The President and Congress have agreed to three bills thus far to help American citizens, businesses, and nonprofits navigate the ongoing health and economic crisis. Some of the provisions offer potential support to land trusts and other nonprofits. The rules and paperwork for some initiatives have not yet been developed. We will update as more specifics are known.
Consult Experts and Links to Assess Applicability
The following brief descriptions include links with additional information. This information is meant as a starting point. Land trusts should work with tax experts and lenders to better understand the various help as it is made available. Check out links to learn more, including eligibility requirements, deadlines, and application processes.
- Payroll Tax Credit: Recent legislation has mandated that most businesses and nonprofits with fewer than 500 employees are required to provide paid sick leave and family leave related to COVID-19 between April 1 and December 31. At the same time, these employers can offset the costs of the paid leave obligations by claiming a tax credit on their payroll tax obligations. For more information and specific requirements: IRS Website.
- Paycheck Protection Program – Emergency SBA 7(a) Loans: Available for businesses and 501(c)(3) nonprofits that have fewer than 500 employees, the loans can be as much as 2.5 times the organization’s average monthly payroll costs during 2019 and are designed to help businesses keep their workforce employed during the COVID-19 crisis. Payroll includes salary, wages, sick leave, health benefits, pension benefits, state taxes, and payments to independent contractors. Employers that maintain employment for the 8 weeks after origination of loan, or rehire employees by June 30, will have loans forgiven in whole or part, essentially turning the loan into a grant. For more information: Council of Nonprofits Chart (see first column) and SBA Website.
- SBA Disaster Assistance Loans: Available to businesses and nonprofits, these loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate for nonprofits is 2.75% and the loans are capped at $2 million. For more information: SBA Website.
These two provisions are unavailable to businesses/organizations that access Paycheck Protection Program SBA 7(a) loans (see above):
- Employee Retention Credit: Creates a refundable payroll tax credit of up to $5,000 per employee for businesses/nonprofits who experience a whole or partial shutdown. For tax-exempt organizations, the entity’s whole operations must be considered when determining eligibility.
- Delay of Employer Payroll Credit: The credit allows the employer to delay paying payroll taxes. 50% of the taxes would be due in December 2021 and 50% in December 2022.
Recent legislation has also added new incentives for charitable giving in 2020.
- Creates a new above-the-line deduction for total charitable contributions of up to $300. The incentive applies to cash contributions made in 2020 and can be claimed on tax forms next year. The law also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent. For corporations, the law raises the annual limit from 10 percent to 25 percent.