Restaurant Return-to-Work Tax Credit Program for New York Businesses
By Barry Halpern, Partner, Tax & Business Services
The New York State Restaurant Return-to-Work (RRTW) Tax Credit Program is available to independently owned small businesses primarily organized to prepare and provide meals and/or beverages to customers for consumption, including for immediate on-premise consumption, and have experienced economic harm as a result of the COVID-19 emergency. The program provides eligible businesses with a fully refundable credit for incremental employment in New York State.
Highlights of the RRTW Program:
- Tax credit of up to $5,000 per net new employee head countover a base amount, capped at $50,000.
- Prorated share of the credit to the partners in a partnership or shareholders of S-corporations that receive the RRTW credit.
- Advance cash payment option for 2021 – must apply by November 15.
- The total credit program is capped at $35 million.
Economic Harm Because of Covid-19
A company must show evidence of a year-to-year decrease of at least forty percent in New York gross receipts or average full-time employment between Q2 of 2019 and Q2 of 2020 or Q3 of 2019 and Q3 of 2020.
Eligible businesses must be located as follows and meet the accompanying criteria:
- Located in New York City and were subject to a ban on indoor dinning for more than six months, or
- Located in a New York State area that was or remains designated as an orange zone or red zone pursuant to Executive Order 202.68, and were subject to additional restrictions on indoor dining for at least 30 consecutive days.
OTHER ELIGIBILITY CRITERIA
- Small business – fewer than 100 full-time employees.
- Operate food/beverage business in NY – e.g., restaurant.
- Operate in a COVID-19 impacted sector – New York City/State designated zones with specified restrictions.
- Experienced harm as a result of COVID – decline in revenue or payroll by 40% or more.
- Have demonstrated a net employee increase – hiring by the second quarter of 2021.
The RRTW credit is part of the Pandemic Recovery and Restart Program enacted in New York State’s 2021-22 budget, which provides new incentives to help certain industries significantly impacted by the COVID-19 pandemic. The RRTW program provides a tax credit of up to $5,000 (up to a total of $50,000) for each full-time employee hired by an eligible business after March 31, 2021. The refundable credit is a financial incentive for restaurants that have suffered economic harm due to COVID-19 to rehire workers and increase total employment. The Commissioner has yet to put forth regulations on the application process and the specifications relating to qualifying entities. With the entire program capped at $35 million, it will be imperative for New York restaurants affected by COVID to apply as soon as the application becomes available at https://esd.ny.gov/.
Eligible companies may want to consider preparing the required documentation now so that it will be ready once the program opens and the application becomes available.