The New England Not-For-Profit Accounting Advisor

A significant number of organizations across the nation are likely eligible for the Employee Retention Tax Credit (ERTC), but since few have claimed it, the tax break may expire early.

If passed, the proposed $1 trillion Infrastructure Investment and Jobs Act will end the pandemic-era tax break three months early, on Sept. 30 rather than the current date of Dec. 31, 2021. Eligible organizations would still be allowed to claim the ERTC for 2020 and the first quarter through the third quarter of 2021, but there would be no credit for the fourth quarter.

Topics: NFP, COVID19, COVID-19, CARES Act, Paycheck Protection Program, PPP, PPP Loan, SBA, Employee Retention Credit, Employee Retention Tax Credit, ERTC

With the modifications made to the incentive, organizations continue to evaluate how to maximize the Employee Retention Tax Credit (ERTC). The ERTC is a special incentive created within the 2020 Coronavirus Aid, Relief, and Economic Securities (CARES) Act that encourages employers to retain their workforce during periods of economic disruption caused by the coronavirus pandemic. It provides immediate reductions to payroll taxes and cash refunds for credits in excess of payroll taxes, for both commercial and not-for-profit employers. A business must have been subject to government shutdown orders or experienced a significant decline in gross receipts to qualify.

Topics: AICPA, IRS, NFP, COVID19, COVID-19, CARES Act, Paycheck Protection Program, PPP, PPP Loan, Employee Retention Credit, Employee Retention Tax Credit, ERTC

The Employee Retention Tax Credit (ERTC) was enacted as part of the early COVID-19 stimulus measures, and can be claimed through Dec. 31, 2021 by eligible employers who retained employees during the COVID-19 pandemic. Earlier this year, the ERTC was expanded through the American Rescue Plan Act to potentially cover more organizations and situations. While not-for-profit organizations are eager to take advantage of the ERTC, there are some logistical hurdles between taking the credit and reaping its benefits.

Topics: NFP, COVID19, COVID-19, Paycheck Protection Program, PPP, PPP Loan, Employee Retention Credit, Employee Retention Tax Credit, ERTC

The Employee Retention Credit (ERC) was originally enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The ERC was extended and expanded by the Consolidated Appropriations Act, 2021 (CAA), and then again by the American Rescue Plan (ARP) Act. Eligible employers can obtain the ERC with respect to wages and health plan costs paid during periods of disruption brought about by the coronavirus pandemic. The most common way to become an eligible employer under the CARES Act, the CAA, and the ARP Act is to satisfy a gross receipts test. Until recently, not-for-profit (NFP) entities faced significant uncertainty about the manner in which gross receipts is defined for purposes of the ERC. Although the CAA provided this clarification, NFP entities now must consider unusual planning decisions in order to maintain ERC eligibility.

Topics: not-for-profit, NFP, tax credit, Employee Benefits, COVID-19, CARES Act, Employee Retention Credit, Consolidated Appropriations Act, The Act, ERTC, American Rescue Plan (ARP) Act, CAA

Provisions in the year-end stimulus bill known as the Consolidated Appropriations Act, 2021 (the Act) benefit beleaguered not-for-profit organizations in a number of ways. The COVID-19 relief measures clarify important elements for recipients of Paycheck Protection Program (PPP) loans, and offer fresh funding for new loans (PPP2) that may be particularly important to not-for-profits. An employer tax credit was also enhanced and employee benefit modifications extended. Read on to learn how your organization can take advantage of the newest stimulus legislation and find some stability in these trying times.

Topics: not-for-profit, NFP, tax credit, Employee Benefits, Paid Family and Medical Leave, COVID-19, CARES Act, PPP, SBA, PPP Loan Forgiveness, Consolidated Appropriations Act, PPP2, The Act, ERTC

Many not-for-profit organizations were forced to completely shutter operations because of the COVID-19 pandemic, making them eligible candidates for the Employee Retention Credit (ERC) benefit in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The credit can be claimed quarterly to help offset the cost of retaining employees. It is important to note that the ERC is only available for organizations that did not receive a Paycheck Protection Program (PPP) loan. The ERC is provided by way of a payroll tax credit covering the period March 13, 2020 through Dec. 31, 2020.

Topics: tax-exempt, not-for-profit, IRS, COVID19, FMLA, COVID-19, CARES Act, COVID, ERC, program guidance, Employee Retention Credit

Not-for-profit organizations drew the short end of the stick when the new tax law commonly known as the Tax Cuts and Jobs Act (TCJA) made parking expenses incurred on behalf of their employees a taxable increase to unrelated business taxable income (UBTI). Commercial enterprises were equally affected by this law change, but for many not-for-profits, the change comes as a shock. The UBTI inclusions are likely to lead to tax bills at year-end, which is particularly surprising for organizations that historically had no UBTI. Fortunately, the IRS heard the collective pleas for change, and may be remodeling its approach to give not-for-profits some relief.

Topics: not-for-profit, NFP, nonprofit, Tax Reform, TCJA, parking expenses