Form 1023 Paper Submission Transition Period Expires April 30

As of January 31, 2020, organizations are required to submit Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, electronically online at Pay.gov. The IRS provided a 90-day transition period during which time applicants can continue to submit paper Form 1023 applications. The transition period expires April 30, 2020. The IRS will not accept paper Form 1023 applications postmarked after that date.

The user fee for Form 1023 remains at $600 for 2020. Applicants must pay the user fee through Pay.gov when submitting the form. Payment can be made directly from a bank account or by credit/debit card.

Updated information on Signing Electronically Submitted Form 1023 

An applicant may satisfy the electronic signature requirement for an electronically submitted Form 1023 by including, in the PDF file it uploads as part of its application, a

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 Notice 2020-23 and Rev. Proc. 2018-58 for more information, including a complete list of affected forms, tax payments and other time-sensitive actions.

IRS operations during COVID-19: mission-critical functions continue

In response to the

Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) , enacted on March 27, 2020, introduces an employee retention tax credit (the “ERC”) designed to incentivize employers affected by the COVID-19 crisis to retain employees.  Subject to certain limitations outlined below, the amount of the credit is 50% of qualified wages paid by an eligible employer, up to a maximum of $10,000 per employee. The ERC is applied against the employer portion of Social Security taxes (but not the employer portion of Medicare taxes) and is a refundable credit. Thus, to the extent the amount of the credit during any calendar quarter exceeds the employer’s applicable employment taxes for such quarter, the excess will be treated as a refundable overpayment under the Internal Revenue Code of 1986 (the “Code”).  The ERC is applicable to wages paid after March 12, 2020 and before January 1, 2021

Loan Programs

Small Business Loan Program Expansion – “Paycheck Protection Program”: Provides 100% guarantee for bank loans made to qualifying business/organizations during the period of February 15, 2020 to June 30, 2020.  To qualify, nonprofits must not have more than 500 total full-time and part-time employees.  Nonprofit organizations with more than 500 employees are not eligible for this program. Detailed guidance from the firm on this program can be found here:

Emergency Economic Injury Grants – “Disaster Loans”: Nonprofits with fewer than 500 employees who apply for an economic injury disaster loan with the SBA may receive up to $10,000 as an advance against the loan within 3 days of application if SBA certifies that the entity is eligible.  This is to enable nonprofits to quickly access financial assistance while their loan application is being processed.  Eligibility is based solely on applicant’s credit score.  Funds can be used for payroll