Is the ERTC Available for Nonprofit Organizations?

July 4, 2023
Dayes Law Firm

There is limited time remaining to apply for the Employee Retention Tax Credit, also known as the ERC or ERTC. But people who run businesses and haven’t yet applied for the credit may not have done so because they’re unsure of their eligibility status. For example, whether or not the ERTC is available for nonprofit organizations might be unclear to the people who manage them. 

At Dayes Law Firm, these are the kind of questions we answer about the ERTC every day!

What is the ERTC?

In a nutshell, the ERTC is a fully refundable payroll tax credit that acts as an incentive for businesses that kept people on staff during the height of the COVID-19 pandemic in 2020 and 2021. 

If you are a business owner and continued to employ W2 staff at your business in the midst of the coronavirus pandemic, you may qualify for this credit. And most importantly, you could receive thousands of dollars for each employee by retroactively claiming it.

The ERTC is for, “Businesses that continued to pay employees while either shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021,” according to the IRS

ERTC and Nonprofit Organizations 

But what about nonprofit organizations? Organizations like churches and other charities may in fact qualify for the Employee Retention Tax Credit under certain conditions. 

Just like other businesses, temporary or total shutdowns had a major impact on many nonprofit entities. Government COVID-19-related restrictions had an effect on churches across the country just as they had on small businesses on Main Street.

If your nonprofit shut down, even temporarily, and its gross receipts for a calendar quarter in 2020 were less than 50 percent of the gross receipts for that same quarter in 2019, or you saw at least a 20 percent decline from 2019 to 2021, it may qualify to apply for the ERTC. 

Nonprofits can potentially receive up to $26,000 per employee, just like any small business that faced similar challenges during the pandemic. Although nonprofits don’t pay income taxes as  501(c)3 organizations, the payroll taxes nonprofits did pay for any qualifying quarters of 2020 or 2021 could be eligible. 

Claiming the ERTC 

Nonprofits can use Form 941-X to claim the credit retroactively. Even if the nonprofit in question received a Paycheck Protection Program (PPP) loan, as long as the payroll identified for the ERTC was not paid out of PPP funds, it’s possible for charities and other nonprofits to get both forms of assistance. 

To determine if your nonprofit can make an ERTC claim, please feel free to get in touch with the team at Dayes Law Firm to see how we can help. Our firm and our partners have a strong track record when it comes to getting ERTC tax credit applications successfully turned in for many employers and have already helped businesses, including nonprofits, file for more than $250 million in ERTC refunds so far!

Give us a call today or fill out the form on this page to see how we can help you determine if the ERTC is available for your nonprofit organization. Speaking with a qualified tax advisor before the ERTC deadlines could make all the difference in the survival of your charity, and we want to help you so you can keep helping others. Contact us to learn more!