You Received a Shuttered Venue Operators Grant, What’s Next for Your Company?

If you are reading this article, you may be one of the thousands of business owners who received a Shuttered Venue Operators Grant (SVOG) this year and are feeling overwhelmed by the implications this new grant has on your compliance requirements. This article is intended to provide an overview of what to consider when your for-profit entity receives an SVOG.

If you are a not-for-profit or other non-federal entity as defined under the Uniform Guidance, please find more information in this Clark Nuber article.

What is the SVOG?

The SVOG program was established by the Economic Aid to Hard-Hit Small Businesses,

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You Got a Shuttered Venue Operators Grant, What’s Next for Your Not-for-Profit?

This summer, many eligible live performing arts organization operators; live venue operators or promoters; theatrical producers; motion picture theater operators; talent representatives; and museum, zoo, and aquarium operators who met specific criteria received notification from the Small Business Association (SBA) that they would be receiving a Shuttered Venue Operators Grant (SVOG) award and potentially a supplemental grant as well. This article will cover the revenue recognition and federal compliance (Single Audit) requirements for these SVOG awards.

Determining Revenue Recognition for SVOG

Now that your entity has received the award, the next step is to determine the proper revenue recognition. The relevant guidance for this type of cost reimbursement federal award falls under U.S.

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Double Dipping Opportunities for RRF and SVOG Recipients Claiming the Employee Retention Credit

When additional Employee Retention Credit (ERC) guidance was provided in March 2021, the Notices clarified wages utilized for Paycheck Protection Program (PPP) loan forgiveness are not eligible for the ERC.

We assumed this double dipping prohibition would extend to post-CARES Act COVID relief programs, such as the Shuttered Venue Operator Grants (SVOG) and the Restaurant Revitalization Fund (RRF). However, Notice 2021-49 provides guidance that indicates otherwise.

RRF and SVOG Wage Double Dipping Permitted for 2020 and 2021 Q1 and Q2

For RRF and SVOG recipients, coordination between these and the other COVID programs (PPP,

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Gross Receipts for Employee Retention Credit Does NOT Include Certain COVID Relief Funds

Revenue Procedure 2021-33, issued by the IRS on August 9, 2021, now answers one of our biggest Employee Retention Credit (ERC) questions: Are Paycheck Protection Program (PPP) loans included in gross receipts for ERC eligibility? Based on this guidance, the answer is NO.

ERC Eligibility Refresher

As a reminder, an employer is eligible for the ERC through one of three ways during 2021:

  1. A full or partial suspension of operations due to a government order;
  2. A gross receipts decline of over 20% when compared to the same quarter in 2019; or
  3. Qualification as a Recovery Startup Business (2021 Q3 and Q4 only).

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Your Top Employee Retention Credit Questions Answered in Recent IRS Guidance

In early August, the IRS issued two pieces of guidance on the Employee Retention Credit (ERC) – Notice 2021-49 and Revenue Procedure 2021-33. This guidance includes answers to your top questions, including:

  • Whether PPP loan proceeds are included in the gross receipts calculation;
  • Whether S-corporation owners are eligible for the ERC;
  • When the ERC credit is included on your income tax return; and
  • What method of accounting to use when calculating a decline in gross receipts.

Also included is a new provision that allows for double dipping on wages for recipients of Shuttered Venue Operator Grants and Restaurant Revitalization Fund Grants.

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Clark Nuber
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