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Goldman, Schumer push IRS to get NYC businesses COVID funds years after they applied
By
Michelle Bocanegra
Published Dec 9, 2024
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By
Michelle Bocanegra
Published Dec 9, 2024
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Alexis Percival received tens of thousands of dollars from the federal government last year for a pandemic-era tax credit that was supposed to help her restaurant, Kindred, survive.
But the Adriatic café in the East Village had already closed its doors the year before.
Percival was among hundreds of thousands of business owners nationwide who were — and still are — collectively owed billions by the federal government. A COVID-19 era program launched in 2020 was designed to help businesses like restaurants and retail stores stay staffed as their bottom lines bottomed out.
But more than four years after New York City became the national epicenter of the pandemic, businesses are still waiting for that relief, as the Internal Revenue Service pores through a backlog of claims that were halted by rampant fraud.
New York Rep. Dan Goldman, along with Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, are pressing the IRS to quickly get the money into the hands of deserving businesses, according to a letter shared with Gothamist ahead of its public release.
“Kindred, I firmly believe, would still be open, had we received those funds in a timely fashion,” Percival said in an interview.
The funds were from the federal employee retention tax credit, which promised to buoy struggling businesses that had lost almost their customer base during and after the lockdowns. Kindred shared a similar fate as many of the city’s shops, bars and restaurants: When big bills came due after moratoriums were lifted, supply chain problems and inflation were driving up prices. The price of eggs spiked in the of summer 2022, more than two years after COVID-19 was first detected in the city.
“We sort of survived the pandemic, and then when all was said and done, the hole was just too deep,” Percival said.
The credit was meant to provide eligible businesses up to $26,000 per employee on their payroll. Despite its popularity, some lawmakers have pushed to end it altogether amid fears of more fraud within pandemic relief programs.
But small business owners who have yet to receive the money lamented the credit as a lifeline that never was, as they continue to struggle toward financial recovery.
“Our offices continue to hear from small businesses and nonprofits in our districts whose legitimate claims remain outstanding,” reads the congressional letter, which was cosigned by almost a dozen Democratic members of the New York delegation.
The IRS imposed a moratorium on new claims last year, citing a deluge of applications from those seeking to take advantage of the credit improperly. The agency has unfrozen claims filed between mid-September 2023 and the end of January, following an internal review this summer.
The IRS announced that it is now working through hundreds of thousands of claims nationally that add up to about $10 billion. But its processing power has not been fast enough for businesses in a bind. Restaurants in New York City, which already operate on tight margins, needed the money years ago.
Rep. Goldman and his cosigners praised the IRS for its diligence, but added: “The slow review process and the moratorium have caused significant delays and hardship for legitimate small businesses who have waited years for their credits.”
Percival said she had gone through every bureaucratic step to apply for the funds she was entitled to.
“It always feels like the small businesses are the ones who get put through the ringer the most,” she said. “We did everything right.”
The IRS did not provide comment on the letter.
Sen. Kirsten Gillibrand, Reps. Jerry Nadler, Nydia Velázquez and Grace Meng also signed onto the letter.
A spokesperson for Goldman, whose Lower Manhattan and Brooklyn district is a destination area for restaurants and bars, said his office had been contacted about $9.4 million in unresolved claims from businesses, four of which have received about $2.6 million in disbursements following his office’s intervention. Ten others were still waiting on action from the IRS.
“What was supposed to be a lifeline and help support small businesses and support jobs became something of frustration and anxiety,” said Andrew Rigie, executive director of the New York City Hospitality Alliance, which represents restaurants and bars across the city.
Though she lost one restaurant to the pandemic, Percival said she is fortunate to have a wine bar in the East Village still operating in full swing. That, she said, is a better outcome than other business owners have had. She is still waiting on another disbursement she filed for her business in 2021.
But Percival said she has no hope that Kindred will someday reopen.
“I know that we made the most responsible decision to not just keep trudging along and just crossing our fingers and hoping,” she said. “Hope doesn't make money.”
Tagged
new york state
pandemic
new york city
chuck schumer
Dan Goldman
irs
economy
Politics
restaurants
Michelle Bocanegra
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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