The House of Representatives on April 7th passed legislation that provides funds to restaurants and small businesses struggling with the pandemic that didn’t receive relief from previous Covid-19 aid packages.
The bill, deemed the “Relief for Restaurants and other Hard Hit Small Businesses Act of 2022,” continues relief from the American Rescue Plan Act. That bill was enacted in March of 2021 and included $28.6 billion to establish the Restaurant Revitalization Fund.
Today’s bill provides $42 billion to replenish that Fund and $13 billion aimed at small businesses and live venue operators. The legislation is paid for by recovering revenue that was fraudulently or mistakenly withdrawn from previous Covid-19 relief bills.
Like the previous legislation, revenue awarded to businesses will not be included in taxable income.
From today’s bill:
TAX TREATMENT OF AWARDS.—
(1) IN GENERAL.—For the purposes of the Internal Revenue Code of 1986—
(A) no award made under this section shall be included in the gross income of the eligible entity that receives an award;
(B) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by subparagraph (A); and
(C) in the case of a partnership or S corporation that receives an award under this section—
(i) any amount excluded from income by reason of subparagraph (A) shall be treated as tax exempt for purposes of sections 705 and 1366 of such Code; and
(ii) the Secretary of the Treasury (or the Secretary’s delegate) shall prescribe rules for determining a partner’s distributive share of any amount described in clause (i) for purposes of section 705 of such Code.
The House-pass legislation will now travel to the Senate where it is expected to be amended. The Senate is scheduled to be in recess for the next two-weeks and is expected to act on its amended verison of the House bill after they return. It is not clear what changes the Senate will make to the bill.
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