Federal program could bring relief to COVID-ravaged churches – Baptist News Global

Many American churches jumped at the chance to use the Payroll Protection Program, or PPP, to cover costs and benefits during the darkest time of the COVID-19 pandemic.

But fewer congregations and other nonprofits have been so quick to tap into an additional provision of the 2020 CARES Act, designed to maintain staffing levels during tough economic times.

Ricky Letson

“While the PPP has caught the attention of many churches, another similar program called Employee Retention Credit, or ERC, was introduced in early 2020,” explained Rickey Letson, congregational stewardship manager for the Cooperative Baptist Fellowship, in a CBF blog. Publish. “The ERC, however, is not as widely known among congregations.”

Churches aren’t the only organizations ignoring the benefit, Forbes reported.

“IRS management predicted that approximately 70-80% of small and medium-sized businesses (as well as tens of thousands of charities) were good candidates to take the ERC,” the magazine noted. “The reality is – to date the actual number of businesses and charities applying for the ERC – is far below this. Small and medium sized businesses (as well as tax exemptions/charities ) leave billions of dollars on the table.

In response, faith groups, Faith-based publications and business and accounting organizations flooded the web and social media with videos, webinars and articles to raise awareness of the tax credit.

Employers can claim up to 70% of qualifying wages for each non-clergy employee who worked at least 30 hours per week in the first three quarters of 2021.

For CBF and its affiliated churches and partners, Letson offered a detailed explanation of the program and how congregations can use it.

“ERC is a refundable credit that nonprofits, like for-profit businesses, can claim on eligible wages, including certain health insurance costs paid to employees,” Letson explained. “Like the PPP, churches are eligible to apply for the ERC and can do so even if they have received funds from the Payroll Protection Program. The ERC is the result of multiple pieces of legislation and requires individual analysis and unique to determine its availability for each organization.

Employers can claim up to 70% of qualifying wages for each non-clergy employee who worked at least 30 hours a week in the first three quarters of 2021, he said.

“Certain health expenses are also eligible,” he added. “It’s easy to see how quickly substantial sums can add up even in a small church with just a few skilled employees.”

To be eligible, churches must either suffered government-forced business or service suspensions, or had to suffer revenue cuts of 20% or more.

Clergy salaries and benefits do not apply, Letson explained.

“This is due to housing allowances and unique FICA elements of clergy compensation,” he noted. “That said, in a church scenario, even if clergy are excluded, other non-clergy staff are most likely eligible.”

In its report, Forbes sought to dispel the notion that credit is designed exclusively for businesses and nonprofits that are experiencing the worst difficulties.

“Some business owners and charity leaders mistakenly believe the ERC is only for distressed/underwater entities. No,” the magazine said. “Congress has considered this provision as a way to encourage businesses and charities to retain employees and hire new staff – helping to overcome the economic hardship and costs caused by Covid.”

“Ultimately, some churches may decide that the ERC filing is worth pursuing. Other congregations may decide for various reasons that it is not for them. —Rickey Letson

But for the churches, the economic conditions are not necessarily the ultimate factor in the decision to use programs like PPP or ERC, Letson acknowledged in his report.

“The Payroll Protection Program…has opened up a whole new world for many churches. For the first time in their history, churches applied for and received repayable government loans at the start of COVID-19,” he said.

“Of course, there has been much debate about the ethics of congregations taking advantage of such a loan. Some churches have felt comfortable participating in the program, and others have not. As Baptists, we affirm the right of each congregation to consider the elements of PPP and make the wisest decision for itself. »

Similar considerations will apply to the ERC, Letson added.

“Ultimately, some churches may decide that the ERC filing is worth pursuing. Other congregations may decide for various reasons that it is not for them,” he said. “Our desire is simply to make you, as church leaders, aware of the existence of this particular tax credit which, like the PPP, is a direct result of these strange circumstances caused by COVID-19. “.

Related Articles:

Churches: take the PPP money and walk

As Major Employers, Churches Help Economy with PPP Loans

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