ASSEMBLIES OF GOD
Insights from the "Cares Act" Stimulus Bill
Posted In Church Leadership
Frank Sommerville and the North Texas AG has provided a summary of vital information on the positive opportunities the Cares Act Stimulus Bill for churches, non-profits, self-employed ministers, etc.
CARES Act Summary
Churches and nonprofit organizations (private or public) that are tax-exempt under section 501(c)(3) of the Internal Revenue Code, may apply for a small business loan. The amount of the loan is 2.5 times the average monthly expenses for payroll from March 2019-February 2020, with a cap of $10,000,000. The loan proceeds can be used to pay payroll, benefits, rent or mortgage payments, utilities, and interest on pre-existing loans. The loan will be forgiven to the extent the borrower maintains its payroll from March 15-June 30, with compensation capped at $100,000 for any individual employee. No loan forgiveness for mandated sick pay or new FMLA paid leave. Any reduction in the number of full-time equivalent employees will reduce the amount of loan forgiveness.
Every adult taxpayer receives $1,200, every child receives $500. These amounts are phaseout for taxpayers making more than $75,000. The payment is phased out entirely at $99,000 for single taxpayers and $198,000 for joint taxpayers. The phaseout is based on the 2019 tax return or 2018 tax return if the 2019 return has not been filed.
Every taxpayer will be allowed to take up to $300 as a charitable contribution without itemizing deductions.
The cap on charitable contribution deductions is suspended for 2020. Corporate donation limit is increased to 25% from 10%.
Employers may delay the payment of employer portion of FICA payroll taxes until December 31, 2021 if they do not qualify for the loan forgiveness. The employer may pay 50% of payroll taxes on December 31, 2021 and remaining 50% by December 31, 2022.
The emergency paid sick leave and emergency paid FLSA leave are each capped at the limit of their respective credits. If an employee is laidoff and rehired after March 1, 2020, the employee must work at least 30 days during the last 60 days since March 1st.
Former church employees will be eligible for unemployment compensation, though their former employers did not subscribe to state unemployment.
Employer retention credit - The bill creates a refundable payroll tax credit of 50% of up to $5,000 for each employee on the payroll. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is available each quarter until the nonprofit’s revenue exceeds 80 percent of the same quarter in 2019. Nonprofits receiving emergency SBA loans are not eligible for these credits. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
Individuals may withdraw up to $100,000 from the retirement accounts if the individual, their spouse, or their dependents are infected with COVID-19 virus without penalty. Eligibility for the withdrawal also includes individuals quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19. The income taxes on the withdrawal are spread out over three years.
CARES Act Summary
Churches and nonprofit organizations (private or public) that are tax-exempt under section 501(c)(3) of the Internal Revenue Code, may apply for a small business loan. The amount of the loan is 2.5 times the average monthly expenses for payroll from March 2019-February 2020, with a cap of $10,000,000. The loan proceeds can be used to pay payroll, benefits, rent or mortgage payments, utilities, and interest on pre-existing loans. The loan will be forgiven to the extent the borrower maintains its payroll from March 15-June 30, with compensation capped at $100,000 for any individual employee. No loan forgiveness for mandated sick pay or new FMLA paid leave. Any reduction in the number of full-time equivalent employees will reduce the amount of loan forgiveness.
Every adult taxpayer receives $1,200, every child receives $500. These amounts are phaseout for taxpayers making more than $75,000. The payment is phased out entirely at $99,000 for single taxpayers and $198,000 for joint taxpayers. The phaseout is based on the 2019 tax return or 2018 tax return if the 2019 return has not been filed.
Every taxpayer will be allowed to take up to $300 as a charitable contribution without itemizing deductions.
The cap on charitable contribution deductions is suspended for 2020. Corporate donation limit is increased to 25% from 10%.
Employers may delay the payment of employer portion of FICA payroll taxes until December 31, 2021 if they do not qualify for the loan forgiveness. The employer may pay 50% of payroll taxes on December 31, 2021 and remaining 50% by December 31, 2022.
The emergency paid sick leave and emergency paid FLSA leave are each capped at the limit of their respective credits. If an employee is laidoff and rehired after March 1, 2020, the employee must work at least 30 days during the last 60 days since March 1st.
Former church employees will be eligible for unemployment compensation, though their former employers did not subscribe to state unemployment.
Employer retention credit - The bill creates a refundable payroll tax credit of 50% of up to $5,000 for each employee on the payroll. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is available each quarter until the nonprofit’s revenue exceeds 80 percent of the same quarter in 2019. Nonprofits receiving emergency SBA loans are not eligible for these credits. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
Individuals may withdraw up to $100,000 from the retirement accounts if the individual, their spouse, or their dependents are infected with COVID-19 virus without penalty. Eligibility for the withdrawal also includes individuals quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19. The income taxes on the withdrawal are spread out over three years.
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