Nonprofits Included In COVID-19 Tax Bill

Nonprofits are included in a payroll income tax credit as part of federal legislation that will provide emergency paid sick leave, more funding for food assistance and unemployment benefits, and coronavirus testing.

President Donald Trump signed the bill last night after it passed the Senate yesterday by a vote of 90-8. The House of Representatives approved H.R. 6201 early Saturday morning by a vote of 363-40. It’s the second measure this month that Congress has passed in response to COVID-19 and a third, even larger bill could be on the way.

The eight senators who voted against the bill were: Marsha Blackburn (R-Tenn.), James Inhofe (R-Okla.), Ron Johnson (R-Wisc.), James Lankford (R-Okla.), Mike Lee (R-Utah), Rand Paul (R-Kent.), Ben Sasse (R-Ark), and Tim Scott (R-S.C.).

“The bill looks very good for both nonprofits entities and for the people we serve,” Steve Taylor, senior vice president and counsel for public policy at United Way Worldwide, said in an interview with The NonProfit Times on Monday as the “Families First Coronavirus Response Act” (H.R. 6201) was on its way to the Senate. “There’s been pretty widespread advocacy in the sector because the bill does look good.”

The measure includes about $1 billion in funding related to food and nutrition, through Supplemental Nutrition Assistance Program (SNAP) and The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and The Emergency Food Assistance Program (TEFAP). “That’s a big deal,” he said.

An earlier COVID-19 related bill, passed less than two weeks ago, provided more than $8 billion, mostly directed toward state health agencies. With H.R. 6201, Congress is “trying to get ahead of the economic impact from everything that is happening as a result,” Taylor said.

Typically, federal economic stimulus and disaster relief bills are designed to help for-profit businesses, primarily through income tax credits — which isn’t relevant to nonprofits. In this bill, the tax credit will be against payroll taxes, which all employers have to pay. “This was a big win for the nonprofit sector, just that provision, that there’s economic relief,” Taylor said.

The payroll tax credit will go toward reimbursing employers some of the cost of providing two weeks of full paid sick leave, if needed, because of the virus and implications of the virus. The provision applies to any employer with fewer than 500 employees, which is the overwhelming majority of employers in the U.S.

The bill also includes expansion of the Family Medical Leave Act (FMLA). It allows employees to 12 weeks of unpaid family leave without risk to their jobs. That provision affects only employers with less than 500 employees. “This might be part of a larger movement toward paid family leave in the U.S., a combination of those two provisions could advance that,” Taylor said.

He credited the National Council of Nonprofits for getting charities and associations to quickly sign on to a letter last week and get it to Congress advocating to get nonprofits a credit toward payroll instead of income tax.

“This is a really good start, providing immediate impact, relief and incentives for business to give employees two weeks of paid leave,” Taylor said, but he expects there will be “probably more after this.”

That “more” is coming together fast and will dwarf the other two bills, according to Taylor. It could include $60 billion sought by the group of the nation’s largest charities, including United Way.

United Way Worldwide signed on to support a request of $60 billion in economic stimulus and COVID-19 relief for the charitable sector. As part of that request, dozens of the nation’s nonprofit leaders also called on Congress to create a universal charitable deduction through 2021.

“Depending on private support, as people stop spending, most discretionary spending anyone has is charitable giving. It’s why for the last week, we’ve been working with a coalition of big nonprofits to put a $60 billion economic stimulus proposal in front of Congress,” United Way Worldwide President and CEO Brian Gallagher said yesterday in an interview with The NonProfit Times. “We’re bigger than finance and construction industries and as big as manufacturing. There’s always the focus on airlines, financial services, we’re saying, ‘What about the nonprofit sector, people who work in that sector?’”