How Non-Profit Organizations and Churches Can Qualify For The Employee Retention Credit (ERC)

The CARES Act ERC presents an opportunity for nonprofits to claim ERC tax credits, despite TEOs typically being ineligible for federal tax credits. Tax exempt organizations impacted by COVID-19 related government mandates to limit commerce, travel, or group gatherings can qualify as eligible employers for the ERC. The eligible period for paying qualified wages lasts as long as the mandates are in place.

For the 1st, 2nd, and 3rd quarters of 2021, if an organization's gross receipts have declined by more than 20% compared to the same quarter in 2019, they may qualify as an eligible employer. The 2020 gross receipts decline requirements are stricter, requiring a decline of more than 50%.

Religious organizations that received PPP loans can also be eligible for the ERC. The original CARES Act prohibited organizations receiving PPP funding from claiming the ERC, but this restriction was lifted with the extension and enhancement of the ERC in December 2020 as part of the Consolidated Appropriations Act.

All religious organizations should assess their eligibility for the ERC as many organizations are eligible for significant cash benefits, in addition to PPP benefits already received, due to COVID-19 related restrictions on normal operations in 2020 and 2021.

The original program allowed businesses to claim the ERC tax credit for a period of three years, meaning you can claim expenses from 2020 until April 15, 2024 and expenses from 2021 until April 15, 2025. Given the approaching deadline, it may be helpful to consult with our ERC tax professionals to determine if claiming the ERC is a suitable option for your business.

To ensure accurate calculation of your ERC tax credit, it is recommended to seek the assistance of a CPA that specializes in ERC. Additionally, be sure to file your claim before the deadlines to fully benefit from the ERC tax credit.

If you are uncertain about your eligibility for the ERC tax credit, it is best to consult a tax expert for proper guidance.