Do you own or operate a Dairy Queen franchise restaurant?
Wondering if your Dairy Queen location qualifies for the Employee Retention Credit (ERC) due to negative impact of COVID during 2020 and 2021?
As a Dairy Queen franchisee, yes it does, and here is why.
Your Dairy Queen restaurant still qualifies for the employee retention tax credit, depending on the mandated state government, county, city, or municipality restrictions placed on your location during the COVID pandemic. Even if your revenue increased during 2020 and 2021, vs. 2019, you still qualify.
If your Dairy Queen franchise restaurant was forced to close your indoor dining room, or limit seating capacity indoors, or reduce your hours of operation at your Dairy Queen location, this qualifies your Dairy Queen restaurant location under the IRS Employee Retention Tax Credit (ERTC) “partial shutdown” rules.
Meaning, your Dairy Queen restaurant was allowed to still do delivery, carryout, or outdoor seating. Even if your location did not have to be fully shutdown. However, you were mandated to close your Dairy Queen indoor dining, and / or reduce your hours of operation at your Dairy Queen location.
Under the IRS ERC rules and regulations, your Dairy Queen business qualifies because your operations were disrupted due to government intervention by forcing you to reduce your business capacity. This qualifies your Dairy Queen franchise for the ERC Credit and tax refund from the start date of government restrictions, to the end date when all restaurant capacity restrictions were lifted.
This is exciting news for all Dairy Queen franchisees and owners to help offset and recoup costs from the negative impact of COVID on your restaurant.
Many Financial and Accounting Professionals, CPAs, Financial Planners, Advisors, and Attorneys are unknowingly advising their Dairy Queen restaurant clients wrong because they do not fully understand all the Employee Retention Credit tax guidelines as they relate to restaurants and food service-type businesses.
Schedule Your Free Restaurant Employee Retention Credit Consultation to see if your Dairy Queen franchise location qualifies for the ERC Refund.
Key ERC Credit Takeaways You Will Learn:
- Up to $26,000 per Employee: Dairy Queen franchises can claim a significant tax credit for eligible wages paid.
- Covers Pandemic Wages: The credit is applicable for wages paid during the pandemic years of 2020 and 2021.
- Federal Income Tax Credit: It’s a federal tax credit, offering substantial savings for restaurant employers.
- Aids in Employee Retention: The credit is designed to help businesses keep their employees on payroll.
- Specific to Restaurants: Tailored guidance for Dairy Queen locations seeking the Employee Retention Credit.
See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.
Background on Dairy Queen Franchise Restaurant Owners and Franchisees
For Dairy Queen franchisee owners, the average annual sales volume of a Dairy Queen franchise restaurant location in 2021 was $1,036,000.
Dairy Queen restaurant franchises overall generated $4,494,000,000 in revenue from 4,337 locations.
This declined from the previous year by -22.
Overall, Dairy Queen corporate has a total of 2 company units added to the 4,337 franchise units, for a combined total of 4,339 restaurant location units company-wide.
Visit the Dairy Queen company website at DairyQueen.com.
Dairy Queen Employee Retention Credit For Franchise Restaurants
Dairy Queen franchisee owners are not alone. The restaurant industry continues to struggle with the economic impact of the COVID pandemic, high inflation, and a possible recession. Dairy Queen restaurant owners are looking for ways to support their Dairy Queen employees and keep their businesses afloat, especially Dairy Queen franchise restaurant owners who have a healthy investment in franchise fees and other expenses to recoup and earn a return from owning a Dairy Queen restaurant.
The Employee Retention Credit (ERC) or Employee Retention Tax Credit (ERTC) was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help restaurant and food service type business employers retain their staff during economic hardship and negative impact due to COVID.
The Internal Revenue Service (IRS) ERC Tax Refund program is an important tool for restaurateurs, restaurant owners, principals, and employers. The ERTC offers tax relief and provides a financial incentive to retain employees during the past economic disruption that occurred during 2020 and 2021.
For Dairy Queen owners, having a thorough understanding of the ERC credit and how it applies to their Dairy Queen restaurant franchise, owners and principals can ensure they take full advantage of this tax credit to support their Dairy Queen employees and locations.
Here is how Dairy Queen restaurant owners and principals can take advantage of this valuable IRS tax credit to help their Dairy Queen location stay open with positive cash-flow to continue keeping their W-2 employees on the payroll.
Employee Retention Tax Credit For Dairy Queen Restaurant Owners
The Employee Retention Credit for Dairy Queen restaurants is a tax credit available to eligible Dairy Queen restaurants and other food service businesses. It provides restaurant employers with a federal income tax credit of up to $26,000 per employee for wages paid during the pandemic years of 2020 and 2021.
This tax incentive is intended to help reduce the financial burden of having retained Dairy Queen employees who may otherwise have been laid off or suspended due to the economic downturn caused by the pandemic.
The ERC applies to gross wages paid to your Dairy Queen franchise employees between March 13, 2020 and September 30, 2021, only for each quarter during this time frame that may have qualified. 3/13/20 to 9/30/21 time frame is for Dairy Queen franchises that were in existence prior to COVID.
For Dairy Queen locations that opened after February 15, 2020, this restaurant is considered a recovery start-up business, and may qualify through December 31, 2021 (12/31/21) of the 4th quarter.
Qualified Dairy Queen restaurants in 2020 can claim up to $5,000 maximum per employee for all of 2020. This is based on up to 50% of a Dairy Queen employee’s qualified wages. Eligible Dairy Queen employers must also have experienced either a full or partial shutdown due to orders, OR a capacity restriction from a governmental authority, OR have experienced a significant decline in gross receipts compared with the same quarter in 2019.
Almost every state forced Dairy Queen restaurants to close their indoor dining, and / or limited their interior seating capacity. These periods of time occurred in which state, county, and city your Dairy Queen restaurant is located, will qualify the quarters and periods of time the capacity restrictions were imposed on your Dairy Queen location.
For all of 2020, Dairy Queen employers can access up to $5,000 maximum for eligible employees, and up to $7,000 per quarter, per employee, for eligible employees (for each quarter) in 2021. This means up to a combined $26,000 to $33,000 per employee depending on certain factors.
For Dairy Queen Restaurants, What Are The Eligibility Requirements For The Employee Retention Credit?
To qualify for the ERC, Dairy Queen restaurants must have experienced a full or partial suspension of their operations due to orders from a governmental authority limiting their ability to operate during specific periods in 2020 due to the pandemic.
Another way to qualify is if your Dairy Queen restaurant had experienced a significant decline in gross receipts of at least 50% in 2020, or 20% in 2021, compared to the same calendar quarter in 2019, a pre-COVID year for your Dairy Queen franchise. 2020 vs. 2019 and 2021 vs. 2019, quarter by quarter.
If you had less than 100 Dairy Queen employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.
In 2021, if your Dairy Queen restaurant had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your Dairy Queen franchise.
The Internal Revenue Service (IRS) provides the following specific restaurant examples to explain “full or partial closure orders” during a calendar quarter:
•Social Distancing Through Capacity Restrictions at Your Dairy Queen Location
It appears that government orders restricting the spacing of tables or limiting seating at your Dairy Queen has more than a nominal impact on the restaurant’s business operations under the facts and circumstances.
•Dairy Queen Dining Is Closed Indoors, But Open Outdoors or for Dairy Queen Delivery
Following the order, the Dairy Queen restaurant can operate only its outdoor sit-down and carry-out service during this period. Since, under the circumstances, a significant portion of the Dairy Queen restaurant’s business operations, its indoor dining service, has been closed by a government order, the Dairy Queen restaurant’s business operations are partially suspended.
•Dairy Queen Restaurants All Interior Dining Rooms Are Closed
Due to a government order closing all restaurants, bars, and similar food service establishments for sit-down service (indoor dining), a Dairy Queen restaurant must close its on-site dining area.
Dairy Queen restaurants that qualify for the ERC can receive a tax refund cash incentive equal to a percentage of qualified gross wages paid:
- Services and other gatherings were restricted by government orders; or
- There was a significant decline in gross receipts for these Dairy Queen restaurants
What If My Dairy Queen Restaurant Received a Paycheck Protection Program (PPP) Loan?
Good news Dairy Queen owners!
Due to recent changes in the ERC program, there are still ERC refund benefits available to organizations and Dairy Queen owners that have previously received PPP Loans, Restaurant Revitalization Funds (RRF), or Shuttered Venue Operator Grants.
The Dairy Queen PPP Loan (or loans), if your Dairy Queen location received two PPP loans, just needs to be correctly subtracted out from the date it was received against the qualified gross wages paid to your employees at Dairy Queen.
Besides Dairy Queen franchises, there are many more types of restaurants that are eligible for the ERC credit. If your business serves any type of food similar to Dairy Queen, you are probably eligible.
How Dairy Queen Franchisees Can Claim The Employee Retention Tax Credit?
Once your Dairy Queen franchise restaurant location has met all the eligibility requirements for the Employee Retention Credit, you can claim it on IRS Form 941-X.
It seems simple enough, however, the ERC Credit is highly confusing and complex when dealing with the ERC program.
See If Your Dairy Queen Restaurant Qualifies For The ERC Credit. Schedule Your Free ERC Tax Refund Consultation For Expert Help In Claiming The ERTC Credit For Your Dairy Queen Franchise.
When dealing with IRS tax matters, federal payroll taxes, income taxes, tax returns and other matters before the IRS, it’s always best to have expert help to stay safe and compliant.
Additionally, you should keep all your Dairy Queen records and supporting documents in case the IRS has any questions. As a restaurant employer, understanding and meeting the expectations of the Employee Retention Credit For Franchise Restaurants is critical to taking advantage of the available tax credits.
Most importantly, Dairy Queen employers must accurately calculate the ERC Credit amount, provide the necessary documentation to support their ERC claim, and ensure they comply with all relevant laws. Dairy Queen employers are also responsible for keeping accurate records of their employee’s wages and hours worked.
You can also check out the detailed guide on How to Claim the Employee Retention Credit (ERC)?
Is The Employee Retention Tax Credit Only For Dairy Queen Restaurants?
No, the employee retention tax credit is not only for Dairy Queen restaurants. The Employee Retention Tax Credit (ERTC) was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to support business owners and Dairy Queen franchisees who have been affected by the Coronavirus pandemic.
This tax credit is available to all businesses regardless of size or industry, so restaurant employees are not the only ones eligible for this benefit.
To qualify for these tax benefits, Dairy Queen employers must demonstrate that they experienced either a full or partial suspension of business operations due to governmental orders related to COVID-19 or had significant revenue losses due to the virus.
Besides Dairy Queen franchises, the ERC program is open to all types of businesses, including educational institutions, churches and other religious organizations, nonprofit organizations, and tribal governments.
Can A Dairy Queen Restaurant Be Eligible For The ERC Credit And PPP Loan?
Yes! Even if your Dairy Queen restaurant received an SBA Paycheck Protection Program (PPP) loan, an Economic Injury Disaster Loan (EIDL), or a Restaurant Revitalization Fund (RRF) grant, you are still eligible under current IRS rules and regulations, provided certain requirements are met.
The Dairy Queen payroll expenses that were paid by PPP loans may not be considered eligible for ERC. You can not claim ERC on the same wages paid by PPP loan. The IRS doesn’t want double-dipping of the same exact wages paid with PPP month to your Dairy Queen employees.
Is The ERTC Available To Dairy Queen Locations That Received Restaurant Revitalization Fund (RRF) Grants?
Yes! The “Restaurant Revitalization Fund” was recently established as part of the American Rescue Plan Act of 2021, providing restaurants with additional assistance.
A clarification was issued by the IRS on August 20, 2021, stating that Paycheck Protection Program (PPP) loans nor Restaurant Revitalization Funds (“RRF”) should be considered gross receipts for the purposes of determining eligibility.
Are Tipped Wages at Dairy Queen Eligible For The Employee Retention Tax Credit?
Yes! As part of this relief measure, certain qualified wages are eligible for reimbursement via an employer’s payroll tax credits. Tipped wages are included in qualified wages if they meet specific criteria as determined by the US Internal Revenue Service (IRS).
If the tipped wages are more than $20 a month and are subject to FICA then those tipped wages are eligible for ERTC.
What Is The Dairy Queen Full-Time or Part-Time Employee Count For ERC Eligibility for 2020 and 2021?
There is confusion because the IRS changed the criteria in 2021 for ERTC.
If you had less than 100 Dairy Queen employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.
In 2021, if your Dairy Queen restaurant had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your Dairy Queen franchise.
Would It Be Better If I Combined The Gross Receipts From All Of My Dairy Queen Franchise Restaurants?
Restaurants in a group may claim the credit for gross receipts if the value of their gross receipts is equal to or greater than an aggregate sum that’s specified by regulators.
If the group meets the criteria, each individual entity may claim the credit, regardless of whether the group as a whole achieved the minimum threshold.
If the gross receipts present for the group as a whole do not meet the requirements, none of the entities may claim the credit even though some restaurants individually had a decline.
How Do I Compare My Q1 2020 Gross Receipts With My Q1 2019 Gross Receipts If I Didn’t Start My Dairy Queen Restaurant Until Mid-Q2 2019?
If you opened your Dairy Queen franchise at the beginning of a quarter this year, you can calculate the gross receipts you have for the entire year. The first 3 months of the Dairy Queen opening in this year can be used as the basis for this calculation.
Conclusion and Summary for Franchise Owners of Dairy Queen Restaurants
The Employee Retention Credit is a great way for Dairy Queen restaurants to offset some costs associated with retaining and keeping employees employed during those tough times experienced in 2020 and 2021 due to COVID.
The ERC Refund will help Dairy Queen restaurant owners receive a much-needed tax refund to keep their Dairy Queen franchise profitable.
Your Dairy Queen location probably qualifies for the ERC based on government orders limiting the indoor seating capacity or hours of operation for your Dairy Queen.
Dairy Queen Franchise Owners: Get Help on How to Apply for the Employee Retention Tax Credit (ERC / ERTC): Claim Up To a $26,000 Refund Per Employee for Your Dairy Queen Location
Disaster Loan Advisors can assist your Dairy Queen restaurant with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, Dairy Queen owners can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Program is a valuable IRS tax credit you can claim for your Dairy Queen franchise.
Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your Dairy Queen location qualifies for.
ERC Deadline Urgency in 2024
April 15, 2024 Deadline for the 2020 ERC Tax Year
The deadline is coming up for the final opportunity to retroactively claim your business Employee Retention Credit for the past 2020 tax year. With the April 15, 2024 deadline fast approaching, we urge you; don’t let this final chance pass!
While not all businesses will qualify, as it depends on multiple factors per IRS Rules and Guidelines, you might be leaving significant financial relief on the table from prior COVID impact to your business during the past 2020 and 2021 business operation years.
Last year, in September 2023, the IRS temporarily paused processing ERC Claims for the remainder of last year. We at Disaster Loan Advisors (DLA) predicted this over one year ago when we made this ERC video warning business owners. See the ten-minute mark of the video for details.
TAKE ACTION NOW IN 2024
Even though the IRS has temporarily paused processing, you will still want to check eligibility and file now (if you qualify) because once the IRS will resume processing, ERC tax credit claims are processed in the order they are received.
If you haven’t previously filed for the ERC Credit, it is worth scheduling a phone call to at least explore your possible eligibility from both the past 2020 and 2021 business tax years. Contact us today for a deep-dive analysis to determine if your business qualifies one or more quarters from the 2020 and / or 2021 tax years.
As a leading dedicated member of the Tax and Accounting Team at Disaster Loan Advisors™, Mark focuses on unlocking the ERC Tax Credit's potential for eligible firms that qualify, providing strategic advice, and detailed guidance to ensure substantial financial recovery and growth. His methodical approach to client engagement includes comprehensive deep-dive analysis, customized consultation and guidance, and a commitment to achieving tangible results for each business served.
Disaster Loan Advisors™ (DLA) offers a comprehensive suite of services designed to navigate the complexities of the Employee Retention Tax Credit (ERC) program, ensuring that qualified businesses leverage the maximum possible benefit with minimum hassle. Unlike some firms that charge exorbitant contingency or percentage-based fees (often between 10% to 30% of your ERC refund), DLA operates on a fair and reasonable, transparent flat-fee structure that aligns with the IRS's guidelines.
If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™
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