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 window of opportunity to take advantage of the Paycheck Protection Program (PPP) has closed, but considerations for the program, particularly around its most appealing benefit, remain.

Topics: tax, NFP, COVID19, COVID-19, CARES Act, Coronavirus Aid, Relief, and Economic Security Act, Paycheck Protection Program, PPP, PPP Loan, SBA, Small Business Administration, PPP Loan Forgiveness

The Employee Retention Credit (ERC) was originally enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.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

On February 22, the White House announced changes to the Paycheck Protection Program that give exclusive access to certain small businesses.

Year-end legislation provided additional funding and an extension of the Small Business Administration’s Paycheck Protection Program (PPP) for the first quarter of 2021. Effective February 24, the Biden-Harris administration is instituting a 14-day holding period on new PPP applications (sometimes referred to as PPP2 loans) for businesses with 20 or more employees. The goal of the hold is to lessen the PPP competition for small businesses and sole proprietorships that may have had difficulty accessing the federal funds previously.

Topics: Election, COVID-19, CARES Act, Paycheck Protection Program, PPP, PPP Loan, SBA, PPP Loan Forgiveness, PPP2

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

The Employee Retention Tax Credit (ERTC) was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but limitations on its availability tempered interest in the relief measure. That is about to change, thanks to significant changes made on Dec. 27, 2020, by the Consolidated Appropriations Act, 2021 (the Act). The ERTC is now available to employers that received loans under the Payroll Protection Program (PPP), so any employer meeting ERTC eligibility criteria can benefit. Because employers potentially benefit from the enhanced ERTC on a retroactive basis, employers should immediately begin analyses to identify and calculate the value of retroactive or prospective ERTC benefits.

Topics: not-for-profit, IRS, NFP, tax relief, tax credit, employees, COVID-19, CARES Act, PPP, PPP Loan Forgiveness, Consolidated Appropriations Act, Employee Retention Tax Credit, The Act, ERTC

As disruptive as the year has been for not-for-profit organizations, 2020 might end up being a better year for charitable giving. The potential for higher tax rates and decreased exemptions from estate and gift taxes under a new presidential administration may lead many high-net-worth individuals to increase charitable giving during 2020. At the same time, individual and corporate donors can benefit from temporary charitable giving incentives in 2020 that are available under recent tax law changes.

Topics: tax returns, individual tax, not-for-profit, charitable donations, IRS, NFP, S Corporation, charitable giving, C Corporation, Charitable Contribution Deductions, COVID-19, CARES Act, PPP, charitable contributions, high-net-worth, AGI

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 boards play a key role in developing an organization’s potential by bringing expertise in a variety of fields, including accounting and risk management. The pandemic was extremely disruptive to not-for-profits, which underscores the importance of providing guidance and understanding the COVID-19 impact. All of these factors are also vital to conceptualizing future operational and endowment investment strategies. Management and board members should continue to work together to overcome any lingering repercussions from the pandemic and position the organization for the next chapter. The following are four elements of COVID-19 recovery initiatives that your board should understand.

Topics: not-for-profit, Financial Statement, Endowments, COVID19, COVID-19, CARES Act, Paycheck Protection Program, PPP, SBA, COVID, Stimulus