In This Week's Edition of Snapshot...
- Congress and the White House are split on the contents of a fourth coronavirus relief legislation. House House Democrats are preparing to unveil a sweeping package of their priorities in the coming days, including substantial funding for state and local governments, expansion of unemployment benefits and increased Supplemental Nutrition Assistance Program (SNAP) benefits. Senate Republicans have staked out liability protections for businesses as their “red line." President Trump’ is looking for a payroll tax holiday but that is failing to excite lawmakers.
- On the occasion of #GivingTuesdayNow, the Council signed onto the Charitable Giving Coalition letter from 100+ groups sent on Tuesday to the Senate Finance Committee and House Ways and Means Committee Members. The Coalition continues its efforts to urge Congress to support charitable giving incentives in the next COVID bill, including actions to expand the temporary universal charitable deduction and to adopt other incentives to encourage giving, such as allowing new gifts during the COVID-19 response to be deducted on 2019 returns.
- On May 7, 2020, a bipartisan group of 30 senators sent a letter to Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY) advocating for the charitable sector and asking that the Senate not overlook nonprofits, charities, and houses of worship in the fourth-phase of coronavirus relief. The letter specifically asks Senators McConnell and Schumer to consider expanding nonprofit access to relief and support programs, increase unemployment insurance reimbursement for nonprofit employees, and strengthen charitable giving incentives to help ease the burdens facing nonprofit employers.
- Congressional tax writers want Treasury Secretary Steven Mnuchin to reverse IRS guidance issued last week that prevents businesses from deducting expenses, like rent and wages, covered through the loans from the Paycheck Protection Program. Such expenses are normally deductible. According to the tax writers, the IRS interpretation is contrary to congressional intent for the emergency loan program and the legislation that authorized it, the CARES Act. In a bi-partisan letter this past Tuesday, the tax committee leadership said the IRS action reverses the benefit that Congress specifically granted by exempting PPP loan forgiveness from income. The Treasury Secretary is standing by the IRS guidance saying it would prevent a "double dip" since the PPP money is not taxable. Expect legislation to be proposed to insure small businesses with forgiven PPP loans can deduct wages and other expenses paid during the period of the loan.
- Lawmakers are also working on legislative language to expand the employee retention credit that would increase it to 80 percent of qualified wages and raise the limit on each employee to $15,000 per calendar quarter, for up three quarters, from $10,000 for all calendar quarters.
The bill would also increase the large-employer threshold from businesses having more than 100 employees to those with more than 1,500 employees or gross receipts that exceeded $41.5 million last year. It would also ease a qualifying requirement related to revenue declines, include health benefits in the definition of qualified wages, and let businesses claim the credit and borrow through the Paycheck Protection Program at the same time, which they cannot currently do. The IRS has FAQ's on the COVID-19 Employee Retention Credit posted on their website.
- The House is scheduled to return on May 11.
President Trump has named Derek Lyons the acting head of the White House’s Domestic Policy Office (DPC). Lyons is currently the White House staff secretary handling the documents Trump sees, including those the president signs. Lyons is expected to retain that job when he takes over the DPC responsibility.
Department of Commerce
The National Telecommunications and Information Administration
NTIA has updated its BroadbandUSA website database of 57 federal broadband programs, spanning 14 federal agencies with billions of dollars for broadband grants, loans, and other resources. The site, created with the help of participating federal agencies, fulfills a goal set out in the Trump Administration’s American Broadband Initiative to make it easier for providers and stakeholders to find federal funding and permitting information.
This week, Commerce Secretary Wilbur Ross announced the allocation of $300 million in economic relief to U.S. fishermen and seafood industries impacted by the COVID-19 pandemic. The funds were allocated as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Commercial fishing, charter/for-hire businesses, qualified aquaculture operations, processors, and parts of the seafood sector in coastal states and territories are among those eligible to apply for funds. Tribes are also eligible for funding including for any negative impacts to subsistence, cultural, or ceremonial fisheries. The Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA) will work with the three Interstate Marine Fishery Commissions, organizations with a demonstrated track record of success in disbursing funds, to quickly deliver financial assistance into the hands of those who need it.
The Federal Reserve
On April 30, the Federal Reserve Board of Governors expanded the eligibility criteria for borrowers under the Paycheck Protection Program Liquidity Facility (PPPLF) to include all SBA-qualified PPP lenders, including designated non-depository community development financial institutions (CDFIs). You can learn more by reading the PPPLF FAQ's.
Department of Homeland Security
While FEMA continues to lead the federal operations to the whole-of-America response to the pandemic, the agency prepares for and responds to other disasters that may occur during this time. This week is Hurricane Preparedness Week and FEMA is preparing to lead response and recovery efforts to meet the demands of regions in the hurricane zones during the COVID-19 environment. FEMA maintains a valuable webpage, Be Ready for Hurricanes, that can assist organizations and individuals to better prepare for the upcoming hurricane season.
Department of Treasury
The Treasury Department informed Congress earlier this week of its willingness to alter an earlier decision regarding the employee retention credit authorized in the CARES Act that kept businesses from claiming it if they continue providing health insurance to workers on furlough.
For our readers working with estates, the IRS has announced newly proposed regulations on the deductibility of administrative fees for trusts and estates that preserve the IRS’s previous guidance and offer new clarity on how excess deductions are treated in the hands of beneficiaries. The proposed rules (REG-113295-18) formally adopt the guidance in Notice 2018-61, 2018-31 IRB 278, concerning the deductibility of the administrative fees specified in Section 67(e) the Tax Cuts and Jobs Act of 2017. The regs also affirm that excess deductions are still allowable, and they provide instructions on how to allocate those deductions among beneficiaries of an estate or trust.
And this week, the IRS posted guidance on how to return a coronavirus stimulus check if the recipient is deceased. However, the agency’s website did not mention consequences for failing to comply.
Department of Veterans Affairs
The VA’s National PSTD Center has put out a new COVID Coach app to help veterans with their self-care and mental health during this difficult time. The app includes tools to manage stress and improve well-being, personal goal tracker, and assessments to monitor well-being, anxiety, mood, and PTSD symptoms over time. The Department also has dedicated an online resource site – Now is the Time – in recognition of May as Mental Health Month.
Exclusive from our colleagues at the National Council of Nonprofits.
Virtual Board Meetings and Annual Meetings Allowed During Coronavirus Crisis
Officials in several states are acknowledging the realities of the pandemic and social distancing requirements by approving virtual and electronic meetings for foundations, nonprofits, and corporations incorporated in their states. The Georgia Secretary of State clarified in a memo that state law does not specifically prohibit virtual or telephone attendance of annual meetings. The New York State Attorney General Charities Bureau issued guidance last month outlining proper procedures and stating that such meetings will be deemed in substantial compliance with the requirements under state law. Across the river, New Jersey lawmakers quickly enacted legislation to permit nonprofits to allow members to participate in meetings by remote communication during a state of emergency. And in North Carolina, the Governor issued Executive Order No. 136 that gives nonprofit boards the flexibility to allow membership meetings to take place by remote communication and through remote voting, even if these types of remote meetings are not expressly authorized in the nonprofit's articles of incorporation or bylaws.
Business Interruption Insurance Polices During Coronavirus Crisis
Nonprofits rely on various forms of insurance, including business interruption and property insurance, especially during difficult times like the current pandemic. However, insurers are denying claims for a variety of reasons. Lawmakers in at least eight states have introduced legislation to require insurance companies to pay out claims despite language in insurance contracts. The bills generally apply to small employers, and some include nonprofit employers. Amended language in pending legislation in New York (A10226B / S.8211A) specifically extends the protections to nonprofit employers, due to strong advocacy by a coalition of nonprofits in the state. However, pending legislation in Pennsylvania only applies to small businesses that meet United States Small Business Administration criteria or receive funds from the Administration, which leaves out many nonprofits. Language in a Michigan bill applies to “a business interruption policy in force on the effective date.” Model language in Louisiana (H.B. 858 / SB 477), Massachusetts, New Jersey, Ohio, and South Carolina apply to every policy of insurance insuring against loss or damage to property. Many of the bills would be retroactive to the beginning of the crisis. The changes and application to insurance policy contracts, if enacted, may face constitutional challenges.