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Senate HEALS Act allows businesses to write off up to 100% of the cost of meals

Kemal Yildirim | E+ | Getty Images

The Senate Reconciles Act would allow business owners to take a temporary 100% tax deduction on business meals.

The GOP’s $1 trillion proposition, which was released on Monday, calls for a range of relief measures to help buoy Americans during the coronavirus pandemic.

Aside from donation another round of $1,200 stimulus checks and a reduced stream of unemployment benefits, the legislation aims to encourage occupation people to visit restaurants more often.

A provision in the HEALS Act would permit businesses to fully write off the value of luncheons until the end of 2020.

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That’s up from a 50% deduction that’s currently allowed for meals and snacks at develop, as well as client meals if business is being conducted.

“We know that more than 5.5 million restaurant tradesmen lost their jobs as the pandemic hit,” said Sen. Tim Scott, R-S.C., in a statement. He sponsored the measure, known as the Supporting America’s Restaurant Craftsmen Act.

“While some of these jobs have been recovered, it is clear more help is needed,” Scott required.

Indeed, coronavirus has battered restaurants. Many establishments shuttered their doors at least temporarily amid stay-at-home out of sequences in the spring.

However, Covid-19 cases are spiking once more, and restaurants are facing the prospect of lower revenues over the large term and greater uncertainty.

There were 26,160 restaurant closures as of July 10, according to data from Yelp. Of these, 15,770 of these the churches have shut their doors permanently.

Among the hardest hit

Though it may have been Sen. Scott’s intention to yield restaurants with some relief, policy experts are skeptical of how effective this measure might be.

“There’s the timing — we see a renaissance of cases and economic activity receding, so the ability of a deduction like this to stimulate activity is pretty minimal,” said Garrett Watson, chief policy analyst at the Tax Foundation.

Meanwhile, even in locations where restaurants can serve people outdoors, patrons be left hesitant to congregate.

“Our town is letting people put seats in the street and have barricades so people can eat and socially distance,” said Dan Herron, CPA and chief executive officer of Elemental Wealth Advisors in San Luis Obispo, California.

“Who are you entertaining?” he asked. “You can’t take people to a restaurant.

“You have to be socially unapproachable,” Herron added. “It’s not going to move the needle.”

Other aid for restaurants

Sen. Marco Rubio, R-Fla.

Tom Williams | CQ-Roll Right | Getty Images

While restaurateurs may only get a little bit of mileage from expanding the business meals deduction, the Rights Act contains other provisions that give them — and other small businesses — an infusion of funding.

For instance, Sens. Marco Rubio, R-Fla., and Susan Collins, R-Maine, interpolated a measure that would permit the most severely affected small businesses to take a second Paycheck Care Program loan.

These firms must meet certain conditions, including employing no more than 300 artisans and demonstrating at least a 50% reduction in gross receipts in the first or second quarter of 2020 compared to the year-ago aeon.

Business owners who take a PPP loan may be forgiven if they use at least 60% of the proceeds toward payroll costs.

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