Our next Restaurant CFO Roundtable is May 16 at Quay Chicago. SS&G’s Restaurant CFO Roundtable is a unique networking group for restaurant-industry financial executives in the greater Chicago area. Our May luncheon features  David Gotowko, founder of Restaurant Business Solutions, a consulting firm specializing in solutions for the food and beverage industry. Join David for an interactive discussion on generating top-line growth. Click here to register.

Our next restaurant webinar, An IRS View of the Restaurant Industry, is May 21. This webinar will take a look at the IRS’ historical and current focus on the restaurant industry. Phil Hofmann and Adam Berebitsky will discuss IRS agents’ resources, issue resolution tools, and common restaurant examination issues. There will be time for audience questions. Click here to register.

If your restaurant has accepted Visa or MasterCard credit cards any time since 2004, there is a proposed settlement of a class-action lawsuit – arguably the largest in antitrust case history – which merits your attention. We recommend you review the terms of the proposed settlement and make an educated decision on what is best for your restaurant company.

The lawsuit filed against Visa, MasterCard, and several large banks challenged payment card interchange fees and merchant discount rules. A $7.25 billion settlement of this case won preliminary approval from a federal judge in 2012. The settlement is subject to final approval at a later date, but the judge’s decision allows plaintiffs to begin signing up more than 7 million retailers who may be eligible to participate. You may have received a notice recently informing you of the proposed settlement and explaining your rights and options.
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THE COMPANY: A company owned several barbecue restaurants in the Midwest, but the majority owner also held a large stake in an affiliated company that processed barbecue meat to sell via an online presence.

THE PROBLEM: The IRS pulled the affiliated company for an exam on its 2008 and 2009 tax returns. The IRS concluded the previous accountant did not classify each owner’s share of debt correctly on their respective K-1s. This error resulted in the owners taking losses (that should not have been taken) in tax years 2001 through 2009 against debt in which they were not personally liable. Based on the facts and the IRS code rules on loss recapture, it was determined the IRS could not force the taxpayers to include in current income the losses previously taken (erroneously) on their tax returns because the losses were outside of the three-year statute of limitations. The initial audit results were that the owners were required to pay tax as a result of the error in the three open tax years, plus penalties and interest.

To read this entire case study, click here.

SS&G’s next Restaurant CFO Bootcamp conference is June 5-7, 2013, in Las Vegas.

SS&G’s Restaurant CFO Bootcamp is a three-day conference for finance and accounting professionals in the restaurant industry. Whether you are an experienced CFO or controller, or an accountant new to the industry, this seminar provides you with an interactive training experience.

The program delves into the hot topics every restaurant’s financial executive needs to know. We work with leading industry experts to discuss issues such as obtaining financing, compensation plans, tax updates, audit issues, restaurant valuation, and benchmarking.

Click here for event information and to register.

We compiled the operating results of publicly traded restaurant companies to provide you with timely benchmarking information. Our past benchmarking surveys of medium-sized private companies indicated, on average, their prime costs were higher than public companies by 1–2 percent. However, high-quartile participants (best performing) in our surveys had prime costs 3 percent lower than the average public company.

Overall same-store sales for fiscal year 2012 are up 2.5 percent, resulting from an increase in traffic and continued menu price increases. Same-store sales decreased since the third quarter of 2012 as the level of uncertainty increased for consumers with the presidential election and fiscal cliff looming. Quick-serve restaurants increased 4 percent with strong results from most companies. The upscale casual segment continues to recover with a 2.6 percent increase while the casual segment continues to experience modest yet positive improvement. Soft comparisons and recession fatigue are spurring positive comp sales. Chipotle continues to impress with an increase of 7.1 percent. Continue Reading »

This is a tax on individual taxpayers; however, if you have passive investors in your operating entity, you’ll need to take the new 3.8 percent surtax into consideration.

Let’s look first at who is subject to this new provision and how it is calculated. The Medicare surtax will be imposed on Net Investment Income for individuals whose adjusted gross income is greater than a certain threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for all others. The tax is 3.8 percent of the lesser of (1) Net Investment Income for the tax year, or (2) the excess of modified adjusted gross income for the tax year over the threshold amount. Continue Reading »

To give employers hiring under the Work Opportunity Tax Credit (WOTC) more time to comply with filing requirements, the IRS has issued Notice 2013-14 to provide guidance and transitional relief.

The WOTC was extended through Dec. 31, 2013, under the American Taxpayer Relief Act of 2012 for taxable employers hiring members of targeted groups and qualified tax-exempt organizations hiring qualified veterans. Employers needed additional time to satisfy compliance requirements since the WOTC was:

• extended retroactively for 2012 for members of targeted groups (other than qualified veterans)
• set to expire for qualified veterans hired after Dec. 31, 2012

As a result, the 28 day deadline period for employers to submit Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to designated local agencies has been extended. Now employers will be considered to have timely filed if a completed Form 8850 is submitted no later than April 29, 2013. This applies to the following groups of qualifying employees:

• Members of certain targeted groups hired on or after Jan. 1, 2012, and on or before March 31, 2013
• Qualified veterans hired on or after Jan. 1, 2013, and on or before March 31, 2013

The 2011 tangible property regulations are deemed by many as overly complex and difficult to apply, particularly for restaurants with frequent remodels.

As a welcome response, the IRS and the Treasury Department recently announced their acceptance of a request from the National Retail Federation and Retail Industry Leaders Association for guidance regarding the temporary tangible property regulations as they apply to remodels performed by restaurants and other retailers. Issuance will be in accordance with the IRS’ Industry Issue Resolution (IIR) program.

The IRS and the Treasury Department will work closely with industry groups in developing further parameters that would specifically address restaurant and other retail remodels. Guidance is expected in 2013 or early 2014 and will be independent of the final tangible property regulations anticipated for release in 2013. Continue Reading »

In SS&G’s Selections newsletter, we share tips and insights from our team of experts in restaurant financial management and operations. From the latest IRS guidelines to examples where we’ve demonstrated the many ways we’ve helped restaurant clients, each issue is packed with valuable information.

Click here to read or print the Winter 2013 issue. Contents include:

• Pinch of Saltz: 2013 Starts with Tax Relief
• Ask SS&G: Will the new 3.8 percent Medicare surtax affect our company?
• Benchmarking Update: Q3-12
• Case Study: Disallowed Losses Due to At-Risk Limitations
• Eating in: Miami

Phil Hofmann, CPA, is partnering with SS&G’s restaurant services group to provide consulting services on client engagements related to tax compliance, conflict resolution, and thought leadership.

Phil brings more than 30 years of IRS experience, most recently as national food, beverage and hotel technical adviser. He retired from the organization in January 2013. He was a key member of task force teams dealing with specific industry issues including smallwares, tips, cost segregation, bonus depreciation, capitalization, vendor allowances, Work Opportunity Tax Credit, charitable contributions, retail remodels, and gift cards. He is a popular speaker and instructor, most notably for the National Restaurant Association and the American Institute of CPAs. Continue Reading »