Employee Retention Credit for Hotels

January 4, 2023
Written by Peter Anderson

Federal Tax Credits For Hotels - The Employee Retention Credit

There are a variety of federal tax credits for hotels, including employee retention credits, that can help reduce a hotel's overall cost of operations. However, some of these credits require a certain level of gross receipts or wages. If an employer does not meet these requirements, the credit is not likely to provide a substantial benefit.

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Employers may have insufficient wages to benefit from all applicable credits

For many hoteliers, the Employee Retention credit is the Holy Grail. Luckily, there's no shortage of resources aplenty to help make the task a breeze. In fact, you'll probably want to get some free advice from the professionals in your corner of the pond. Not to mention the plethora of benefits and perks available only to the lucky few. There are many reasons for this revolving door, but one thing that remains constant: the hospitality industry is still a great place to work, especially in light of the current economic climate. Of course, the only downside is the high cost of doing business. To this end, it's important to take advantage of the numerous tax incentives and tax credits available to you and your employees. After all, you'll be better off in the long run.

As you can imagine, the best way to go about getting this tax break is to get the ball rolling early. The key is to find an experienced CPA who can guide you through the maze. Fortunately, there are dozens of reputable companies vying for your business. If you're not lucky enough to have your own personal CPA, you can always turn to the IRS for guidance.

Employers may consider the health care expenses especially attractive where employers furloughed staff in 2020

While there are several issues that employers should consider, one that is likely to be of particular interest this year is the wage rate. A recession is causing a number of workers to quit their jobs, and employers who have seen their revenue streams cut will be looking to reduce wages. However, it may be difficult to justify a reduction in pay because of strained finances.

In addition to the wage rate issue, there are also several considerations regarding insurance plans. There are different calculations for employees with variable and fixed incomes, and it is important to carefully evaluate your own plan to ensure it will be sufficient to cover your staff.

As you consider any of the above, remember that employees who lose health coverage are not entitled to traditional after-tax contributions, and may look to state health insurance exchanges for replacement coverage. The terms of your insurance contract will determine how much of the cost of premiums will be borne by the employee and how much will be covered by the employer.

If your company has a group health coverage program, you will need to notify affected employees of their rights under COBRA. You also must give them the option to elect COBRA continuation coverage.

Employers who have lost their health insurance coverage during a furlough are required to pay their employees' share of the premiums, but this is usually handled through payroll deductions. However, it is still possible to make an arrangement to pay the employee outside of the payroll process.

Employers will need to consider the impact of any furlough on full-time employees' status for the 2021 plan year. Employees who have a reduced workload can continue to accrue continuous service during a furlough. Depending on the furlough period, they could also acquire statutory redundancy payment rights.

Having a clear business rationale will also help avoid any discrimination claims. This is especially critical in positions that have similar job descriptions, but vary in hours.

While many employers have already made reductions in salaries, it is important to understand the impact of the pandemic on your own business.

COVID relief programs for the hospitality industry

Hospitality businesses are struggling to recover from the effects of the COVID-19 pandemic. The tourism industry has been particularly hard hit. Restaurants, hotels, bars, and salons have all experienced low or no occupancy. Various organizations have created supportive resources to help industry employees get through these difficult times.

If your business is experiencing financial hardship, you may be eligible for one of the various COVID relief programs available to the hospitality industry. These grants are based on the loss of revenue caused by the pandemic. There are many different types of assistance, so make sure to research your options before applying.

In addition to HARP, there is also a Restaurant Revitalization Fund. This fund was established to provide emergency financial aid to qualified hospitality businesses. It will offer funding up to $10 million per business, and funding is not required to be repaid. However, you must use the funds before March 11, 2023.

Another program, One Fair Wage, provides financial assistance to restaurant employees who have lost their jobs. You can apply in both English and Spanish.

Several national organizations have also established resources to support industry employees who are affected by the pandemic. Those who are out of work for more than a month can apply for an emergency grant.

Those who are impacted by the COVID-19 pandemic can also find support through the Bartender Emergency Assistance Program. The program uses the money raised through the COVID-19 Relief Campaign to support qualified bartenders.

Small businesses can also qualify for one-time reimbursement grants to reimburse them for costs associated with a COVID-19 infection. Forgivable loans from the Small Business Administration are also available.

To learn more about these programs, you can visit the Websites of the various hospitality, restaurant, and tourism organizations. Some have specific sections dedicated to assisting industry employees, including food, utility, and wellness assistance.

The James Beard Foundation has launched a new initiative. It will disburse grants of $15,000 to majority-owned Black and indigenous businesses.

Other organizations offering financial assistance to restaurant workers with the COVID-19 pandemic include Apron Inc. and CORE Gives.