Update 8/16/2021: New York has recently implemented a “fast-track” option, which allows restaurants to claim the credit as an advanced payment ahead of their 2021 tax return. The “fast-track” option will evaluate eligibility based on a shortened period from April 1 – August 31, 2021 with the same net employee increase criteria. New York has established an online portal, which can be found at: https://esd.ny.gov/restaurant-return-work-tax-credit, to help determine eligibility by filling out a questionnaire along with application form to claim the credit.
The Restaurant Return-to-Work Tax Credit Program was recently passed by legislation in New York. As part of the budget, the state will make up to $35 million available in tax credits for this program. This provides an incentive to COVID-impacted restaurants to bring back staff and increase hiring at restaurants located in New York State. Qualifying businesses are eligible for a tax credit of $5,000 per net new employee, up to a maximum credit of $50,000 per business.
This program is open to all small, independently-owned restaurants in New York City that were subject to a ban on indoor dining for more than six months, or restaurants that are located in areas that were designated by the NYS Department of Health as either an orange or red zone pursuant to Executive Order 202.68, and were subject to additional restrictions on indoor dining for at least 30 consecutive days. An eligible restaurant must also show a decrease in New York gross receipts, or average full-time employment, of at least 40% when comparing the 2nd and 3rd quarters of 2020 with 2019. They must also have fewer than 100 full-time employees.
Restaurants must be able to show a net employee increase, which is an increase of at least one full-time equivalent employee, from the first quarter of 2021 to the end of August or December, whichever the business chooses. This is part of New York’s efforts to help bring workers back, revitalize heavily impacted areas, and provide support to small businesses that were hit hardest by the COVID-19 pandemic.
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The materials contained herein are intended for educational and informational purposes only and do not constitute tax or legal advice. Readers are responsible for obtaining such advice from their tax and legal counsel.