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Let's take a look at the CARES Act, the Family First Coronavirus Act, and the tax deadline
delay find out how they affect you and your church.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) - enacted March 27, 2020
The Small Business Administration Disaster Assistance Program went into effect to give small businesses low interest loans to eligible parties. Unfortunately, churches are specifically prohibited from this program.
Since then, the US Congress has passed what is being called the CARES Act. This bill specifically includes nonprofits, churches, and Christian schools.
This bill could be a financial lifesaver for many churches that are on the brink of failure due to the “Stay At Home” regulations which have gone into effect.
The loan portion of the Act called the Paycheck Protection Program (PPP) will cover:
Employee compensation
Rent expense
Interest expense on facility loans
Utilities
The goal of the loan portion of the bill appears to be elimination of layoffs and help for keeping organizations from permanently closing during this difficult period.
You apply for the loans through your current banking institution.
Importantly, the loans will likely be forgiven if your church maintains (or increases) it’s employees and payroll levels during this time period. Anything not forgiven would be amortized over 10 years on a low interest rate with the first payment due at least one year out from now.
Informational resources include:
Details of CARES ACT (Vanderbloemen)
Coronavirus Emergency Loans Guide - CARES ACT (US Chamber of Commerce)
Overview of CARES ACT for Churches (Church Law and Tax)
Webinar: Churches and the CARES ACT - April 2 @ noon EST (Church Law and Tax)
Another important part of the proposed bill (and probably the most publicized in the media) is the direct payment stimulus.
Checks will be issued to each household: $1200 per adult and $500 per child. Income restrictions begin at $75,000 and the benefit caps at $99,000 for individuals. Double this for married couples.
There is no application process. Checks will automatically be mailed or funds directly deposited (depending on your most recent income tax filing) within 3 weeks.
Coronavirus Stimulus Package Questions and Answers (New York Times)
Family First Coronavirus Act and the Emergency Paid Sick Leave Act (EPSLA) - enacted March 18,2020
Congress has mandated that employees be given sick pay for absences related to COVID-19. But churches can almost immediately recover the full cost including insurance. After paying the covered sick leave, the church would exclude the eligible amount from its federal payroll tax payment.
Additionally, the Act provides up to 12 weeks of Family and Medical Leave if an employee can’t work due to child care disruption from the COVID-19 emergency.
Of course, there are many more details about who qualifies, the maximum payout amount, and more. It’s important to consider that the IRS and US Department of Labor are still hammering out the details. Some additional guidance is expected.
For now, just know that you must provide these benefits to employees who qualify.
These articles are good sources.
How the New FMLA Law Will Affect Churches During the Coronavirus Outbreak (Church Law and Tax)
Your Church Can Be Reimbursed For Mandated Sick Pay (Church Law and Tax)
Tax Deadline Moved to July 15
The deadline for individual tax returns was moved from April 15 to July 15. If you haven’t filed yet, there is no need to rush. There will be no penalties for filing up until July 15. It’s also not necessary to submit an extension form. The deadline change is automatic for everyone.
According to the IRS website, this relief also includes estimated tax payments.
No clear information if the deadline move includes Form 990-T. Form 990-T is filed by exempt (Nonprofit) organizations for unrelated business income taxes. It is usually due on the 15th of the fifth month after the fiscal year ended. So if your church earned more than $1000 last year in unrelated business income, make sure Form 990-T is filed as usual.
Tomorrow, I'll post about Virtual Business and Communication. I'll get into details about:
How to communicate with your church
How to communicate with your church staff
How to do church business remotely
It will packed with information and research.
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