Only two types of federally approved nonprofit organizations are currently eligible for the Paycheck Protection Program portion of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The approved types include 501c(3) and 501c(19), commonly thought of as charities and veteran's organization. This leaves thousands of private social clubs, 501c(7), on the outside looking in and wondering 'what about us?'. For the 3% of nonprofits classified as 501c(7), minimal relief is available.
The CARES Act does provide employers in operation during 2020, with an employee retention payroll tax credit. All tax-exempt 501(c) organizations types (e.g., 501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6), 501(c)(7), etc.) are eligible for the employee retention payroll tax credit if (1) its operations were fully or partially suspended due to a governmental order that limited commerce, travel, or group meetings (for commercial, social, religious or other purposes) due to COVID-19, i.e., a shutdown order; (2) its gross receipts declined by more than 50% when compared to the same quarter in a prior year; and (3) the organization has not received a Paycheck Protection Program loan. CLICK HERE TO FIND AVAILABLE PROGRAMS The credit is a refundable payroll tax credit equal to 50% of “qualified wages.” For eligible employers with more than 100 employees, those are wages paid to an employee even though the employee is unable to work due to a full or partial suspension of operations due to a governmental “stay at home” or other order. For eligible employers with 100 or fewer employees, “qualified wages” include all wages paid whether the employer is open for business or subject to a shutdown order. Qualified wages include health plan expenses.