Did You Know About These Tax Credits Available to New York Hospitality Employers?

Did You Know About These Tax Credits Available to New York Hospitality Employers?

As an employer in New York State, you may qualify for tax credits for employing tipped workers, youth employees, veterans, individuals with disabilities, and more. Below are five tax credits available to New York restaurant and hospitality employers, four of which are state-specific incentives.

  1. FICA Tip Credit: The FICA Tip Credit is a federal tax incentive available to eligible food and beverage employers with tipped employees. The credit is equal to the employer’s share of Social Security and Medicare (FICA) taxes on certain tips received by employees. The FICA Tip Credit was recently expanded by the One Big Beautiful Big Act to include additional industries where tipping is customary, such as hair and beauty services.
  2. New York Youth Jobs Program Tax Credit: Previously called the Urban Youth Jobs Program Tax Credit and the New York Youth Works Tax Credit Program, the New York Youth Jobs Program Tax Credit is a credit available to eligible employers who hire qualified employees between the ages of 16 and 24. The amount of the credit is up to $7,500 per certified youth. To participate in the program, employers must be certified by the NYS Department of Labor, applying no later than November 30 of the program year.
  3. Hire a Veteran Credit: Employers in New York State who employ qualified veterans may be eligible for a tax credit. The credit is available to employers who employ qualified veterans for a 12-month period in a full-time or part-time position, with employment beginning between January 1, 2014 and January 1, 2028. The amount of the credit is equal to a percentage of the total wages paid to the veteran during the first twelve months of employment (20% for disabled veterans and15% for non-disabled veterans).
  4. Credit for Employment of Persons with Disabilities: Employers who hire eligible individuals with disabilities may be eligible for a tax credit. To qualify, the employee must be certified by the NYS Education Department’s Adult Career and Continuing Education Services-Vocational Rehabilitation (ACCES-VR), or the Office of Children and Family Services’ NYS Commission for the Blind (NYSCB) as a person with a disability. An additional tax credit is available to qualified employers certified by DOL for employing individuals with developmental disabilities. 
  1. Empire State Apprenticeship Tax Credit: The Empire State Apprenticeship Tax Credit (ESATC) Program provides a tax credit to certified New York employers who employ qualified apprentices. To participate in the program, employers must submit an application and be certified by the NYS Department of Labor.

Partner With RBT

RBT CPAs’ restaurant and hospitality accounting experts can help you identify what tax credits you may be eligible for. Contact us today and find out how we can be Remarkably Better Together.

Choosing a CPA Firm for Your Audit: How to Read a Peer Review Report

Choosing a CPA Firm for Your Audit: How to Read a Peer Review Report

Looking for a CPA firm to perform your audit? As part of the request for proposal process, you can request a copy of a CPA firm’s most recent peer review report. It’s important to know how to read these reports so that you can be sure you’re hiring the best firm for the job.

About Peer Reviews

The AICPA (American Institute of CPAs) requires every member CPA firm that performs audits, reviews, or compilations to undergo a peer review every three years. A peer review is an independent, external review of a CPA firm’s accounting and auditing practice that assesses a firm’s quality control system and adherence to professional standards.

Firms can receive one of three ratings: (1) pass, (2) pass with deficiencies, or (3) fail. Any firm that receives a rating other than “pass” is required to undergo a process called remediation, a point-by-point plan to correct any deficiencies identified during the review.

There are two types of peer reviews: system reviews and engagement reviews.

System reviews: A reviewer evaluates all elements of the CPA firm’s quality control system for performing accounting and auditing work, including a sample of the firm’s engagements. System reviews are required for member firms that perform audits, Yellow Book work (Generally Accepted Government Auditing Standards), or attestation services.

Engagement reviews: A reviewer evaluates a sample of the firm’s accounting work. Engagement reviews are conducted for firms that do not perform audits, but perform other accounting work, such as reviews and compilations.

Why are Peer Reviews Necessary?

Since financial statements are often used to make important management decisions, audits and accounting work must adhere to strict professional standards. Peer reviews ensure that CPA firms are operating within these professional standards. If deficiencies are identified, the remediation process holds CPA firms responsible for correcting these deficiencies. Peer reviews also increase public transparency, with many peer review reports publicly accessible on the AICPA’s Peer Review Public File Search.

How to Read a Peer Review Report

Any firm you are considering hiring for an audit should have a system review report. As mentioned above, a firm can receive one of three ratings on its peer review: “pass”, “pass with deficiencies,” or “fail.” Here’s what those results mean.

Pass: A rating of “pass” indicates that the firm’s quality control system is appropriately designed and compliant with professional standards.

Pass with Deficiencies: A rating of “pass with deficiencies” signifies that, except for the specific deficiencies described, the firm’s quality control system is appropriately designed and compliant with professional standards.

Fail: When a system review report receives a rating of “fail,” the reviewer has determined that as a result of significant deficiencies, the firm’s quality control system was not suitably designed or compliant with professional standards.

What to Look for in a Peer Review Report

  1. Verify that the report is recent (within the last three years).
  2. Make sure the auditor has experience in GAS and/or single audits. This information can be found under the “Required Selections and Considerations” section of the report.
  3. Ideally, you want your auditor’s peer review report to have a rating of “pass.”
  4. If the rating is “pass with deficiencies” or “fail,” are the deficiencies related to GAS or single audits? If the answer is yes, you’ll want to go with another auditor.

Choosing an Auditor You Can Trust

When it comes to hiring a CPA firm, reputation matters. Peer reviews are important not only for monitoring the quality of service and compliance of accounting firms, but also for protecting the public interest. RBT CPAs has participated in the peer review program for over 30 years, only ever receiving “pass” reports. When you work with RBT, you can be confident you are working with highly experienced accounting professionals, with a reputation for integrity and excellence. Give us a call today to learn more about our accounting, tax, audit, and advisory services—and find out how we can be Remarkably Better Together.

What Makes a Union Tax-Exempt? Key Characteristics of 501(c)(5) Organizations

What Makes a Union Tax-Exempt? Key Characteristics of 501(c)(5) Organizations

A 501(c) organization is a nonprofit organization recognized under the U.S. Internal Revenue Code as exempt from federal income tax. There are many kinds of 501(c)s, the most widely-known of which are 501(c)(3)s—or charitable organizations. Unions, however, fall specifically under the category of 501(c)(5)s. Below are the distinguishing characteristics of 501(c)(5) organizations that enable unions to qualify as tax-exempt entities.

What is Section 501(c)(5)?

Section 501(c)(5) of the Internal Revenue Code provides a federal income tax exemption for labor, agricultural, or horticultural organizations. As labor organizations, unions fall under this definition for tax purposes.

Exemption Requirements

To qualify as a 501(c)(5), an organization must meet the following requirements:

  1. The organization’s net earnings may not benefit any one member.
  2. The organization’s primary purpose must be to better the working conditions of workers engaged in labor, agriculture, or horticulture, improve the grade of their products, or develop greater efficiency within its members’ occupations.

In general, an organization is not considered a 501(c)(5) organization if its primary activity is to receive, hold, invest, disburse, or otherwise manage funds associated with savings or investment plans.

Lobbying and Political Activities

Unlike 501(c)(3) organizations, which face greater restrictions regarding their participation in political and legislative activities, 501(c)5 organizations are permitted to achieve their exempt purposes through lobbying for pertinent legislation. 501(c)(5)s that engage in lobbying may be required either to notify members of the percentage of dues allocated to lobbying activities or to pay a proxy tax.

Direct or indirect participation or intervention in political campaigns—either in support of or in opposition to a candidate for public office—is not permitted as part of a 501(c)(5) organization’s exempt purpose. However, the organization can participate in certain political activities as long as it is not the group’s primary activity. Any expenditures related to political activities, however, may be subject to tax.

Reminder about Unrelated Business Income Tax

Though unions are generally exempt from paying income tax under Section 501(c)5, they may still be subject to tax for income classified as “unrelated business income.” Unrelated business income (UBI) is income from a trade or business that is regularly carried on and not substantially related to the exempt purpose of the organization. For more information about Unrelated Business Income Tax (UBIT), please refer to last month’s thought leadership article.

Partner with RBT CPAs

For all matters accounting, tax, audit, and business consulting-related, please don’t hesitate to reach out to our team at RBT CPAs. Our experts are here to assist and advise you. Contact us today and find out how we can be Remarkably Better Together.

Bonus Depreciation for Qualified Production Property: New Deduction Under the OBBBA

Bonus Depreciation for Qualified Production Property: New Deduction Under the OBBBA

Since the passage of the One Big Beautiful Bill Act (OBBBA) in July of 2025, RBT has been covering its impacts on the real estate industry. Among the most notable provisions of the new tax law is the restoration of 100% bonus depreciation—a change that benefits businesses across various industries. The OBBBA also extends 100% bonus depreciation to a new category of property known as “qualified production property.” So, what are the rules regarding qualified production property, and what are the implications of this new incentive for the real estate industry? Let’s get into it.

Qualified production property (QPP), according to section 168(n) of the One Big Beautiful Bill Act, is defined as that portion of any nonresidential real property which:

  • Is used by the taxpayer as an integral part of a qualified production activity
  • Is placed in service in the U.S. or any possession of the U.S.
  • The original use of which commences with the taxpayer
  • The construction of which begins after January 19, 2025 and before January 1, 2029
  • Is designated by the taxpayer in the election
  • Is placed in service before January 1, 2031

“Qualified production activity” is defined as the manufacturing, production, or refining of a qualified product resulting in a “substantial transformation” of the property comprising the product. Note that taxpayers are required to make an affirmative election to claim the QPP deduction (unlike bonus depreciation, which is typically applied automatically for qualified property).

Certain types of property are excluded from the definition of qualified production property and are therefore ineligible for the new deduction. Ineligible property includes:

  • Leased property
  • Any portion of nonresidential real property which is used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property.

In general, the deduction applies to new construction. However, the provision includes a special rule for acquired qualified production property, which provides an exception to the “original use” requirement if certain conditions are met (see Section 168(n) for these conditions).

Also note that QPP must be used as part of a qualified production activity for at least 10 years after it is placed in service to remain eligible for the deduction. If the property is disposed of or ceases to be used as an integral part of a qualified production activity during this time, any depreciation previously claimed is subject to recapture.

Key Takeaways for the Real Estate Industry

  • Eligible taxpayers can now immediately deduct 100% of the cost of qualified production property, instead of following the typical 39-year depreciation schedule for nonresidential real property, which may significantly increase cash flow.
  • Taxpayers must maintain qualified use for the property for at least 10 years to benefit from the deduction.
  • To claim the deduction, taxpayers must make an affirmative election for each tax year. This election is irrevocable.
  • Further guidance is expected from the IRS and the Treasury regarding the application of the QPP rule.
  • Real estate investors and developers should consult with a tax professional for help interpreting the various provisions of the rule and to discuss eligibility for the QPP deduction.

Questions?

RBT CPAs’ real estate accounting team is here to answer your questions regarding the new tax rules and to support all of your other tax, accounting, audit, and advisory needs. Give us a call today and find out how we can be Remarkably Better Together.

Are Your Internal Controls Up to Par?

Are Your Internal Controls Up to Par?

Internal controls are systems and procedures put into place within an organization to safeguard assets, prevent fraud, ensure accuracy and compliance, and support operational efficiency. A strong system of internal controls is essential for your practice to thrive and remain financially healthy. This article highlights important internal control strategies and the areas of your practice for which we recommend you implement these controls.

Internal Control Strategies

  • Segregation of duties: Segregation of duties is a fundamental internal control that applies across many areas of an organization’s operations. This strategy involves dividing key responsibilities within a business process among multiple employees so that no single individual has too much control over any one process. By separating these functions, you can significantly reduce the risk of fraud, misuse of resources, and unintentional errors within your practice.
  • Authorization processes: Authorization processes ensure that financial transactions are sent through the proper channels for approval.
  • Reviews and reconciliations: Regular reviews of transactions help to detect errors and misuse of funds. Account reconciliations—or comparisons between two sets of records—are a critical internal control strategy that can be utilized within multiple operational areas.
  • Clear procedures for recordkeeping and documentation: Establishing guidelines for documentation of your practice’s policies, processes, and transactions promotes consistency, cohesion, and clear expectations within your practice.
  • Physical controls: Physical controls over your practice’s tangible assets are also key for secure operations. Physical controls include locked storage for inventory, safes for cash and sensitive documents, and security cameras.

Key Areas to Implement Internal Controls with Examples

Financial management: Regular reconciliations between bank statements and your practice’s books and PIMS, double-checking invoices, separation of duties within financial processes (i.e., authorizations, recordkeeping, custody of assets, reconciliations).

Inventory and purchasing: Locked storage for inventory, physical inventory counts, formal cycle counting procedures and schedule, comparing actual inventory counts against records, vendor checks, authorization processes for purchases, dual signature policy for checks over a certain threshold, segregation of duties between employees making and approving purchases.

Client service: Transparent billing, standardized procedures.

Human resources and payroll: Authorization processes for salary changes, timecard approvals, segregation of duties between employees processing and approving payroll, reconciliation of payroll bank accounts, access controls for payroll software.

IT: Robust access controls for practice software, password policies, two-factor authentication, other cybersecurity measures.

How RBT Can Help

RBT CPAs’ veterinary accounting team is available to perform internal control reviews for your practice. We’ll assess the procedures you have in place, identify potential risks, and make recommendations for strengthening your internal control system. Contact RBT CPAs today to request a review of your practice’s internal controls—or for assistance with any of your other accounting, tax, audit, and advisory needs. Together, we can be remarkably better.