A new law signed in late December 2020 makes hospitality businesses eligible for an employee retention tax credit, even if they received a PPP loan. Now, for any calendar quarter between March 13 and Dec. 31, 2020, a restaurant with 100 or fewer full-time employees may be able to access the Employee Retention Tax Credit (ERTC) of up to $5,000 per employee.

And, for the first two quarters of 2021, Jan. 1–March 31, and April 1–June 30, businesses with 500 or fewer full-time employees may be able to access ERTC of up to $7,000 per employee per quarter. 

Read more from the National Restaurant Association: Big tax credits to restaurants could support employee retention

FAQ on the Employee Retention Credit
(The following information provided by Cross Financial)

The eligibility criteria outlined below is referring to the Employee Retention Credit as it is revised in Bill HR 133, Taxpayer Certainty and Disaster Tax Relief Act of 2020, signed December 27, 2020. This went into affect January 1, 2021 and ends June 30, 2021. 

While the IRS has yet to update their webpages on the ERC, the changes outlined in the bill are as follows: 

• Expanded eligibility for the credit by reducing the required year-over-year gross receipts decline from 50 percent to 20 percent and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility;
• Increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees;
• Removes the 30-day wage limitation, allowing employers to, for example, claim the credit for bonus pay to essential workers;
• Clarifies that group health plan expenses can be considered qualified wages even when no other wages are paid to the employee, consistent with IRS guidance
• Provides that employers who receive Paycheck Protection Program (PPP) loans may still qualify for the ERC with respect to wages that are not paid for with forgiven PPP proceeds.

Employers need to make sure they do not claim wages that were used for family leave, PPP or other Cares act related credits. In other words, no double dipping.

Employee Retention Credit 2020 (ended Dec 31, 2020)
An employer with one employee making $12,000 within a quarter would be permitted to use 50% of $10,000 so the max annual employee limit of $5,000 against applicable employment taxes, if there was not enough taxes to offset against, a refund would be calculated at the time of filing form 941, or a refund can be requested earlier by filing form 7200.

1 Employee x $12,000 in quarterly wages = $12,000
$12,000 - $10,000 (max qualifying wage amount) = $10,000
$10,000 x 50% (eligible credit percentage)  = $5,000 employee retention credit (ERC)
$5,000 in ERC - $ (employment taxes) = Refund amount if credit exceeds employment taxes for the quarter.

Employee Retention Credit 2021 (ends June 30, 2021)
The Employee Retention Credit as it is revised in Bill HR 133, Taxpayer Certainty and Disaster Tax Relief Act of 2020, signed December 27, 2020 outlines updates for the calculation of the ERC. This went into affect January 1, 2021 and ends June 30, 2021. 

An employer with one employee making $12,000 within a quarter would be permitted to use 70% of $10,000 so the max quarterly employee limit of $7,000 against applicable employment taxes. If there is not enough taxes to offset against, a refund would be calculated at the time of filing form 941, or a refund can be requested earlier by filing form 7200.

1 Employee x $12,000 in quarterly wages = $12,000
$12,000 - $10,000 (max qualifying wage amount) = $10,000
$10,000 x 70% (eligible credit percentage for Q1)  = $7,000 employee retention credit (ERC)
$7,000 in ERC - $ (employment taxes) = Refund amount if credit exceeds employment taxes for the quarter.

Property tax season is upon us, and many property owners will be paying very close attention to their bills in 2020. Due to Oregon’s unique property tax laws, often the real market value and the assessed value of a property are very different, which can result in bills increasing even if the real market value of a property dropped in the year assessed. 

If you want to appeal your property taxes, there are three general reasons for filing:

1. Based on values. You can appeal the Real Market Value or the Specially Assessed Value of a property. To give some examples, your property value could decrease in value because of removal of buildings, square footage errors, or by an “act of God” or fire.
2. Based on an exception event. An exception event may occur when remodeling, for instance. You may feel that the assessor has valued the property too highly as a result of the event.
3. Based on a penalty assessed. If you feel a penalty has been assessed to you in error, you can ask for it to be waived.

Unfortunately, these kinds of appeals do not consider financial distress. 

To appeal, you must file your petition by December 31st with the Board of Property Tax Appeals (BOPTA) clerks in your county. To see contact information for clerks in each county, click here. Be sure to visit your county’s website for the correct appeal forms and fee information, or contact the clerk for them.

Appeals are reviewed by your county’s Board of Property Tax Appeals, made up of members from the community appointed by your county’s Commissioners. Appeals are typically heard by the Board between February through April. If you disagree with their valuation decision, you can then appeal to the Magistrate Division of the Oregon Tax Court by filing forms and paying a fee. To appeal beyond that, this chart has more information on where and when you must file an appeal—note that some of these dates may be extended by emergency declarations due to COVID-19.

If you have a special appeal situation, for example, needing to contest previous assessment years, read more guidance from the Oregon Department of Revenue on how to file an appeal.

More information is now available on the “Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act” released earlier this week by Senate Republicans. As a reminder, the House introduced the HEROES Act proposal in May, which passed along party lines. Discussions are expected to now begin in earnest as Congress faces the July 31 deadline for enhanced pandemic unemployment insurance benefits.

Part of the Republican proposal would reduce these benefits from $600 per week to $200 per week on top of state administered aid until the end of September at which time the maximum benefit will be 70% of the recipient current wages -- but this will be a starting point for the negotiations.    
 
Read the National Restaurant Association’s summary of the proposal and the American Hotel and Lodging Association’s analysis of the HEALS Act.
 
Many of the hospitality industry’s priorities are included in the HEALS Act, including: 

1. PPP Recapitalization: Eligible small businesses with 300 employees or less and that show significant year over year revenue decline (currently 50%) will be eligible for a second PPP Loan. The NAICS Code 72 exemption language for Hospitality and Food Service, originally included in the CARES Act, is included in the Small Business proposal.  Additionally, there is increased funding for the SBA 7(a) program, which is targeted towards “recovery sector businesses.” 
2. Liability Protections: The “SAFE TO WORK Act” introduced by Senator John Cornyn (R-TX) provides liability protections for employers, schools and health care providers. This Act also provides limited liability protection for businesses until October 1, 2024. 
3. Targeted Tax Provisions: The expansion of the Employee Retention Credit (ERC) and Work Opportunity Tax Credit (WOTC), and a per employee credit for enhanced cleaning and acquisition of PPE in the Finance proposal. 
4. Business Meal & Entertainment Deduction: Supporting Americans Restaurant Workers Act: Senator Tim Scott (R-SC) introduced a separate bill which would fully reinstate the business meal and entertainment deduction. 

If you haven't yet, please take action on the National Restaurant Association's Blueprint for Restaurant Revival and/or the American Hotel and Lodging Association's Hotel Priorities Day of Action, thank you!  

New research shows coronavirus continues to devastate restaurant industry
New research from the National Restaurant Association indicates that the restaurant industry has lost $120 billion in sales during the last three months due to the impact of coronavirus in the United States. State mandated stay-at-home policies and forced closures of restaurant dining rooms resulted in losses of $30 billion in March, $50 billion in April, and another $40 billion in May.

The latest operator survey conducted by the NRA drew more than 3,800 responses, illustrating the extensive damage to restaurant businesses since the outbreak began. It found that the restaurant industry, which experienced the most significant sales and job losses of any industry in the country in the first quarter of 2020, expects to lose $240 billion by the year-end.

At their most recent meeting, the Oregon Restaurant & Lodging Association (ORLA) Board of Directors voted unanimously (with 1 abstention) to support a legislative bill which will originate from Governor Brown’s office in support of a permanent 1.8% statewide lodging tax rate during the 2020 Oregon Legislative Session. Revenue raised by the statewide lodging tax is invested in Travel Oregon’s efforts to strengthen the economic impact of our state’s tourism industry. Oregon’s statewide lodging tax is currently collected at a rate of 1.8% with a reduction in the rate scheduled to take effect as of July 1, 2020 to a permanent rate of 1.5%.

“We appreciate Governor Brown’s proactive outreach to meet with ORLA and some of our key lodging stakeholders in person to discuss the merits of keeping the statewide lodging tax rate at 1.8% permanently,” said Jason Brandt, President & CEO of ORLA. “Our goals for lodging tax rate structures in Oregon are two-fold – protecting all statewide lodging tax resources to create return on investment for the industry through the efforts of Travel Oregon and protecting local lodging tax reforms passed in the 2003 Legislative Session.”

Oregon continues to experience healthy growth in tourism spending logging our ninth consecutive year of industry growth in 2018. Compared to 2017, visitor spending was up 4.2% reaching a record $12.3 billion. Industry employment was also up year over year by 2.9% to approximately 115,400. Year over year, hotel room revenue increased by 4.4% as well.

“We have seen firsthand what strategic investments in tourism promotion can do when industry tax dollars are put to their most effective use,” said Brandt. “With many other competing priorities in the Capitol, it is essential the association protects the appropriate use of these dollars at both the local and state levels. The economic impacts we are seeing are significant not just for our industry but for our public sector partners as well.”

The U.S. Travel Association tracks statewide economic impact throughout the country and assists states in quantifying the value of year over year tourism growth. The most recently available data notates Oregon’s tourism growth at 5.3% when comparing 2016 to 2017, further substantiating the value of healthy tourism growth for Oregon’s public sector. From 2016 to 2017, Oregon experienced visitor spending growth of $652 million. That increase in spending and associated payroll income tax increases equates to as many as 410 firefighter positions, 380 police officer positions, or 380 teacher positions.

ORLA continues to focus on the protection of local lodging tax dollars for tourism promotion and tourism related facilities in addition to support given to Governor Brown’s upcoming legislative bill for the statewide resource. Oregon’s local lodging tax structure can be complicated with over 110 different city and county jurisdictions collecting a transient lodging tax outside of the 1.8% statewide tax. Important guidelines have been in place for the past 16 years for how local lodging tax dollars can be spent. To clarify those parameters, ORLA recently produced a new instructional video to assist all stakeholders and the general public in better understanding the rules which govern local lodging tax resources.

The new video specific to local lodging taxes (not to be confused with Oregon’s 1.8% statewide lodging tax) can be viewed here:

• Oregon Lodging Tax Defined (video)

For more information about the Oregon Restaurant & Lodging Association’s policies on transient lodging taxes, please reach out to Greg Astley, ORLA’s Director of Government Affairs, at astley@oregonrla.org via email.

NOTE: This position statement was drafted by local restaurateurs and foodservice operations doing business in Hood River County and as a result reflects the official position of our statewide association on their behalf.

Hood River County needs a solution to their budget shortfall, but this is an ill-conceived way to do it. There is still a three-year runway to find a financial solution and this measure is fundamentally flawed. Measure 14-66 is bad for Hood River County for the following reasons:

Bad for Businesses
- Entire tax burden carried by just one business segment – this is not a fair tax.
- Restaurants are seasonal and already struggle in the winter.
- Already hit by massive cost increases from higher minimum wages and unequal share of business property taxes.
- Restaurant sales taxes are shown to shift demand to large corporate chains and grocery stores, hurting local restaurants and farms.
- Tax is complex and hard for small restaurants to implement and comply with.

Bad for Workers
- Will reduce overall income and overall employment opportunities.
- Will reduce tip income as customers will tip less to offset additional tax cost.
- Restaurant employees already struggle with affordable housing and this will compound that, especially in winter months.

Bad for Residents
- Residents will shoulder most of the tax burden as they eat in restaurants all year long. Tourism is only a factor for a few months of the year.
- Residents want to support and access local farmers and locally sourced food. This tax creates a headwind for that.
- Restaurant sales plummet during economic downturns, making this an unstable source of income for the county.

Let’s ask Hood River County to bring a fair and sustainable option for raising these funds.

NoSalesTaxOnMeals

Business Association Letter to the Revenue Committees

​The Oregon Restaurant & Lodging Association is one of 22 business associations who signed the following letter submitted to the revenue committees on March 21, 2019.

As representatives of Oregon’s leading private-sector employers, we recognize that the Legislature intends to pass significant new taxes this year, most of which will fall on Oregon’s businesses, small and large.

As we consider tax proposals, our organizations will be guided by the following principles:

1. Gross receipt taxes are bad for consumers. The pyramiding characteristics of a GRT distort the true tax rate, unfairly impacting some products and industries more than others. With a GRT, many products can be taxed multiple times before they reach the final consumer, resulting in higher prices that will be borne by allOregonians on such critical items as food.
2. Short-term and long-term stable funding for schools is critical, but cost control must be part of the plan. We support targeted investments to improve education outcomes, but new revenue is only part of the equation. Tax increases must be accompanied by cost control, starting with PERS, which has been draining money away from classrooms for years. Schools will not be helped unless the ever-increasing PERS burden is addressed. Before raising taxes on any Oregonians, the Legislature must act to control costs.
3. Tax reform requires a comprehensive review for business and employees. We will participate in conversations about tax reform that take a broad view of Oregon’s tax system rather than focusing singularly on one new tax concept. And we ask for recognition that any major tax reform will require a years-long transition, with thoughtful planning and execution for all parties.
4. New taxes should be fairly assessed. We will consider tax options that are broad based, recognize the needs of low-margin businesses and maintain a level playing field when it comes to competitive relationships.
5. Reforms should have a positive effect on Oregon’s economy. We will insist that the impact to Oregon’s economy, and particularly the ability of private-sector businesses to grow and retain jobs, be considered carefully, not only in terms of a new tax proposal, but also in light of the cumulative costs of all of the legislation expected to be passed in 2019. As the state economists warn of an economic slowdown in 2020, the potentially negative impact of major tax increases must be weighed.
6. We will oppose a gross receipts tax. As representatives of the business community, we are making a good-faith effort to understand the tax proposals on the table during this legislative session, so that we can participate in conversations effectively and ensure the impact to Oregon’s employers are understood. We request that the Legislature keep our principles in mind as they develop a revenue package and that they include us, as representatives of the private-sector employer community, in those discussions.