On Thursday, August 5, 2021, New York State announced the launch of the New York Restaurant Return-to-Work Tax Credit. This $35 million tax credit program provides an incentive to COVID-impacted restaurants to bring restaurant staff back-to-work, and to increase hiring at restaurants across the state. Qualifying businesses are eligible for a tax credit of $5,000 per new worker hired, up to $50,000 per business. The program is only open to eligible restaurants located in New York City, or in an area outside of New York City that was designated an Orange or Red Zone for at least thirty consecutive days. This includes most restaurants in Erie County as the State designated Erie County as an Orange Zone from Nov. 20, 2020 to Jan. 27, 2021. See the map below for the affected areas. The following municipalities have been designated Orange Zones:
- Amherst
- Aurora
- Buffalo
- Cheektowaga
- Clarence
- Eden
- Elma
- Evans
- Grand Island
- Hamburg
- Lackawanna
- Lancaster
- Orchard Park
- Tonawanda (City & Town)
- West Seneca
Niagara County was designated a Yellow Zone, but no part of Niagara or any other surrounding WNY counties were as Orange Zones, so restaurants located outside Erie County will not qualify for this tax credit program.
Eligibility
The program is open to all small independently owned and operated restaurants (excludes franchises) with less than 100 employees in NYC or in areas that were designated by the NYS Department of Health as either an Orange or a Red zone for at least 30 consecutive days.
- Applicants must be able to demonstrate COVID-related losses of at least 40% in gross receipts or full-time equivalent (FTE) employees
- Applicants must hire at least one full-time worker at the restaurant
The 40% decline may be shown by a comparison of gross receipts or employment in either the 2nd or 3rd quarter of 2019 and the same quarter of 2020.
A full-time equivalent (FTE) position is one or more employees working at least 35 hours a week.
Eligible businesses are full-service and limited-service food and beverage establishments in New York State that predominately support on-premises, in-person dining, such as:
- Full-service restaurants (i.e. waiter/waitress service)
- Limited-service restaurants – where patrons generally order food at a counter and pay before eating
- Bars, taverns, nightclubs, or other drinking places
- Certain breweries/wineries/cideries/distilleries/meaderies with a tasting room
Franchises are not eligible for the tax credit
How to Apply
Empire State Development (ESD) is running this initiative for the state. They have a website with pertinent information here: Restaurant Return-To-Work Tax Credit | Empire State Development (ny.gov)
To aid in determining eligibility, there is an online eligibility questionnaire that an applicant can complete to determine if they qualify for the tax credit. If you have a restaurant location in a qualifying area that meets the eligibility requirements, you will then be invited to submit an application via email. The questionnaire asks for basic information about the business, NAICS code listed on tax returns, gross receipts and employee information. You will also need to upload the following supporting documentation as part of the application process:
- Evidence of economic harm from COVID-19 (2019-20 income tax returns)
- Evidence of business location and current operation (lease, utility bill, bank statement, sales tax returns)
- Ownership info
- Evidence of number of employees (NYS-45 and NYS-45 ATT documents for April 1, 2020 – March 31, 2021)
The ESD website provides more information on applicable supporting documentation that must be provided.
Tax Credit
Restaurants may claim the credit (advance payment) before November 15, 2021 (Fast Track Option), if the business can demonstrate a net employee increase of at least 1 FTE as measured from April 1, 2021 to August 31, 2021. Alternatively, restaurants can choose to claim the tax credit on their 2021 NY tax return if the business can demonstrate a net employee increase of at least 1 FTE as measured from April 1, 2021 to December 31, 2021. Businesses are eligible for a tax credit of $5,000 per each net new employee hired at its qualifying restaurant location(s) up to a maximum of $50,000 per business (if 10 or more net new employees are added).
See Program Overview for more details. The website also provides some pretty good FAQs that answer a number of questions related to required calculations and claiming the tax credit.
