( File photo )

A bipartisan bill has been introduced that would give tax credits to offset uncollectable foodservice sector debt incurred as a direct result of the COVID-19 shutdown.

Reps. Darin LaHood, R-Ill., and Jimmy Panetta, D-Calif., introduced the Providing Liquidity for Uncollectible Sales (PLUS) Act, which is supported by the United Fresh Produce Association and International Food Distributors Association, according to a news release.

The foodservice distribution industry amassed more than $12 billion in debts they can’t recover, with restaurants and other operators shut down in response to the global pandemic, according to the release, and were not able to pay their distributors. Fruit and vegetable distributors have $5 billion in such debt, and broadline foodservice distributors reported more than $5 billion of debt, according to the release.

“Produce foodservice distributors absorbed a devastating blow with the spring shutdown of the restaurant and hotel industry,” Tom Stenzel, president and CEO of the United Fresh Produce Association, said in the release. “I commend Reps. LaHood and Panetta for introducing the Providing Liquidity for Uncollectible Sales (PLUS) Act, a helpful solution to an insurmountable challenge for produce foodservice distributors and the companies on both ends of their business agreements.”

Restaurants buy supplies on payment terms that allow them to generate revenue before the bill comes due, normally 30-60 days after delivery. After the near complete collapse of the foodservice sector, sales plummeted, customers were unable to pay their bills and distributors were left with more than $12 billion in debt.

While many of the provisions of the earlier passed CARES Act provided critical assistance for foodservice distribution companies, it did not account for unpaid debts owed to distributors for food that restaurants could not use due to COVID-related shutdown orders.

Tax credits for the $12.2 billion in outstanding debts will provide the liquidity distributors need to continue to extend credit to their restaurant customers and help them get back on their feet as the economy restarts, according to the release.

“The PLUS Act would provide tax credits for uncollectible accounts receivable, ensuring that distributors can continue to provide assistance to their restaurant customers,” Mark Allen, president and CEO of the International Foodservice Distributors Association, said in the release.


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