ACC News

Compilation of COVID-19 Resources including the CARES Act

May 18, 2020

In light of the numerous resources regarding loans and grants available to Nonprofit Organizations, including synagogues, here is a consolidated list including guidance from the Core Lawyers Working Group of the Church Benefits Association (CBA). The ACC is a member of the CBA and the Church Alliance (CA) through our plan sponsor status of the ACC Retirement Plan. Additionally, resources from the ACC’s certified public accounting firm, Warady and Davis, and the Internal Revenue Service is also included.

We recommend you consult your own legal and financial teams before applying for any assistance.

Compiled Resources on COVID-19 Resources on transmission & prevention of COVID-19 by various scholars, doctors, experts, etc. Compiled by Dr. J. Alex Huffman, Univ of Denver, Department of Chemistry and Biochemistry

URGENT: PPP Loan Forgiveness Application The loan application for PPP forgiveness has been released. Please review the document and instructions carefully.

Link to Department of Treasury guidance  

Business Loan Program Temporary Changes; Paycheck Protection Program as released by the Department of Treasury 4.2.2020

PPP Application Form

SBA Faith Based Organization FAQs

Treasury interim guidance on affiliation

Latest PPP FAQs from Treasury Department (5.14.2020)

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Information for Independent Contractors (and clergy) wishing to apply for PPP Loans

The attached Interim Final Rule relates to PPP loans for self-employed individuals. These loans are intended for sole proprietors or independent contractors, and will require the individual to certify that the PPP loan is necessary “to support the ongoing operations” of the
borrower. Thus, this rule largely appears to be inapplicable to ministers to whom CBA members provide benefits, but may apply to some, who are not employees of a ministry. This Interim Final Rule could make it difficult for clergy who are incorrectly counted as 1099 independent contractors rather than W-2 employees (as IRS guidance provides for clergy compensation) to receive PPP loans. While clergy have dual tax status and are required to pay self employment taxes, they should be treated as full employees and receive W-2 forms  

Do independent contractors count as employees for purposes of PPP loan calculations? No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation. 

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HHS Issues Guidance on Diagnostic Testing Coverage

HHS just issued the attached guidance implementing the requirement for group health plans and group and individual health insurance to cover COVID-19 diagnostic testing and related services. The guidance specifies that the requirement applies to antibody testing. It also specifies that “group health plan” includes both insured and self-insured group health plans and that it includes ERISA plans, non-federal governmental plans, and church plans.

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Information from the Church Alliance and Church Benefits Association Core Lawyers Working Group

The Treasury Department has now released the application for the Paycheck Protection Program, and other information (please see the links below). The borrower fact sheet does not provide guidance on whether churches or other religious organizations can obtain loans, but it doesn’t state that they are excluded.  The link for the borrower fact sheet below states, under the section on who can apply:

“Who can apply? All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).”

The borrower fact sheet also states that “businesses” can apply for loans beginning April 3.  I presume that would be the same for nonprofits. 
Note that the application states the following:  “I acknowledge that the lender will calculate the eligible loan amount using tax documents I have submitted. I affirm that these tax documents are identical to those I submitted to the IRS.”  We believe that Form 941, a copy of which is attached, may suffice, but that is not yet entirely clear.  https://home.treasury.gov/cares 

ASSISTANCE FOR SMALL BUSINESSES

The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses.

Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.

  • For a top-line overview of the program CLICK HERE
  • If you’re a lender, more information can be found HERE
  • If you’re a borrower, more information can be found HERE
  • The application for borrowers can be found HERE

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Can my synagogue/small business apply for both a PPP loan and an EIDL loan?

This caused the CBA CLWG chair to look once again at the SBA Economic Injury Disaster Loan (“EIDL”) loans and grants, which are now available. These funds are to be issued within 3 days of application.

Below is a description, and these loans/grants seem applicable to our ministries as the SBA is applying the CARES Act.  Here is a link to the application:  https://covid19relief.sba.gov/#/

The definition in existing regulations for “private nonprofits” did not seem to apply to our ministries, but apparently the SBA is taking a broader view in the CARES EIDL program, because here is the category of applicant that would be applicable to our employers per the SBA application:  “Applicant is a private non-profit organization that is a non-governmental agency or entity that currently has an effective ruling letter from the IRS granting tax exemption under sections 501(c),(d), or (e) of the Internal Revenue Code of 1954, or satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law, or a faith-based organization.”

Attached is a letter to regulators from four House leaders who are supportive of assistance to churches and religious organizations in the Cares Act.  The House Whip reached out to Karishma yesterday about the letter, asking whether we would be supportive.  It’s great to see the relationships in Congress that Karishma, Lauren and many of you have built, which are now proving very helpful. 

SUMMARY OF EMERGENCY EIDL GRANT PROVISIONS
Section 1110

  • Makes loans available under Section 7(b)(2) of the Small Business Act  for financial needs attributable to COVID-19
  • Covered period is January 31 to December 31, 2020 (eleven months)
  • Certain SBA provisions are waived for loans made during the covered period (personal guarantees for loans not more than $200,000: inability to obtain credit elsewhere).
  • Applicant for a loan in response to Covid-19 can request an advance of up to $10,000 that may be distributed within three days of application. These funds do not have to be repaid, even if the loan requested is denied, so it is in effect a $10,000 grant.
  • Funds can be used for sick leave due to COVID-19, maintaining payroll to retain employees during business disruption, rent, mortgage payments and other limited obligations.
  • If the same applicant obtains a Paycheck Protection Program (PPP) loan under Section 7(a) of the SBA, the $10,000 forgiven under this loan reduces what can be forgiven under the PPP loan.
  • Applications are to be accepted immediately.
  • Private non-profits are also eligible for both grants and EIDLs.
  • During the covered period, allows SBA to approve and offer EIDL loans based solely on an applicant’s credit score, or use an alternative appropriate alternative method for determining applicant’s ability to repay.

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IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19

WASHINGTON — The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?
The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?
Qualifying wages are based on the average number of a business’s employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees:  If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?
Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?

Updates on the implementation of this credit,  Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.

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Q&A For CARES Act Emergency Loans – Apply Now

From David Faje, CPA, MST, Partner at Warady and Davis
https://waradydavis.com/qa-cares-act-emergency-loans/

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Jewish Together. Virtual community and informative resources, powered by The Jewish Federations of North America.

These are difficult times. Staying apart like this isn’t easy. But through it all, we can still stay together with our Jewish community – it might just need to be virtual. So, we’ve put together this website of curated resources and experiences. Whether it’s for yourself, your family or as a professional, we hope you’ll find what you’re looking for – from virtual Jewish events ways to connect, learn, share or help. If you’re looking for something that’s not here, please get in touch! Click here to visit the website. 

Latest FAQ from JFNA (as of 4.2.2020)

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IRS ISSUES GUIDANCE ON SICK AND FAMILY LEAVE CREDITS

The IRS issued informal guidance and FAQs on the sick and family leave credits enacted in HR 6201 (Stimulus 2).  While the guidance focuses on the credits and how to calculate and claim them, it also includes a helpful description of the sick and family leave mandate.  For a document of this type, the content is quite thorough and you may find it helpful.  https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#sick_leave

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TREASURY SAYS SENIORS DON’T HAVE TO FILE A TAX RETURN TO RECEIVE INDIVIDUAL REBATES AFTER ALL

Just days after Treasury Secretary Mnuchin said that seniors, veterans and SSI recipients would have to file a “simple” tax return to claim the individual rebate payment authorized in the CARES Act, he reversed course in the face of Congressional pressure and now says that seniors will not have to file.  In the 2008/2009 stimulus payments, those filing tax returns were required to file a “simple” return and there was widespread criticism that many people missed out because they didn’t know they needed to file, didn’t know how to file on their own, or couldn’t afford to pay a tax preparer to prepare the return.  It is unclear exactly how the process will work, but presumably it will build off the 1099s that seniors receive for their social security payments.  It may only be a matter of time until Mr. Mnuchin follows suit on recipients of veteran’s benefits and SSI payments.  Of course, working from a 1099 doesn’t provide all the salient information necessary to accurately pay the rebate, including whether a person is married or whether they have any eligible children (although most seniors probably don’t have young children).  Working off documents like 1099s will decrease individual burden and increase the number of individuals receiving the payments, but likely will increase the number of erroneous payments that are made.  There are no plans to require erroneous payments to be repaid.  And this process still leaves plenty of people who are off the grid, like a lot of gig workers.  These individuals will either have to disclose themselves to the IRS or run the risk of losing out on the rebate payment.  If they should have been filing a tax return but haven’t, there could be some exposure to the IRS catching up with them, although often in situations like this the IRS looks the other way.  Nevertheless, there is a lot of oversight built into the CARES Act, so eventually the IRS probably will be held accountable for the job it did in distributing the payments.

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FAQS ON EMPLOYEE RETENTION CREDIT AND LINKS TO GUIDANCE ON UNEMPLOYMENT INSURANCE

As of April 28, 2020, new guidance on Unemployment:

Unemployment
Guidance was issued today by the Department of Labor on CARES Act Emergency Unemployment Relief for certain nonprofits.  This guidance is applicable to nonprofit organizations that reimburse their states for unemployment benefits paid to their laid-off or former employees (e.g. some universities and social service agencies).  A link to the guidance is shown here:  https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=5893 .  The Council for Nonprofits wrote the following scathing description of the guidance:    https://www.councilofnonprofits.org/article/dol-issues-breathtakingly-cruel-guidance-inflicting-billions-immediate-costs-charitable. 

However, the guidance clarifies that the following CARES Act unemployment provisions will require no payments by employers (of any sort, including churches and other nonprofits):  

  • Pandemic Unemployment Assistance (the provision extending unemployment benefits for certain COVID-related situations to laid-off and former employees, including ministers, of churches and other normally exempt religious employers);
  • Federal Pandemic Unemployment Assistance (the extra $600/week);
  • Pandemic Emergency Unemployment and Compensation (extra 13 weeks); and
  • Temporary Full Funding of the First Week of Compensable Unemployment. 

Thus, the emergency unemployment relief for nonprofits that must reimburse their states will be applicable to “normal” unemployment benefits and short-time compensation benefits (for reductions in hours).

Senate Finance Committee Republican staff have released FAQs on the employee retention credit and unemployment insurance.  Chart on unemployment compensation.

With additional thanks to the CBA, here is a direct link to the guidance from the Department of Labor. https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=4628

Attachment I, the Pandemic Unemployment Assistance (PUA) Implementation and Operating Instructions, states: “Self-employed individuals” as defined in 20 C.F.R 625.2(n) means individuals whose primary reliance for income is on the performance of services in the individual’s own business, or on the individual’s own farm. These individuals include independent contractors, gig economy workers, and workers for certain religious entities.”

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