August 10, 2020

Groups Urge Congress to Lower Qualification Threshold for Second PPP

On Aug. 5, the National Restaurant Association sent a letter to Congressional leaders praising many components of the latest proposed coronavirus response legislation and urged them to come to bipartisan consensus on two issues that could have considerable impacts on the short- and long-term survival of the restaurant industry.

The Senate HEALS Act, which is the proposed follow up to the CARES Act, would allow small businesses with fewer than 300 employees that can demonstrate a 50 percent loss in quarterly gross receipts compared to 2019 to apply for a second round of Paycheck Protection Program (PPP) loans. However, at this threshold level, the NRA says that 55 percent of restaurants would not be eligible. The association is appealing for a 20 percent threshold, which would make 430,000 restaurant operators eligible for a second PPP loan.

“The PPP got thousands of restaurants through the spring shutdown, but most are now open under strict business limitations and every month are wrestling with their bottom line,” said Sean Kennedy, executive vice president for public affairs. “A second round of PPP will make or break these restaurants, so we encourage a bipartisan agreement to lower the qualifying threshold so that more of the struggling restaurants in our communities can have a fighting chance.”

Earlier this week, FEDA signed on to a letter from the International Franchise Association that also asked for the second PPP loan threshold to be reduced to a level that would qualify a greater share of struggling small businesses. That letter is available here.

“Many small businesses operate with slim profit margins in a normal economy,” the IFA letter states. “For them, even a revenue decline of 20 percent or greater could mean the difference between staying in business or closing. For their employees, such a revenue decline could mean the difference between remaining at work and receiving benefits or losing their jobs.”

The NRA has also warned Congress that without their action, restaurants across the country would soon be on the hook for thousands of dollars in unexpected tax bills. Because of an IRS decision made weeks after restaurants began accepting PPP loans, normally deductible business expenses are no longer deductible if the business pays the expense with a PPP loan that is later forgiven.

Tell Congress to stop the surprise PPP tax liability here.

July 29, 2020

FEDA Members Urged to Contact Legislators to Support COVID-19 Relief Package Provisions

Summarized from Jade West, National Association of Wholesaler-Distributors

On July 27, Senate Republicans released a series of bills covering a broad range of issues that they will now combine into the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act. This is the Senate’s long-awaited $1 trillion CARES 2 Coronavirus response legislation.

To pass, this bill will have to get 60 votes, and that outcome is not certain since there is intense Democratic opposition and some opposition from Senate Republicans as well. Negotiations are now underway on the Senate bill, and if it passed it will have to be reconciled with the HEROES Act, which was passed by the House in June, before something can be sent to the president.

The HEALS Act includes numerous provisions that NAW has strongly advocated for, such as: 

  • Additional funding and structural changes for the Paycheck Protection Program (PPP);
  • Limited and targeted liability protection from COVID-related claims;
  • Extension of the unemployment insurance program but with a reduced pandemic bonus payment;
  • Expansion of the Employee Retention Tax Credit, including making PPP borrowers eligible for the ERTC with limits to prevent overlap; and
  • Stimulus payments to individuals.

One notable omission the NAW expected in the bill was language to reverse the IRS ruling that otherwise-deductible expenses paid with forgiven PPP loan proceeds are not tax-deductible. A strong effort will be made to fix this problem.

Politico published a story last evening that summarizes the legislation and gives a good account of the political situation in Congress and the challenges ahead as they try to negotiate a final bill. You can read that story here.

Also, the Littler Law firm published a report on some of the key provisions in the bill. You can view the firm’s report here.

Section-by-section of Finance/tax provisions

Legislative text of Finance provisions (including ERTC)

Liability legislative text

Small business section-by-section

Small Business provisions legislative text

Legislative text for Restaurant aid

FEDA urges members to reach out to their legislators and ask them to work toward the passage of another COVID-19 relief package the would include the above provisions. To find your U.S. representative and his or her contact information, visit house.gov/representatives and enter your home zip code in the top right corner. For your U.S. senators, visit senate.gov and click on the “Find Your Senators” by state dropdown menu in the top left corner. 
 

July 29, 2020

PLUS Act Take Action Alert

With the introduction of the HEALS Act this week, it is unclear whether measures left out of the GOP recovery package or the Democrats’ alternative HEROES Act will have momentum in the coming weeks. One such proposal is the Providing Liquidity for Uncollectible Sales (PLUS) Act, which would provide a 100 percent tax credit to wholesale distributors that sell to food and beverage operators that were forced to close for at least 30 days because of the COVID-19 pandemic.

FEDA is asking members to contact their legislators to urge them to support the PLUS Act and ensure the tax credit is made available to the foodservice equipment and supplies industry. To find your U.S. representative and his or her contact information, visit house.gov/representatives and enter your home zip code in the top right corner. For your U.S. senators, visit senate.gov and click on the “Find Your Senators” by state dropdown menu in the top left corner.
 

July 20, 2020

Potential Defense Amendment Would Burden Small Businesses

The National Federation of Independent Businesses (NFIB) has authored a letter to congressional representatives opposing a new regulation that would require small businesses to disclose information about their beneficial owners to the Financial Crimes Enforcement Network.

The language of the Corporate Transparency Act of 2019, which includes the reporting requirement, could be added to the National Defense Authorization Act for Fiscal Year 2021, the NFIB reports, despite having little to do with the defense bill.

“This amendment would saddle America’s smallest businesses with 131.7 million new paperwork hours at a cost of $5.7 billion, and treats small business owners as criminals by threatening them with jail time and oppressive fines for paperwork violations,” the NFIB wrote.

FEDA previously signed on to a letter to Senate leaders opposing  the Corporate Transparency Act, in part because it would shift reporting requirements from large banks to small businesses that were not well-equipped to handle the additional workload the new paperwork would create. NFIB members appear to share those concerns, as 80 percent of them oppose the idea of Congress requiring small business owners to file paperwork with the Treasury Department each time they form or change ownership.

“While large businesses and financial institutions may have access to teams of lawyers, accountants, and compliance experts to gather beneficial ownership information and report it to the government, small business owners do not,” the NFIB said. “Small business owners have difficulty affording accounting and legal experts to help them understand and comply with federal reporting requirements. And small business owners lack the time to track and gather information to fill out yet more forms for the government.”

Further, the NFIB expressed concerns that the new requirement would lead to the establishment of a publicly accessible federal registry, which could be used to name and shame small business owners.

The full letter is available to read here.

FEDA urges its member to contact their legislatures and ask them to oppose the Corporate Transparency Act of 2019. To find your U.S. representative and his or her contact information, visit house.gov/representatives and enter your home zip code in the top right corner. For your U.S. senators, visit senate.gov and click on the “Find Your Senators” by state dropdown menu in the top left corner.