Congress continues to enforce social distancing, with many staffers teleworking and passing legislation by unanimous consent to enable lawmakers to avoid gathering. If you have not been following the multiple relief packages Congress has released amid the COVID-19 epidemic, do not panic! Here is a brief overview of the latest legislative issues affecting nonprofits during these challenging times:
Update on COVID-19 emergency relief packages
On April 23, Congress passed the Paycheck Protection Program and Health Care Enhancement Act (H.R. 266). The $484 billion COVID-19 relief measure signed by the president provides $310 billion for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), $60 billion for disaster loans through the Economic Injury Disaster Loan (EIDL) program, and an additional $100 billion for the Department of Health and Human Services (HHS), which includes $75 billion for health care provider relief and $25 billion to ramp up coronavirus testing.
This fourth COVID-19 relief package comes after the funding appropriated in the CARES Act for the SBA’s programs dried up almost instantly after its release – with many nonprofits unable to secure any of it. Independent Sector has launched a new CARES Act Chatbot – using AI technology – to help you quickly and more efficiently get answers to pressing questions and apply for relief programs. To learn more, visit the IS CARES Act resource. The chatbot will open automatically when you arrive.
IRS extends filing period for nonprofits
The Internal Revenue Service (IRS) has extended the filing deadline for the 990 form for tax-exempt organizations until July 15, 2020 due to the COVID-19 pandemic. The IRS generally requires tax-exempt organizations to file the 990 form on the 15th day of the 5th month after the end of the organization’s taxable year. This information can be found on the IRS website under the FAQ section on filing and payment deadlines.
Legislation to prioritize funding for nonprofits introduced
Last month Reps. Seth Moulton (D-MA) and Brian Fitzpatrick (R-PA) introduced the Save Organizations that Serve (SOS) America Act (H.R. 6408). This legislation would allow all 501(c)(3) nonprofits to qualify for SBA loans created in the CARES Act by removing the 500-employee cap provide $60 billion in emergency assistance loans to 501(c)(3) nonprofit organizations; expand the above-the-line, universal charitable deduction by eliminating the cap and allowing taxpayers to retroactively claim the deduction in 2019; and prioritize nonprofits and their employees in future unemployment insurance relief.
Independent Sector launched a call to action to ask your Representatives to cosponsor the SOS America Act. Please take 60 seconds to elevate your voice on behalf of nonprofits and charities that are on the frontlines of the COVID-19 pandemic and in need of funding to serve their communities.
Proposed regulations on UBIT siloing provision released
Last week, the Treasury Department and the Internal Revenue Service (IRS) issued proposed regulations under Section 512(a)(6), also known as siloing provision, which provides rules for the calculation of unrelated business income tax (UBIT) for separate unrelated trades or businesses.
The passage of the Tax Cuts and Jobs Act in 2017 added Internal Revenue Code Section 512(a)(6), which requires tax exempt organizations to calculate unrelated business taxable income (UBTI) separately for each trade or business activity. This new rule prevents organizations from using losses from one unrelated trade or business to offset income from a different unrelated trade or business. In the case of nonprofits, this provision diverts an average of $15,000 from the mission of an impacted organization.
According to the proposed regulations, nonprofit organizations would have to group unrelated business income into 20 categories using the North American Industry Classification System (NAICS). The proposed regulations make a significant change from the interim guidance issued in August 2018 by allowing separate trades or businesses to be identified solely by two-digit NAICS codes. However, the regulations make it clear that an organization must use the code that identifies the unrelated trade or business and not the code that describes the organization’s general activities.
Comments are due 60 days after the proposed regulations are published in the Federal Register. There has been a concerted effort by Treasury and the IRS to finalize regulations relating to the TCJA as quickly as possible, Independent Sector encourages organizations to provide comments within this period.
Decision on the sale of the .ORG domain delayed
The Internet Corporation for Assigned Names and Numbers (ICANN) has until May 4 to decide whether to move forward with its proposed sale of the Public Interest Registry (PIR) to the private equity firm Ethos Capital after another extension was agreed upon, The Nonprofit Times reported.
In response to a letter from California Attorney General Xavier Becerra, ICANN confirmed the agreement between it and PIR that the organization’s response time would be extended from April 20 to May 4.
