Employee Retention Tax Credit - 520-977-9973 www.synergipartners.com/accu - Synergi Partners

CARES Act
       Employee Retention Tax Credit
Non-Government Nonprofit Organizations

               PRESENTED BY:

                      +

                 520-977-9973
          grossi@synergipartners.com
         www.synergipartners.com/accu

Understanding the CARES Act
                          Employee Retention Tax Credit

President Trump declared a public health emergency in January 2020 to combat the spread
of the Coronavirus (COVID-19). Additionally, numerous state and local governments declared
their own states of emergency which greatly curtailed the ability of businesses to freely
operate and the public to freely congregate. As a result, the U.S. faced an extreme economic
downturn the likes of which have not been seen since the Great Depression. The federal
government recognized the challenges faced by businesses and individuals due to COVID-19.
On March 27, 2020, President Trump signed the CARES Act. Included within the Act is an
Employee Retention Credit (ERC) which is designed to encourage employers to retain their
employees during the economic hardships related to COVID-19.

In December 2020, the Consolidated Appropriations Act of 2021, and in March 2021 the
American Rescue Plan Act of 2021 that was signed into law by President Biden provided
additional COVID-19 relief packages for businesses. Specifically, the new legislation amended,
expanded, and enhanced the CARES Act Employee Retention Credit.

Do Non-Government Nonprofit
 Organizations Qualify for the Credit?
Any employer, regardless of size, is eligible for the credit during calendar year 2020 & 2021 if
the business: (1) is fully or partially suspended due to a governmental order related to
COVID-19, or (2) experiences a 50% decline in gross receipts for 2020 or a 20% decline in
gross receipts for 2021. The credit also applies to tax-exempt organizations if the operation
of the organization is fully or partially suspended due to the circumstances described in (1)
above. The credit generally does not apply to governmental employers, including the U.S.
Government, state and local governments, or any agency of the foregoing. PPP recipients are
also eligible to receive the ERC—just not on wages paid with PPP loan funds.

Many nonprofit schools, day care centers, counseling centers, ministries, churches, and clubs
closed their buildings and/or partially suspended services to comply with government orders
and guidelines. This cessation of services is a suspension of operations which would qualify
that organization for the ERTC.

                      Common Misconceptions:

Aren’t We Considered Essential?
Some non-government nonprofit organizations are considered essential businesses. The
CARES Act does not make an “essential” versus “non-essential” employer distinction
regarding ERTC qualification. Rather, guidance issued by the Internal Revenue Service in
the form of FAQs has caused confusion among organizations.

FAQ 30 asks “if a governmental order requires non-essential businesses to suspend
operations but allows essential businesses to continue operations, is the essential business
considered to have a full or partial suspension of operations?” The FAQ response is “[n]o. An
employer that operates an essential business is not considered to have a full or partial
suspension of operations if the governmental order allows the employer to remain open,
even though the governmental order requiring non-essential businesses to close may have
an effect on the employer's operations.”

The IRS position has been criticized by Congressional tax committee staff and by employers
because many orders that designate essential businesses and allow them to remain open
also cause parts of their business operations to close. An example is credit unions that are
allowed to remain open but must close lobbies and restrict customers to drive-thru only
service to comply with CDC social distancing guidelines.

Congressional tax committee staff have advised that the US Treasury Department has agreed
to modify FAQs 30 and 36 (which addresses the treatment of employers that are deemed
essential in some jurisdictions but not others) to allow “essential”
employers who have had to suspend some operations because
of government orders to claim the ERTC. Treasury has
already modified the FAQs on three other occasions and
Congressional staff indicate that the latest agreed
modifications of the essential business FAQs
should be released soon.

What Wages Can Be Used
                   for the ERTC?
If your organization averaged 100 or fewer full time benefits eligible employees (2020), or
500 or fewer full time benefits eligible employees (2021) then the qualified wages are those
paid to any employee whether they worked or not. For those organizations that averaged
more than 100 full time employees (2020) or 500 full time employees (2021), qualified wages
are those wages paid to an employee who is not providing services, including those that
have had significant change in job tasks or idle time due to COVID-19.

Examples include:
   Employees quarantined or on leave due to COVID-19
   Teachers or tellers redeployed to lower level or different tasks, but receiving the same
   pay
   COVID-19 related Training Time
   Hero Pay
   Guaranteed payments that were not guaranteed before COVID-19

              How is the ERTC Claimed?
The ERTC can be used against all federal tax deposits including employee withholding
utilizing IRS Forms 941 or 941-X. Importantly, any excess is treated as an overpayment
immediately refundable utilizing IRS Forms 7200.

Synergi Partners has more than 40 years’ experience in the tax credit field and is recognized
as an industry leader. Your organization has struggled with the ramifications of COVID-19.
Let Synergi Partners lead
the fight to maximize your
CARES Act benefit so you can
continue your needed good
works.

ERTC Examples

 National Charity with 3,000 employees
                 (avg. wage of $40,000)

 700 furloughed with 2-week severance and healthcare
 benefits (100% wages qualify) $1 million
 1,000 redeployed due to COVID-19 and other tasks (50%
 wages qualify) $4 million
 500 employees still paid, but not working full time unless
 called in for backup $2.5 million
 Hero Pay of $1,000 per employee for employees not
 already maximized $800,000

               $8.3M Total Credit