December 22 – This is a breaking story. Please stay tuned to ECFA’s news page for further updates.

Late on Monday, December 21, Congress passed the next round of its long-anticipated COVID-19 Emergency Relief Package. This bill extends and modifies several provisions first enacted through the CARES Act in March.

President Trump is indicated to sign the bill soon.

Here is a first look at a few of the major provisions directly affecting nonprofits including churches.

Charitable Deductions

The CARES Act allowed above-the line charitable deductions of up to $300 in charitable gifts in 2020 for those who don’t itemize their tax deductions. In this new package, Congress would extend that provision for tax year 2021, allowing singles to deduct up to $300 and couples to deduct up to $600 in charitable gifts even if they don’t itemize.

The bill would also extend for one year the increased limits provided under the CARES Act on deductible charitable contributions for individuals who itemize and for corporations. For individuals, the cap would remain at 100% of adjusted gross income, and the corporate would remain at 25% of taxable income in 2021. The cap on deductibility of food donations from corporations would also stay at 25%.

Paycheck Protection Loans

The new bill would provide $284 billion in funding for Paycheck Protection Program (PPP) loans. Under this new legislation, the previous cap of 500 employees will be reduced to 300 employees, and loans would be limited to $2 million per organization. This new legislation would also expand the list of eligible loan expenses to include personal protective equipment and certain other worker-protection expenditures in addition to employee wages or operating expenses like rent and utilities.

In order to qualify for the second round of PPP loans, the organization must show they have had at least a 25% drop in revenue. The bill includes language to make clear that houses of worship and other faith-based organizations are eligible for PPP loans. It also provides a simplified forgiveness application process for loans up to $150,000.

Unemployment Insurance

The legislation will extend through March 14, 2021 a reimbursement provision in the previous stimulus law for nonprofits that self-fund unemployment benefits. Under the provision, those nonprofits could get reimbursed for up to half the costs of benefits provided to their laid-off employees.

Flexible Savings Accounts (FSA)

FSA balances for both health and dependent care accounts can be rolled from the 2020 tax year into 2021. This will help taxpayers with unused balances to not lose out on these benefits at year end. 

 

ECFA will continue to provide updates as new information becomes available.