April 2020 Public Policy Roundup

April 2020 Public Policy Roundup

Publication date: 
April, 2020

By Hillary Evans, vice president of professional learning & public policy, Philanthropy Southwest

Congress Passes Phase 3.5 of the COVID-19 Stimulus Legislation 

On April 24th, President Trump signed into law “Phase 3.5” of the Paycheck Protection Program (PPP) and Healthcare Enhancement Act. This legislation, which provides $484 billion in additional funding, replenishes relief funds for small businesses and adds billions of dollars in aid to hospitals impacted by the pandemic. 
This COVID-19 emergency interim coronavirus relief package comes after funds ran out in the original PPP provided in “Phase 3” of the CARES Act which passed last month. The relief package provides the following: 

  • 310 billion in additional funding for a small-business loan program 
  • $60 billion for small-business disaster loans and grants
  • $75 billion for hospitals
  • $25 billion for coronavirus testing

This legislation is setting the stage for Phase 4 negotiations which could yield an even bigger relief package, rivaling the $2 trillion CARES Act. 
Over the past few weeks, there have been coordinated efforts among the charitable and nonprofit sectors urging Congressional leadership to support charitable nonprofits and incentivize charitable giving by: increasing the $300 cap on the temporary universal charitable deduction, applying the deduction to 2019, extending the temporary suspension of adjusted growth income limitations and temporary universal charitable deduction beyond 2020, and allowing deductibility of gifts to donor-advised funds.  Additionally, nonprofits and Congressional leadership have submitted comments into the Federal Reserve for nonprofits to be included in the Main Street Lending Program. The program would offer four-year loans to companies employing up to 10,000 workers with revenues lower than $2.5 billion. 
For more information about the Paycheck Protection Program, check out the Small Business Administration and Department of Treasury’s Frequently Asked Questions document that will be updated on a regular basis. 
Philanthropy Southwest will continue monitoring these rapidly changing policy developments.

IRS Published Proposed Rule Streamlining UBIT Reporting for Nonprofits
The Internal Revenue Service (IRS) recently issued a proposed rule for unrelated business income tax, or UBIT, that would simplify the tax-filing process for nonprofits with taxable side businesses. This proposed rule allows for losses to offset profits from business activities with the same industry, but it does not allow that offsetting across industries. Prior to the Tax Cuts and Jobs Act (TCJA), nonprofits could pay all of their unrelated business income taxes as one item, offsetting losses from one business with profits from another and reducing their tax liability. TCJA made this offsetting impossible and this new proposed rule would simplify this reporting. IRS is soliciting public comment on this proposed rule by June 23, 2020. 

IRS extends more tax deadlines, including Form 990-series returns and notices

Last month, the IRS announced that certain taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. The IRS has extended this relief to additional returns, tax payments, and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. The extensions apply to many forms and tax payments made by tax-exempt organizations, including: 

  • Form 990-series annual information returns or notices (Forms 990, 990-EZ, 990-PF, 990-BL, 990-N (e-postcard))
  • Forms 8871 and 8872
  • Form 5227
  • Form 990-T
  • Form 1120-POL
  • Form 4720
  • Form 8976

See IRS Notice 2020-23 for more information, including a complete list of affected forms, tax payments, and other time-sensitive actions. 
Relatedly, the Tax Foundation has released a new resource that tracks budget and tax news by state in response to COVID-19.

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