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Focus on Not-For-Profit: How Coronavirus is Impacting Not-for-Profit Organizations

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On March 18, 2020, President Trump signed into law the Families First Coronavirus Relief Act (Act). The Act has many provisions impacting individuals, families, employees and employers.
March 23, 2020

On March 18, 2020, President Trump signed into law the Families First Coronavirus Relief Act (Act). The Act has many provisions impacting individuals, families, employees and employers. See our March 19, 2020 E-Focus, “Focus on Taxation: President Signs into Law Coronavirus Relief Act”.

Many of these benefits are provided by amending the Family and Medical Leave Act of 1993 (FMLA). The FMLA is administered by the Department of Labor and is beyond the scope of RubinBrown’s practice. While it is clear that the original FMLA generally only applied to governmental employers and employers with 500 or more employees, it appears that the expanded benefits related to the Coronavirus outbreak are applicable to all entities that employ less than 500 employees. An exemption from the paid leave requirements related to school closings or child care unavailability is permitted for employers with less than 50 employees is available if paying the benefits would jeopardize the ability of the business to continue. The IRS is going to issue additional emergency guidance to clearly articulate this exemption later this week.

The Families First Coronavirus Relief Act does provide tax credits for employers required to pay benefits under the Act. The calculation of these credits is described in the above referenced E-Focus on the Coronavirus Relief Act. These credits are available against the employer portion of all Social Security payroll taxes, the employees’ portion of the all Social Security payroll taxes, as well as the federal income tax withheld from all employees’ wages. Any excess credits can be refunded to the employer. The IRS expects to issue these refunds in two weeks or less. The processes and timing of applying the credit to the employer’s payroll tax liabilities and for receiving refunds of the excess amounts will be issued by the IRS later this week.

The Family And Medical Leave Act Employer Guide published by the Department of Labor that may be useful in helping organizations answer questions related to the FMLA of 1993 rules. The IRS announcement regarding implementation of the Act may also provide additional information.

In addition to the Families First Coronavirus Relief Act, other support may be available to not-for-profit organizations during this challenging time through the U.S. Small Business Administration (SBA). The SBA has released updated criteria for states requesting disaster assistance loans for small businesses, which includes not-for-profit organizations, impacted by Coronavirus.

Not-for-profit organizations may be eligible for SBA’s Economic Injury Disaster Loans, which offer up to $2 million in assistance. These loans can provide vital economic support to not-for-profit organizations to help overcome the temporary loss of revenue they are experiencing in the current environment. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid due to the impact of the disaster. The interest rate on these loans is 2.75%. Terms are determined on a case-by-case basis, based on each borrower’s ability to repay. SBA offers loans with long-term repayments up to a maximum of 30 years.

For more information or if you have questions regarding the impact of Coronavirus on your organization, please contact one of RubinBrown's Not-For-Profit professionals.

 

Readers should not act upon information presented without individual professional consultation.

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

 

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