On the 20th of every month, bars and restaurants in Texas pay a “mixed beverage gross receipts tax” to the state. Many businesses are probably not worried about tomorrow’s tax deadline because they have good practices of setting aside 6.7% as it comes in, or because they have cash reserves.

But let’s be realistic. We’re talking about the bar business – with narrow margins, unexpected pitfalls and expenses, and occasionally less than ideal accounting practices. So let’s consider that in many Texas cities bars have been ordered closed for most of this week because of virus concerns, and probably had reduced receipts the weekend before that. Yes, that is only 5 days, but that is more than 16% of March, and probably a comparable 16% that their income is down.

Of course these business owners have also just had to put all their employees on indefinite leave, and have at least 6 more weeks of mandatory shutdown in Dallas and at least 2 weeks throughout the whole state with no income to look forward to, and rent, vendors, and other bills still to pay.

What this means for many bars and clubs across the state is that tomorrow the first big unavoidable hit to the life support keeping their small business alive is coming. Unavoidable because the office of the Texas comptroller has proven unyielding about this tax deadline. Many other states, including Michigan and Massachusetts, have taken actions such as extending tax deadlines and closing offices to alleviate the pressure on their local economies, but not in Texas. From texas.comptroller.gov

While the Comptroller’s office recognizes the hardships businesses are facing during these uncertain times, the taxes that are due are based on sales made in February and collected by businesses on behalf of the state and local governments in February, the decision is not to extend or delay the March due dates…

It is perfectly reasonable for the comptroller to have the policy that since this is covering February sales, taxes are due as normal. It is also perfectly reasonable to expect that these business operate hand-to-mouth (like many American households) and this will be impossible to pay for an owner who has lost a whole week’s income. Oh, and missing that tax payment incurs a 5% penalty if it is even one day late (and 10% penalty if a month late.)

So what is to be done to mitigate the impending decimation of small service industry businesses across the lone star state?

Texas Governor Greg Abbott announced on Wednesday that TABC was waiving restrictions and allowing restaurants to deliver booze with to go food, which will help businesses with kitchens to lessen the blow. He has also made an effort on Tuesday to get the ball rolling on small business disaster loans from the U.S. Small Business Administration which would potentially provide long-term, low-interest loans to “qualifying businesses” in Texas. At the time of publishing Texas is not among the states in this SBA list where businesses qualify for these loans.

It should also be noted that the standard SBA loan program granted only $30 Billion in the entire past fiscal year, and it may be asked to extend more than twice that amount in disaster loans in the next two weeks alone.

The Federal coronavirus relief bill was signed by the President on Wednesday, and will provide several billion dollars to Texas, but this will apply mainly towards public health efforts and personal unemployment payments, not substantially affecting businesses other than keeping their out-of-work employees fed for a few weeks.

Other more grass-roots efforts are popping up to help stem the bleeding in the service industry, including this list of initiatives in Austin.

Given tomorrow’s deadline, however, you can expect a good percentage of those nightclubs, bars, and music venues that were asked to close their doors for the good of the public this week to never open them again.

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