Legal Alert: Important New Financial Information and Relief



Pro Bono Partnership is compiling COVID-19-related information and resources on our website that may be helpful to nonprofits. Find that information here.

FEDERAL UPDATES

CARES Act Passed
On Friday, March 27 Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides significant funding for businesses, hospitals, schools, and social support programs, among many other things. Of particular importance to nonprofits is the Paycheck Protection Program.  This Program provides funding for special emergency loans of up to $10 million for eligible nonprofits and small businesses, permitting them to cover costs of payroll, operations, and debt service, and provides that the loans be forgiven in whole or in part under certain circumstances.

  • General Eligibility:¬†Available to entities that existed on March 1, 2020 and have paid employees.
  • Nonprofit Eligibility:¬†Available for charitable nonprofits with 500 or fewer employees (counting each individual ‚Äď full time or part time and not ‚ÄĚfull-time equivalents‚ÄĚ). The final bill does not include a provision in earlier drafts that would have disqualified nonprofits that are eligible for payments under Title XIX of the Social Security Act (Medicaid).
  • Loan Use:¬†Loan funds could be used to make payroll and associated costs, including health insurance premiums, facilities costs, and debt service.
  • Loan Forgiveness:¬†Employers that maintain employment between March 1 and June 30 would be eligible to have their loans forgiven, essentially turning the loan into a grant.

Also in the CARES Act and important to nonprofits: the Employee Retention Payroll
Tax Credit
. 
This is a refundable payroll tax credit of up to $5,000 for each employee on the payroll when certain conditions are met. Your organization may qualify if you saw a revenue decrease of 50% or more this year, compared to Q1 2019. The credit continues each quarter until the organization’s revenue exceeds 80 percent of the same quarter in 2019. For tax-exempt organizations, the entity’s whole operations must be taken into account when determining the decline in revenues. Notably, employers receiving emergency SBA 7(a) loans would not be eligible for these credits

Thank you to the National Council of Nonprofits for these summaries.

For more loan and financial relief information, please read our overview here.

Form 990s Still Due on May 15 
You may have heard that the date for filing federal tax returns has been pushed back 90 days ‚Äď to July 15 – in light of the COVID crisis. However, except as noted below,¬†the date for nonprofits to file their¬†Form 990, Form 990-EZ, Form 990-N, and/or Form 990-T¬†has¬†NOT¬†been changed, so all informational returns that are normally due on May 15 are still due on that date. The May 15th¬†date applies to any organization with a fiscal year-end date of December 31. Automatic extensions of six months for the 990 and 990-EZ are available as usual, by submitting IRS Form 8868. Payroll and sales tax deadlines also have not changed. Note ‚Äď the deadline for Form 990-Ts (for unrelated taxable income) due on April 15 has been postponed to July 15.

The IRS has posted a list of frequently asked questions about Notice 2020-18 here.

STATE UPDATES

Connecticut  
The State of Connecticut Recovery Bridge Loan Program established last week has already been closed. Even though Governor Lamont doubled the amount available from $25 million to $50 million, the fund was depleted within two days. The State is looking at other ways to assist small businesses, and we will keep you posted.

New Jersey
On March 25, 2020, the Earned/Paid Sick Leave Act, the Family Leave Act, and temporary disability insurance (TDI) and family leave insurance benefit laws were amended so that (1) the benefits provided by these laws apply when employees or their family members have been directed to quarantine or stay in isolation and (2) the one-week waiting period for TDI benefits is waived with respect to public health emergencies.

These changes to New Jersey law were summarized by the Jackson Lewis law firm here. We expect the New Jersey Department of Labor and Workforce Development will update its resource pages relating to the coronavirus to reflect these changes.

New York
On March 25th, NYS published FAQs and other guidance regarding the state’s recently enacted COVID-19 Paid Sick Leave Law and expansions to New York’s Paid Family Leave Law (PFL) and Disability Benefit Law. This bill was signed into law on March 18, and became effective immediately as part of a statewide coronavirus response. The law requires NY employers to provide job-protected sick leave to employees who are subject to a mandatory or precautionary order of quarantine or isolation issued by the state of New York, a state or local health department, or any other governmental entity due to COVID-19. The law also provides certain qualifying employees with salary continuation during otherwise unpaid leave periods by expanding coverage under the PFL and Disability Benefit Law.

Westchester Nonprofits & the Federal Stimulus: Please join us for a free webinar on Friday, 4/3, from 9:30-11 am that will provide overviews of the Families First Coronavirus Response Act and the CARES Act, will discuss employment and health insurance issues, SBA loans, and tax implications. We are pleased to partner with Nonprofit Westchester, PKF O’Connor Davies, and the Charles Newman Company to bring you this information. Register here.

LET’S WORK TOGETHER!

Are you a member of the state association of nonprofits in your state? They can help you access timely, state-specific information in this rapidly changing environment, advocate for you, and enable you to share your experiences and skills. There is power in numbers! If you have any questions about these issues or other legal concerns, please contact your local Pro Bono Partnership office.

This document is provided as a general informational service to volunteers, clients, and friends of Pro Bono Partnership. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does distribution of this document create an attorney-client relationship.