CARES Act: Don’t Overlook 2 Valuable Provisions

The federal government has enacted various pieces of legislation providing relief to employers, including nonprofits, suffering financially due to the COVID-19 pandemic. While much of public attention has focused on government lending programs, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes two other notable provisions that could aid struggling organizations.

1. Retention tax credits

The CARES Act created a new refundable credit against payroll tax. Nonprofits can qualify if their:

  • Operations were fully or partially suspended due to a COVID-19–related governmental shutdown order, or
  • Gross receipts fell more than 50% compared to the same quarter in the previous year.

Employers with more than 100 employees may qualify to claim the credit for wages paid to employees who’ve been furloughed or had their hours reduced. Organizations with 100 or fewer employees can qualify regardless of whether they’ve furloughed employees or reduced their hours. The credit equals 50% of up to $10,000 in compensation paid to an eligible employee from March 13, 2020, through December 31, 2020.

2. Payroll tax and unemployment benefit support

The CARES Act allows employers to defer payment of their employer share (6.2% of wages) of the Social Security payroll tax. You have the next two years to pay your share, with the first half due by December 31, 2021, and the remainder due by December 31, 2022.

Certain nonprofits qualify for reimbursement of 50% of the costs they incur from March 13, 2020, through December 31, 2020, to pay unemployment benefits. This relief is available to organizations that reimburse their states for unemployment benefits paid to former employees, rather than paying unemployment taxes.

Proceed with caution

Note that additional rules apply to these breaks. For example, participation in the Small Business Administration’s Payroll Protection Program could affect your eligibility. We can help you make the most of the COVID-19 relief that’s already been provided and any additional relief that comes down the road.

© 2020

Information provided on this web site “Site” by Thompson Greenspon is intended for reference only. The information contained herein is designed solely to provide guidance to the user, and is not intended to be a substitute for the user seeking personalized professional advice based on specific factual situations. This Site may contain references to certain laws and regulations which may change over time and should be interpreted only in light of particular circumstances. As such, information on this Site does NOT constitute professional accounting, tax or legal advice and should not be interpreted as such.

Although Thompson Greenspon has made every reasonable effort to ensure that the information provided is accurate, Thompson Greenspon, and its shareholders, managers and staff, make no warranties, expressed or implied, on the information provided on this Site, or about any other website which you may access through this Site. The user accepts the information as is and assumes all responsibility for the use of such information. Thompson Greenspon also does not warrant that this Site, various services provided through this Site, and any information, software or other material downloaded from this Site, will be uninterrupted, error-free, omission-free or free of viruses or other harmful components.

Information contained on this Site is protected by copyright and may not be reproduced in any form without the expressed, written consent of Thompson Greenspon. All rights are reserved.

Share:

Leave a Comment





This site uses Akismet to reduce spam. Learn how your comment data is processed.