The CHEERS Act

Creating Hospitality Economic Enhancement for Restaurants and Servers

BACKGROUND

During COVID-19, restaurants and bars faced immense challenges in maintaining operations, often forced to temporarily close their doors or adapt their business models. The proposed draft deduction empowers restaurants, retailers, taprooms, and entertainment venues of all sizes to take advantage of a tax incentive that simultaneously increases sustainability and alleviates their financial burden.

The pandemic catalyzed a shift towards consumers purchasing beverage alcohol in single-use containers like cans and bottles, and the use of kegs dropped precipitously. Even now, draft beer volume share is still significantly diminished, down 26% since 2019.

Kegs offer a sustainable option, eliminating the need for disposable containers and promoting reuse. Kegs and draft beer represent the most environmentally conscious choice for our industry.

SOLUTION

As restaurants and bars continue to face high inflation, supply chain issues, and other logistical challenges, the beverage alcohol industry is advocating for federal economic relief for its retail partners.

To support the hospitality sector, the Beer Institute is championing the introduction of H.R. 7577 the CHEERS Act: Creating Hospitality Economic Enhancement for Restaurants and Servers, introduced by Reps. Darin LaHood (R-IL-16) and Steven Horsford (D-NV-04). This legislation proposes a straightforward tax incentive to promote the use of kegs – encouraging consumers to enjoy a beer in the freshest, most sustainable manner possible while supporting bars and restaurants.

Using kegs and tap lines allows the retailer to utilize reusable property known for their energy efficiency. The proposed draft deduction empowers restaurants, retailers, and taprooms to take advantage of a tax incentive that simultaneously increases sustainability and alleviates their financial burden.

Since 2005, the tax code has provided the Section 179D deduction for qualifying investments in energy efficient systems on commercial premises. This provision would be expanded to apply to all new keg and tap properties, incentivizing the use of draft lines and keg equipment in taprooms, restaurants, and bars. The legislation also would provide an additional benefit for remodeling of draft property and for lost or
stolen kegs. Congress has modified definitions for qualifying property within Section 179D several times in recent years to expand the scope of the deduction. The CHEERS Act expands Section 179D again to include an incentive for energy-efficient draft containers and installation property, providing immediate tax relief to struggling on-premise businesses.

For more information on the CHEERS Act, please contact Annie Lange.