Nonprofit Resources


Paid Sick and Family Leave Credits Change; Extended Filing Date for Texas Nonprofits

When the Families First Coronavirus Response Act (FFCRA) went into effect in April 2020, it enacted two provisions, the Emergency Paid Sick Leave Act and the Expanded Family and Medical Leave Act, that required most employers to pay their employees for sick leave and family and medical leave for specific reasons due to the COVID-19 pandemic.

The original legislation stated that qualified wages paid to employees under these two provisions would be eligible for a tax credit that could be claimed against the employer’s portion of payroll taxes. However, wages paid to students who were otherwise exempt from FICA taxes, ministers, and several others were not included in the definition of qualified wages and therefore, payments to them during their sick leave or family leave were not eligible for the credits.

That has now changed. The Consolidated Appropriations Act (CAA) passed on December 27, 2020, includes wages paid to student employees and ministers in the definition of qualified wages. This means that wages paid to these employees under the paid sick leave and family leave provisions of the FFCRA are now eligible for the credits. The change is retroactive to April 1, 2020, the effective date of the original FFCRA.

Employers may claim these credits retroactively for qualified wages paid on or after April 1, 2020. The credits are available for qualified wages paid through March 31, 2021. For more information, employers can review the FAQs provided by the IRS, especially FAQs 7 and 8.

Note that the definition of qualified wages for the purpose of claiming the employee retention credit now expressly includes wages paid to student employees, but not wages paid to ministers.

Extended Filing Date for Texas Nonprofits

In a notice issued on February 22, 2021, the IRS extended the filing date for taxpayers impacted by the recent severe winter storms in Texas. Affected nonprofit organizations with an original or extended due date between February 11, 2021 and June 15, 2021 for their annual information return (i.e., Form 990, Form 990-EZ, or Form 990-N) now have until June 15, 2021, to file. Taxpayers in all 254 Texas counties qualify for this extension.

Please contact us with any questions.

Join us next Thursday, March 4, for a free one-hour webcast on “The Employee Retention Credit and Nonprofit Organizations.” CPE credit is available. Learn more and register.


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