established before March 14, 2020, applied for pandemic relief but received no funding, paid employment taxes in at least 2 quarters of 2021, and experienced significant revenue loss compared to 2019
- **Applicable employment taxes**: Payroll taxes imposed under specific sections of tax law on employers
- **Wages**: Compensation to employees as defined in tax law, excluding wages already counted for other tax credits
##
Effective Date
Calendar quarters beginning after December 31, 2022.
II
118TH CONGRESS
1ST SESSION
S. 28
To amend the Internal Revenue Code of 1986 to provide a partially refundable
credit against payroll taxes for certain restaurants affected by the
COVID–19 pandemic.
IN THE SENATE OF THE UNITED STATES
JANUARY 24 (legislative day, JANUARY 3), 2023
Mr. CARDIN (for himself, Mr. BROWN, Mrs. MURRAY, and Mr. MARKEY) in-
troduced the following bill; which was read twice and referred to the Com-
mittee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide
a partially refundable credit against payroll taxes for
certain restaurants affected by the COVID–19 pandemic.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Restaurant Revitaliza-
4
tion Tax Credit Act’’.
5
SEC. 2. RESTAURANT REVITALIZATION CREDIT.
6
(a) IN GENERAL.—Subchapter D of chapter 21 of
7
subtitle C of the Internal Revenue Code of 1986 is amend-
8
ed by adding at the end the following new section:
9
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•S 28 IS
‘‘SEC. 3135. RESTAURANT REVITALIZATION CREDIT.
1
‘‘(a) IN GENERAL.—In the case of an eligible em-
2
ployer, there shall be allowed as a credit against applicable
3
employment taxes for each calendar quarter an amount
4
equal to 100 percent of the wages with respect to each
5
employee of such employer for such calendar quarter.
6
‘‘(b) LIMITATIONS AND REFUNDABILITY.—
7
‘‘(1) IN GENERAL.—The aggregate amount of
8
wages which may be taken into account under sub-
9
section (a) by the eligible employer for any calendar
10
quarter shall not exceed $25,000.
11
‘‘(2)
CREDIT
LIMITED
TO
EMPLOYMENT
12
TAXES.—The credit allowed by subsection (a) with
13
respect to any calendar quarter shall not exceed the
14
applicable employment taxes (reduced by any credits
15
allowed under subsections (e) and (f) of section
16
3111) on the wages paid with respect to the employ-
17
ment of all the employees of the eligible employer for
18
such calendar quarter. For purposes of the pre-
19
ceding sentence, the credit allowed under subsection
20
(a) shall be applied first against applicable employ-
21
ment taxes described in subsection (c)(1)(A).
22
‘‘(3) PARTIAL
REFUNDABILITY
OF
EXCESS
23
CREDIT.—
24
‘‘(A) IN GENERAL.—If the amount of the
25
credit under subsection (a) exceeds the limita-
26
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•S 28 IS
tion of paragraph (2), so much of such excess
1
as does not exceed the applicable employer re-
2
fund limitation shall be treated as an overpay-
3
ment that shall be refunded under sections
4
6402(a) and 6413(b).
5
‘‘(B) APPLICABLE
EMPLOYER
REFUND
6
LIMITATION.—For purposes of subparagraph
7
(A), the applicable employer refund limitation is
8
the excess of—
9
‘‘(i) $25,000, over
10
‘‘(ii) the amount of credit treated as
11
an overpayment of the eligible employer by
12
reason of this paragraph for all preceding
13
calendar quarters.
14
‘‘(C) REDUCTION BASED ON NUMBER OF
15
EMPLOYEES.—In the case of any eligible em-
16
ployer for which the average number of full-
17
time employees (within the meaning of section
18
4980H) employed by such eligible employer
19
during the last calendar quarter of 2022
20
(rounded to the nearest multiple of 1) exceeds
21
10, the $25,000 dollar amount under subpara-
22
graph (A)(ii)(I) shall be reduced (but not below
23
zero) by the product of such excess and $2,500.
24
‘‘(c) DEFINITIONS.—For purposes of this section—
25
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•S 28 IS
‘‘(1) APPLICABLE EMPLOYMENT TAXES.—The
1
term ‘applicable employment taxes’ means the fol-
2
lowing:
3
‘‘(A) The taxes imposed under section
4
3111(a).
5
‘‘(B) The taxes imposed under section
6
3111(b).
7
‘‘(2) ELIGIBLE EMPLOYER.—
8
‘‘(A) IN GENERAL.—The term ‘eligible em-
9
ployer’ means any employer—
10
‘‘(i) which is an eligible entity (as de-
11
fined in section 5003(a) of the American
12
Rescue Plan Act of 2021) which—
13
‘‘(I)
was
established
before
14
March 14, 2020,
15
‘‘(II) submitted an application
16
for a grant under section 5003(c) of
17
such Act in accordance with the pro-
18
cedures established by the Adminis-
19
trator of the Small Business Adminis-
20
tration under such section,
21
‘‘(III) certifies to the Secretary
22
(in such form and manner as the Sec-
23
retary requires) that such employer
24
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•S 28 IS
was eligible for a grant under such
1
section, and
2
‘‘(IV) did not receive any grant
3
funds under such section due to a lack
4
of funding,
5
‘‘(ii) which paid applicable employ-
6
ment taxes with respect to pay periods oc-
7
curring in at least 2 calendar quarters of
8
calendar year 2021, and
9
‘‘(iii) which meets the gross receipts
10
test of subparagraph (B).
11
‘‘(B) GROSS
RECEIPTS
TEST.—An em-
12
ployer meets the gross receipts test of this sub-
13
paragraph if—
14
‘‘(i) the gross receipts of such em-
15
ployer for any applicable calendar year
16
were less than 50 percent the gross re-
17
ceipts of such employer for calendar year
18
2019, or
19
‘‘(ii) the average gross receipts of
20
such employer for all applicable calendar
21
years were less than 70 percent the gross
22
receipts of such employer for the calendar
23
year 2019.
24
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•S 28 IS
‘‘(C) APPLICABLE CALENDAR YEAR.—For
1
purposes of this paragraph, the term ‘applicable
2
calendar year’ means any of the following:
3
‘‘(i) Calendar year 2020.
4
‘‘(ii) Calendar year 2021.
5
‘‘(D) SPECIAL RULE FOR EMPLOYERS NOT
6
IN EXISTENCE FOR ENTIRETY OF 2019.—In the
7
case of any employer that was in existence be-
8
fore January 1, 2020, but not in existence on
9
January 1, 2019, the amount of gross receipts
10
taken into account for any applicable calendar
11
year shall be the amount of such gross receipts
12
(determined without regard to this clause) mul-
13
tiplied by the ratio of—
14
‘‘(i) the number of days during 2019
15
during which such employer was in exist-
16
ence, to
17
‘‘(ii) 365.
18
‘‘(E) SPECIAL RULE FOR EMPLOYERS NOT
19
IN EXISTENCE BEFORE 2020.—In the case of
20
any employer that was not in existence before
21
January 1, 2020, in applying this paragraph—
22
‘‘(i) the amount of gross receipts for
23
calendar year 2019 shall be equal to the
24
product of—
25
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•S 28 IS
‘‘(I) the amount of gross receipts
1
for the period beginning on the date
2
the employer was established and end-
3
ing before March 14, 2020, and
4
‘‘(II) the ratio of 366 to the
5
number of days in the period de-
6
scribed in subclause (I), and
7
‘‘(ii) the amount of gross receipts for
8
calendar year 2020 shall be equal to the
9
product of—
10
‘‘(I) the amount of gross receipts
11
for the period beginning after March
12
13, 2020, and ending on December
13
31, 2020, and
14
‘‘(II) the ratio of 366 to the
15
number of days in the period de-
16
scribed in subclause (I).
17
‘‘(3) WAGES.—
18
‘‘(A) IN GENERAL.—The term ‘wages’ has
19
the meaning given such term under section
20
3121(a), determined without regard to para-
21
graph (1) thereof.
22
‘‘(B) EXCEPTION.—Such term shall not in-
23
clude any wages taken into account under sec-
24
tions 41, 45A, 45P, 45S, 51, and 1396.
25
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•S 28 IS
‘‘(4) OTHER TERMS.—Any term used in this
1
section which is also used in this chapter shall have
2
the same meaning as when used in this chapter.
3
‘‘(d) AGGREGATION RULE.—All persons treated as a
4
single employer under subsection (a) or (b) of section 52,
5
or subsection (m) or (o) of section 414, shall be treated
6
as one employer for purposes of this section.
7
‘‘(e) ELECTION TO NOT TAKE CERTAIN WAGES
8
INTO ACCOUNT.—This section shall not apply to so much
9
of the wages paid by an eligible employer as such employer
10
elects (at such time and in such manner as the Secretary
11
may prescribe) to not take into account for purposes of
12
this section.
13
‘‘(f) THIRD PARTY PAYORS.—Any credit allowed
14
under this section shall be treated as a credit described
15
in section 3511(d)(2).
16
‘‘(g) TREATMENT
OF DEPOSITS.—The Secretary
17
shall waive any penalty under section 6656 for any failure
18
to make a deposit of any applicable employment taxes if
19
the Secretary determines that such failure was due to the
20
reasonable anticipation of the credit allowed under this
21
section.
22
‘‘(h) EXTENSION OF LIMITATION ON ASSESSMENT.—
23
Notwithstanding section 6501, the limitation on the time
24
period for the assessment of any amount attributable to
25
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•S 28 IS
a credit claimed under this section shall not expire before
1
the date that is 5 years after the later of—
2
‘‘(1) the date on which the original return
3
which includes the calendar quarter with respect to
4
which such credit is determined is filed, or
5
‘‘(2) the date on which such return is treated
6
as filed under section 6501(b)(2).
7
‘‘(i) REGULATIONS AND GUIDANCE.—The Secretary
8
shall issue such forms, instructions, regulations, and other
9
guidance as are necessary—
10
‘‘(1) with respect to the application of the cred-
11
it under subsection (a) to third party payors (includ-
12
ing professional employer organizations, certified
13
professional employer organizations, or agents under
14
section 3504), including regulations or guidance al-
15
lowing such payors to submit documentation nec-
16
essary to substantiate the eligible employer status of
17
employers that use such payors, and
18
‘‘(2) to prevent the avoidance of the purposes of
19
the limitations under this section, including through
20
the leaseback of employees.
21
Any forms, instructions, regulations, or other guidance de-
22
scribed in paragraph (1) shall require the customer to be
23
responsible for the accounting of the credit and for any
24
liability for improperly claimed credits and shall require
25
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•S 28 IS
the certified professional employer organization or other
1
third party payor to accurately report such tax credits
2
based on the information provided by the customer.
3
‘‘(j) APPLICATION.—This section shall only apply to
4
wages paid after December 31, 2022, and before January
5
1, 2024.’’.
6
(b) REFUNDS.—Paragraph (2) of section 1324(b) of
7
title 31, United States Code, is amended by inserting
8
‘‘3135,’’ after ‘‘3134,’’.
9
(c) CLERICAL AMENDMENT.—The table of sections
10
for subchapter D of chapter 21 of subtitle C of the Inter-
11
nal Revenue Code of 1986 is amended by adding at the
12
end the following:
13
‘‘Sec. 3135. Restaurant revitalization credit.’’.
(d) COORDINATION WITH SMALL BUSINESS ADMIN-
14
ISTRATION.—The Administrator of the Small Business
15
Administration shall coordinate with and provide informa-
16
tion to the Secretary of the Treasury (or the Secretary’s
17
delegate) to assist in identifying employers that are eligi-
18
ble for the credit allowed by section 3135 of the Internal
19
Revenue Code of 1986, as added by this section.
20
(e) EFFECTIVE DATE.—The amendments made by
21
this section shall apply to calendar quarters beginning
22
after December 31, 2022.
23
Æ
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