Originally published: June 7, 2022
Updated: August 3, 2022
To date, our firm has assisted nonprofit organizations in validly claiming millions of dollars of federal aid in the form of the Employee Retention Credit (ERC). On average, clients we have helped to claim the ERC are receiving benefits in the hundreds of thousands of dollars. Some individual organizations qualify for an ERC in the millions of dollars. The ERC is a form of federal relief/stimulus/financial aid available to eligible employers, including nonprofit organizations.
An eligible employer receives the ERC funds by way of a payroll tax refund. If the amount of the ERC for which the employer qualifies exceeds the employer’s applicable payroll taxes for the relevant period, the employer still receives the full amount of the ERC from the federal government. The federal government refers to this as a “refundable credit.” A better term that might more accurately describe such a payment is an “excess refund.” That is, the federal government provides a refund in the amount of the ERC even if it exceeds the employer’s applicable payroll taxes for the relevant period. The reality is that the ERC has nothing to do with an organization’s payroll taxes. Congress simply chose the payroll tax refund process as the way to deliver the ERC to eligible employers.
The ERC can be as much as $5,000 per FICA employee for 2020 and as much as $21,000 per FICA employee for 2021. That is a very significant benefit for those employers who qualify.
In conversing with nonprofit leaders across the country, it is my observation that many, many eligible churches, schools, ministries, and other nonprofit organizations are on the path to missing out on the opportunity to receive this very significant federal aid.
The reason for this is simple…many nonprofit leaders are not carefully analyzing the ERC eligibility requirements in detail and evaluating their circumstances to determine if they qualify for the aid.
The purpose of this article is not to describe the details of the ERC and its eligibility criteria. Our firm has done that in a separate article available here. Rather, this article serves as my attempt to shout from the rooftops about the availability of this poorly understood form of federal aid and to help spur nonprofit leaders to look carefully at their situations to see if their organizations qualify.
BMWL Can Help
BMWL has a task force that assists clients in addressing the ERC and certain other pandemic-related matters. That team can be reached directly at [email protected].