In late July, Senate Republicans released a proposal for the fourth round of coronavirus relief legislation. The collective of bills involved are being referred to as the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. The $1 trillion proposal contains nine separate bills that cover everything from expansions of existing coronavirus relief measures to additional funding for educational institutions. Below are five key proposals that could affect not-for-profit organizations.
Paycheck Protection Program
The proposal would allow 501(c)(6) organizations to apply for Paycheck Protection Program (PPP) loans, and it would also make changes to the eligibility requirements for all applicants. Organizations would only be eligible for the loans if they have 300 full-time employees (down from 500 currently). Not-for-profits would also be required to demonstrate they experienced at least a 50% reduction in gross receipts in the first or second quarter of 2020 relative to the same 2019 quarter.
Expansion of Employee Retention Credit
Proposed changes to the refundable employee retention payroll tax credit would permit not-for-profits that meet the gross receipts test to qualify for the benefit. The size of the credit would also increase to 65% of qualified wages (currently it’s 50%), and the per-employee limitation on wages would be raised to $10,000 per quarter (rather than the current $10,000 per year). Not-for-profit organizations qualify for the retention credit if gross receipts declined by more than 25% compared to the same quarter in 2019, which would mark another significant change to the benefit (currently gross receipts must have declined by 50%).
Safe and Healthy Workplace Tax Credit
Organizations would potentially benefit from a new refundable payroll tax credit to offset the expense of protecting employees from further COVID-19 virus spread. Eligible “healthy workplace” expenses include purchases of protective personal equipment, COVID-19 testing for employees, cleaning supplies and services, qualified workplace reconfiguration expenses, and certain types of technology. The credit would cover eligible expenses incurred after March 12, 2020 but before Jan. 1, 2021. It would be capped to $1,000 for each of the first 500 employees, $750 for each employee between 500 and 1,000, and $500 for each employee that exceeds 1,000.
Employer Liability & COVID-19
A bill included in the HEALS Act would limit the liability for businesses, schools, and healthcare providers for claims related to COVID-19 exposure. Protection from pandemic-related lawsuits would be effective through Oct. 1, 2024, provided the organization made reasonable efforts to follow public health guidelines.
Funding for Schools & Universities
The Republican plan would allocate $105 billion in additional aid to schools, colleges, and universities. Two-thirds of that funding would be contingent upon the implementation of reopening plans.
More Information to Come
Disagreement even among members of the Republican Party in Congress may delay a vote on final bipartisan COVID-19 relief provisions. The Senate is also scheduled for a summer recess after August 7, so if a compromise is not reached before then, the fourth round of coronavirus stimulus legislation may not be coming until September.
We will keep you up-to-date as more details emerge. A full analysis of the proposed legislation can be found here. To see other coronavirus coverage, please visit our COVID-19 Resource Center.
Published on August 03, 2020
© Copyright CBIZ, Inc. and MHM. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ). MHM (Mayer Hoffman McCann P.C.) is an independent CPA firm that provides audit, review and attest services, and works closely with CBIZ, a business consulting, tax and financial services provider. CBIZ and MHM are members of Kreston International Limited, a global network of independent accounting firms. This publication is protected by U.S. and international copyright laws and treaties. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.