House of Representatives | KRG Hospitality

March 29, 2023by David Klemt David Klemt No Comments

What’s Up with the Restaurant Tax Credit?

What’s up with the Restaurant Revitalization Tax Credit?

by David Klemt

If you’re wondering what’s going on with the Restaurant Revitalization Tax Credit bills in the House and Senate, you’re probably not alone.

And if you find yourself wondering about them, that’s likely because there isn’t much news about the bills. Unfortunately, it appears that no meaningful progress has been made on HR 9574 or S.5219.

A quick check shows that both bills share the same status: Introduced. As for the House bill, HR 9574, that was introduced on December 15, 2022 by Representative Earl Blumenauer (D-OR). The Senate bill, S.5219, was introduced by Senator Benjamin Cardin (D-MD) on December 8, 2022.

It’s important to note that Sens. Cardin, Patty Murray (D-A), and Sherrod Brown (D-OH) reintroduced S.5219 in January of this year. However, that apparently didn’t mean much as the Congress.gov trackers show no progress.

Last year, some opined that neither bill would receive a vote until January 2023 at the earliest. That “prediction” has proven true, of course—it’s now the end of March.

Restaurant Revitalization Tax Credit Act Summary

Let’s take a quick look at HR 9574 and S.5219.

Both bills propose a $25,000 payroll offset for restaurants. Eligibility requirements are also identical: applicants must have applied for but not awarded a Restaurant Revitalization Fund grant.

Additional, eligible applicants are:

restaurants with operating losses of at least 30 percent in 2020 and 2021 in comparison to 2019; or
restaurants with losses of at least 50 percent in either 2020 or 2021 in comparison to 2019.

So, those are elements that both the Senate and House bills share. What about the differences between the two bills?

Mainly, differences come down to the number of employees. For S.5219, restaurants with ten employees or fewer could be eligible for the maximum payroll tax credit. That credit, as a reminder, is up to $25,000 for 2023. For every employee over ten, the refund cap drops by $2,500.

Now, HR 9574. Restaurants with ten or fewer employees would receive the full $25,000 payroll tax offset. For restaurants with between 11 and 20 employees, the offset would be “partially refundable.”

Now What?

If you believe that you’re eligible for this tax credit, it’s time to let your representatives know you want them to act.

To make things simple for everyone, I’m including the links you need to find and contact senators and representatives.

For senators, click here. And for representatives, click here.

Let them know that it’s time for action on S.5219 and HR 9574. And let them know exactly what action you expect them to take.

Image: Karolina Grabowska on Pexels

November 11, 2022by David Klemt David Klemt No Comments

Why is the SBA Sitting on RRF Funds?

Why is the SBA Sitting on Tens of Millions in RRF Funds?

by David Klemt

Three months after the revelation that the SBA is sitting on $180 million in RRF funds, we’re wondering why they still aren’t disbursing the money.

Oh, and a handful of American lawmakers have the same question. In fact, two members of the House and two senators are requesting a plan from the SBA.

The patience of Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA) appears to be at its end. So, too, the willingness for Senators Kyrsten Sinema and Roger Wicker (R-MS) to simply wait and see.

So, the bipartisan lawmakers are playing hardball, sending a strongly-worded letter to the Small Business Administration.

$180 Million in Available Funds

As it turns out, there are are tens of millions of dollars in unallocated Restaurant Revitalization Funds. Months ago, the Government Accountability Office (GAO) investigated the RRF situation.

Back in July, the fruits of the investigation came to light: of the $28.6 billion in the RRF, $180 million have not been disbursed. Further, it was reported in August that the SBA was working the Department of Justice to “formulate a plan on how to distribute” the money.

It’s now November and…there’s no news. Well, there’s news, but it’s that four bipartisan lawmakers are demanding answers and action from the SBA.

Look, $180 million is a far cry from the $40 billion our industry needed and deserved to have approved to replenish the RRF. Indeed, if every dollar of this “found” money is distributed to RRF applicants, just 0.44 percent would receive a grant.

However, nearly $200 million in funds can still help some operators. There’s simply no excuse for the SBA failing to disburse the funds six months after the GAO made their discovery.

Clearly, several lawmakers agree with this assessment.

Lawmakers Seek Action from the SBA

Earlier this week, Reps. Blumenauer and Fitzpatrick, and Sens. Sinema and Wicker, sent a letter to the SBA. Not only are they seeking action from the SBA, they’re seeking a plan by next week.

“We request the SBA provide Congress with a detailed plan and timeline to distribute unobligated RRF funding as well as detailed information regarding the agency’s progress in retrieving misallocated funds and distributing those funds to eligible applicants no later than Monday, November 14, 2022,” reads the letter.

Further, the lawmakers make their position clear: “It is inexcusable for the Small Business Administration to not dispense every single available dollar to help as many of our nation’s still struggling main street businesses.”

According to reports, the lawmakers who penned the letter are working with the Independent Restaurant Coalition and National Restaurant Association. Reporting states that the IRC and NRA endorse the letter sent by the lawmakers this week.

As of the publication of this article, the SBA has issued no response. Unfortunately, that’s not exactly surprising. After all, they’ve been silent on this topic for months.

Image: Giorgio Trovato on Unsplash

September 19, 2022by David Klemt David Klemt No Comments

Swipe Fees Cost Over $77 Billion in 2021

Swipe Fees Cost Merchants Over $77 Billion in 2021

by David Klemt

A bill that intends to lower the credit card fees merchants pay by creating more competition within the industry is before Congress.

This bill, the Credit Card Competition Act of 2022, has bipartisan support. The two sponsors behind it are Sens. Richard Durbin (D-IL) and Richard Marshall (R-KS).

Of particular note, the bill seeks to amend the Electronic Fund Transfer Act. Specifically, the amendment targets the networks that merchants use to process electronic credit card transactions.

In short, banks that issue credit cards would have to merchants at least two processing networks. According to experts in this space, the bill prohibits banks from making those networks Visa and MasterCard.

Billions in Fees

So, why are Visa and MasterCard in the crosshairs of this bill?

According to the Merchants Payments Coalition (MPC), Visa and MasterCard control 87 percent of credit (and debit) card markets. Per the MPC, Visa and MasterCard account for about 576 million credit cards.

In the U.S. alone, transactions amounted to $3.49 trillion in 2021. Eye-wateringly, those transactions were accompanied by $77.48 billion in merchant fees for the two processing behemoths in the same year.

For additional context, Visa and MasterCard swipe fees totaled $61.6 billion in 2020. That represents an increase of 137 percent over the decade prior. Adding the merchant fees for all cards, the 2020 total was $110.3 billion, which is an increase of 70 percent from the previous ten years.

As veteran operators are well aware, swipe fees are among the highest costs for restaurants and bars.

Merchants Payments Coalition Sends Letter to Congress

Compellingly, the MPC is urging Congress to investigate the Visa-MasterCard duopoly. In their view, the two processors’ dominance is stifling competition; harming business owners and consumers; and contributing to inflation.

“The two giant card networks and their partner mega-banks routinely use their market power to stifle competition and charge merchants the highest swipe fees in the industrialized world,” reads the MPC’s letter to Congress.

Further, the letter states, “It is difficult to imagine any other market in the U.S. economy in which two entities set prices for thousands of businesses that should be competitors. That lack of competition or downward pricing pressure has resulted in out-of-control swipe fees and increases inflation throughout the economy.”

The MPC is urging Congress to act quickly and effectively: “It is crucial for Congress to act swiftly and implement real reforms to bring true competition, transparency and equity to the U.S. payments market.”

National Restaurant Association Supports the Bill

Interestingly, the National Restaurant Association says they’re working with the MPC.

The NRA is also working with other organizations to drum up support for the the Credit Card Competition Act of 2022.

You can read about their support for the bill on their website. Additionally, you can tell Congress to pass the bill here. As it stands currently, no action beyond the bill’s introduction to the Senate on July 28 has taken place.

Image: Pixabay

November 22, 2021by David Klemt David Klemt No Comments

Build Back Better…Without Restaurants?

Build Back Better…Without Restaurants or Bars?

by David Klemt

The Build Back Better Act was passed by the House last Friday without the inclusion of the Restaurant Revitalization Fund Replenishment Act.

For those keeping count—me, for instance—the RRF Replenishment Act has seen zero movement since June.

We’re now six months without RRF Replenishment progress. The RRF application portal closed on May, 24.

To put it bluntly, the House once again failed our industry.

Of the $1.7 trillion dollars in the Build Back Better Act, zero are earmarked to replenish the RRF.

Applicants in Limbo

According to the National Restaurant Association, there are at least 177,000 RRF applicants awaiting grants.

Unless the RRF is replenished, those applicants will receive nothing.

For six months now, two bills seeking $60 billion to replenish the RRF have languished. Those bills are the aforementioned RRF Replenishment Act and the ENTREE Act.

The former was introduced by a bipartisan group of representatives and senators. Rep. Blaine Luetkemeyer (R-MO) introduced the latter.

Unfortunately, the chance to replenish the RRF via a unanimous consent motion was shot down in August. Sen. Rand Paul (R-KY) objected to $43 billion in emergency funding, killing the RRF.

At this point, it’s difficult to take any statement of support for our industry from members of Congress seriously.

NRA Speaks Out

The same day that the Build Back Better Act passed, NRA vice president Sean Kennedy released a statement.

“We are disappointed that the House passed the Build Back Better Act without including the Restaurant Revitalization Fund Replenishment Act… Passing this bill without including RRF replenishment leaves thousands of small business restaurants teetering on the brink of closure,” reads Kennedy’s statement.

Kennedy also points to specific elements of the Build Back Better Act that can cause further harm to operators and our industry.

In particular, Kennedy states that the NRA “specifically asked Congress to not pass any legislation that would harm restaurants as they rebuild.” Instead, the Build Back Better Act imposes new taxes on small businesses, including restaurants and bars.

Per Kennedy, “this bill newly applies the net investment income tax (NIIT) to active business income for pass-through businesses.”

Read Kennedy’s statement in full here.

It’s possible that the Senate will make changes to the bill. And it’s possible that replenishing the RRF will be among those changes. If that happens, the bill will be sent back to the House, further delaying the crucial assistance our industry needs.

Oh, and the deadline to avoid a government shutdown is December 3.

To tell your lawmakers to replenish the RRF, click here. I know I’ve asked you to do this several times. As frustrating as it’s getting, we need to stick together and keep up the pressure.

Image: Wokandapix from Pixabay