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Jack Owen’s Tax-Exempt Alert MARCH 2020

National News

The U.S. House of Representatives passed the $2 Trillion Coronavirus Aid, Relief, and Economic Security (CARES Act) on Friday March 27, 2020. The Senate previously voted unanimously to pass the bill, and President Trump also signed the bill on March 27, 2020.  The legislation will provide assistance to workers and businesses that have been adversely affected by the COVID19 pandemic.  The legislation will provide loans to businesses, a boost to unemployment insurance, (including a boost to the maximum that a person can receive for a 4 month period), and will enable direct cash payments to some Americans.

According to sources such as the National Council on Nonprofits, the bill provides other help for nonprofits, such as:

  • Nonprofits with 500 or less employees will be eligible for large (up to $10 Million) Small Business Administration (SBA) loans and for expedited loans of up to $1 Million for payroll, paid leave, health insurance premiums, facility costs and debt service. If a nonprofit employer keeps its employees on the payroll from February 15, 2020 to June 30, 2020, it could have its loans forgiven, making the loan operate more like a grant.
  • The bill includes a refundable payroll tax credit of up to $5,000 per employee with certain defined drops in revenue in the first quarter of 2020, compared to that same quarter in 2019.
  • Nonprofits having self-funded unemployment benefit plans could get reimbursement for some of the costs of benefits paid to laid-off employees.
  • The bill provides multimillion dollar appropriations to public media stations and to the SBA Economic Injury Disaster Loan program, waiving a creditworthiness requirement for applicants, including nonprofits, and enabling a quick turnaround for checks of $10,000 for those that are eligible.  Billions will also be made available to hospitals, certain industries and for state and local stimulus funds.

The bill will also help nonprofits to secure more charitable gifts by expanding the charitable deduction to all taxpayers for one year and by boosting tax incentives for corporate giving.

Now, only taxpayers who itemize may claim charitable deductions on their tax returns. According to the National Council on Nonprofits, the bill will allow nonitemizers to claim up to $300 in cash donations made to charity in 2020, (excepting donations to donor advised funds). This is not the “universal deduction” sought by nonprofit advocates, but it is a step in that direction.

For taxpayers who can itemize, the bill raises the cap on deductions for annual charitable giving from 60% of Adjusted Gross Income to 100%. The cap on the deductibility of annual corporate charitable giving is raised from 10% of taxable income to 25%, and from 15% to 25% on corporate food donations.

As nonprofits realign to continue their important work, the measures provided by the stimulus bill should provide some relief for losses suffered and some direction for future fund raising strategies.

Pennsylvania News

According to local news sources, on March 27, 2020, Governor Wolf signed three bills to provide various relief for those fighting the COVID-19 pandemic in Pennsylvania and one bill to reschedule the 2020 Pennsylvania Primary from April 28 to June 2.

The 3 other Pennsylvania bills provide $50 million for the purchase of medical supplies, equipment and services, change public school requirements to relax the number of required in-school days and mandatory testing, and ease applications for unemployment compensation for workers affected by the pandemic.

Please do not hesitate to contact us for more information or for help on any of these topics.

We sincerely hope you appreciate receiving the information in this newsletter.  But in case you do not want to receive it, please contact Diane Trichtinger at 412.745-1040, or [email protected] to be removed from this list.  Likewise, please contact Diane with any colleagues or other persons who you would like to add to this list. 

Note:  This provides general information regarding matters of interest to tax-exempt organizations.  Such information is neither legal advice nor legal opinion concerning particular situations.  If legal advice or opinion is required, legal counsel should be consulted. 

We would be pleased to address any questions you may have regarding the foregoing or any other tax-exempt issues.  For further information, please contact Mike Dutkovich (412-765-0535), [email protected]; Susan Ott (412-745-9900), [email protected]; or Jack Owen (412-765-1020), [email protected].

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