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Congress wants entrepreneurs to go to restaurants and apply for a full tax deduction.
Whether it is enough to save contested restaurants is a different story, said financial advisors and tax professionals.
The $ 900 billion proposal, which was released Monday and is 5,593 pages long, contains a number of relief efforts designed to get Americans through the pandemic.
The measure includes US $ 600 stimulus checks for adults and children and a US $ 300 weekly increase in unemployment.
The legislation also encourages entrepreneurs to encourage restaurants through frequent visits.
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Indeed, the bill provides a “temporary full allowance for business lunches” and applies to the cost of food or beverages provided by a restaurant and paid for or incurred in 2021 and 2022.
“As you know, the President is concerned about restaurants, so we have restored business dining deductibility,” Treasury Secretary Steven Mnuchin told CNBC’s “Squawk on the Street” Monday morning.
Currently there is a 50% deduction for meals and snacks at work and meals for customers when doing business.
If the measure sounds familiar to you, it is likely because you have already seen it. The HEALS Act, a previous Senate discharge proposal, required a temporary 100% deduction on business meals.
This move was advocated by Senator Tim Scott, RS.C., and was known as the Supporting America’s Restaurant Workers Act.
“It’s great for small businesses and restaurants. They really need that shot in the arm,” said Michael Goodman, certified financial planner and CPA with Wealthstream Advisors in New York.
“Unfortunately, it won’t help right now as it’s for 2021 and 2022,” he said. “It won’t do anything for those restaurants that have to go out of business.”
Meet restaurants
The proposal comes at a difficult time for the hospitality industry. Restaurants lost 17,400 jobs in November.
In the meantime, municipalities lock up while Covid cases resurrect.
That means indoor eating is banned in New York City, while outdoor seating at restaurants and breweries in Los Angeles County is closed to the public.
Tax professionals are also skeptical about whether or not business owners want to take the risk of a meal – especially at a time when their own finances are already suffering.
“The three-martini lunch is a great idea in theory, but you expect people to have money to spend,” said CFP Dan Herron, CPA and director of Elemental Wealth Advisors in San Luis Obispo, California.
“It’s great for wealthy people who can blast money through a business, but I know people who struggle to make ends meet,” he said. “Your priority is not a three-martini lunch.”
