Government Money Available for Churches Through ERTC Program

Government Money Available for Churches Through ERTC Program

Due to the COVID-19 epidemic, some charity organizations only stayed afloat because they agreed with government regulations requiring them to suspend operations or reduce services temporarily. While people may think that tax-exempt organizations are ineligible for a fully refundable government tax credit, such as Employee Retention Credit, this is not true.

What is Employee Retention Credit (ERC)?

Employee Retention Credit is a government initiative accessible to taxpayers beginning in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to encourage businesses to retain staff during extensive disruptions caused by the pandemic. This credit remains available for churches to claim on revised payroll tax returns for qualifying periods, provided they completed the eligibility requirements and paid qualifying wages and benefits during those years.

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Employee Retention Credit for Churches

Since tax-exempt organizations, such as ministries, are also considered to be engaged in business or trade regarding the entirety of their operations, if a ministry continued to keep employees on the payroll despite the difficulties caused by the COVID-19 pandemic, they may still be eligible for significant cash relief in the form of a refundable employee payroll tax credit, particularly ERC.

Money Available for Churches Through ERTC Program
Government Money Available for Churches via ERTC Program

At first, tax-exempt organizations that had secured loans under the Paycheck Protection Program (PPP) were not eligible to participate in the ERC. Later, legislators in the United States enacted the Taxpayer Certainty and Disaster Tax Relief Act of 2020, which widened the standards for eligibility concerning the ERC. The item was included in the Consolidated Appropriations Act of 2021, signed into law on December 27, 2020. The legislation was a component of a larger COVID-19 relief package.

As a result of the Tax Relief Act of 2020, church leaders who have received PPP loans are now eligible to apply for the ERC. However, to qualify for the credit, it is required that funds other than PPP loans be employed in the calculation. Because of this move, the ERTC was given an additional year, bringing its expiration date to the end of June 2021. Despite this, the American Rescue Plan Act of 2021 concluded that it should be prolonged until the end of 2021—the date set for termination.

Because of the newly implemented restrictions, churches can now qualify for a non-refundable tax credit. In 2020, the maximum credit awarded to an employee was just $5,000; however, in 2021, that amount was increased to $28,000. Even while the ERC cannot be used to cover the minister’s salary, it may give significant resources to congregations eligible for the benefit.

Employee Retention Credit Eligibility Criteria for Churches

Your church might be qualified for the ERC, which is meant to aid your ministry in recovering from the financial effects of the COVID-19 pandemic, if it experienced a significant decline in gross receipts during any calendar quarter since the pandemic or fully or partially suspended or facilitated any important part of its operations as a result of a mandate from the state, federal, or local government.

ERC YearMinimum CreditReported Form
2020 $5,000 Per EmployeeForms 941-X (Q2-4)
2021 (Q1)$7,000 Per EmployeeForm 941-X (Q1)
2021 (Q2)$7,000 Per EmployeeForm 941-X (Q2)
2021 (Q3) $7,000 Per EmployeeForm 941-X (Q3)

Is Employee Retention Credit a Loan?

Many church leaders ignored the ERC because they were in a rush to apply for PPP loans and other COVID-related financial assistance initiatives. However, if you apply for the ERC, you may be able to get thousands of dollars that will help you get back on track after the stressful two years of financial crisis you would have experienced. We are here to provide clarification because there is a great deal of misunderstanding around the requirements and the application process.

Employee Retention Credit – Qualifying Requirements for Churches

The Employee Retention Credit (ERC) is a tax credit that Eligible Employers, including non-profit organizations and charitable groups, may use to keep employees on the payroll. The most surprising point is that there is no need for repayment because Employee Retention Credit is not a loan. For most taxpayers, the refundable credit amount is higher than the payroll taxes paid during the tax-generated period, in contrast to non-profit and tax-exempt organizations like churches.

Money Available for Churches Through ERTC Program
Money Available for Churches Through ERTC Program

Government Mandate Test

For the ERC, churches that have their activities entirely or partly interrupted due to orders made by the governmental authority to limit travel, commerce, or group gatherings during the pandemic are eligible to be designated, Eligible Employers. Nevertheless, the church leader must keep paying salaries during this time as long as the regulations imposed by the government are in place.

Gross Receipts Test

To qualify for the Employee Retention Credit in any of the 2020 quarters beginning from March 12, gross sales must have decreased by at least 50 percent compared to the corresponding 2019 quarter. Even better, your church may fulfill the criterion for gross revenues if it saw a decline of at least 20% in the first three quarters of 2021 compared to the corresponding quarter in 2019.

Enhanced Benefits

For the ERC in 2020, churches with fewer than 100 full-time employees (as determined, on average, in 2019) are entitled to the maximum available benefits, provided that they continue to qualify as an Eligible Employer by either the Gross Receipts Test or the Government Mandate Test. This would remain the case even if there were a shift in the number of full-time workers at different points during the year. Nevertheless, this limitation was resolved for the 2021 ERCs by increasing the number of full-time employees required for eligibility to 500.

PPP Loan Interplay

The qualifications to be eligible for the Employee Retention Credit are much like the requirements for Paycheck Protection Program. When the ERC was first permitted as part of the CARES Act, it was statutorily illegal for any organization that had previously received funds under PPP to claim an ERC. This was done to prevent any organization from claiming an ERC more than once.

However, the regulatory barrier preventing Paycheck Protection Program members from receiving ERC payments was eventually removed in December 2020. This came about due to the Consolidated Appropriations Act, which included provisions that expanded and enhanced the ERC.

How to Claim ERC for Church

Follow these instructions to claim ERC for the church successfully.

  • Identify the criteria for Suspended Operations or Decline in Gross Receipts
  • Next, determine the total amount of your eligible earnings, e.g., church gatherings.
  • Apply the appropriate rate to each qualifying quarter (see chart above for reference).
  • Request a refund on your modified Form 941-X quarterly payroll tax return.
  • If not, make an advance payment to receive your earned rate credit (ERC).

Qualifying for ERC is not quite as simple as it may seem. There is a significant amount of documentation to be completed and qualifying requirements to be met. Consequently, working with an ERTC professional such as [Client’s Website] is the best way to receive ERC in no time. Let us take you through our simple procedure, which consists of five steps.

  • Complete the Questionnaire: Start with the ten simple questions to begin your ERTC claim.
  • Upload Data: Upload PPP documents, 941 returns, and payroll data on our secure portal.
  • Credit Calculation: Get an accurate calculation of the credit you can receive from the IRS.
  • Application Package: Get an expert’s help filing the 941-X Amended payroll returns.
  • Get Paid from IRS: Receive an email from the IRS with your very own ERTC check.

The expertise of certified public accountants, lawyers, and payroll specialists is combined in our ERC service, making it unique compared to other similar offerings on the market. When preparing income taxes, this offers a degree of technical soundness that most CPAs cannot match. We work to optimize your ERC throughout the PPP Covered Period and ensure that your church will have the fastest possible access to the Employee Retention Credit scheme.

Are You Eligible For ERTC? Check Your Status Now!

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Wrapping Up

At [Client’s Name], we have completed many credit assessments for churches in the United States and don’t want you to lose out on this opportunity. To assist your church in obtaining the funds that are rightfully owed to it via the ERTC, our team is prepared to analyze the benefit of the ERTC, calculate the potential credits available, and make any necessary form revisions. Schedule your obligation-free consultation today by completing the questionnaire at Federal Tax Credits.

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