Menu
Tax Notes logo

Financially Strained Nonprofits Push for Filing Extensions

Posted on Apr. 7, 2020

Nonprofits are pushing for increased tax relief, including filing extensions, following enactment of laws to abate the economic impact of the coronavirus pandemic.

Like many for-profit entities, tax-exempt organizations face new hurdles created by cash flow and other financial restrictions stemming from the pandemic, Ruth Madrigal of KPMG's Washington National Tax practice said on an April 6 webcast sponsored by her firm.

Regarding return filing and payment deadlines, there isn’t much relief granted to EOs in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), since new deadline extensions apply only to income tax returns, according to KPMG's Preston Quesenberry. Several EOs have sent letters to Treasury and the IRS calling for filing extensions for forms that are relevant to them.

Such forms include information returns and excise tax returns, according to Quesenberry, and for EOs, the CARES Act income tax deadline extension applies only to Forms 990-T, "Exempt Organization Business Income Tax Return," that were previously due April 15.

EOs that paid significant estimated tax in tax years ending in 2019 and now think they’re owed a refund may want to file a Form 990-T sooner in order to receive it, Quesenberry said. 

For disaster relief payments under section 139 stemming from COVID-19, cited expenses must be reasonable, necessary, and resulting directly from the pandemic, according to Robert Delgado of KPMG.

Disaster relief payments are nontaxable to the recipient and deductible by the employer, and no tax-specific documents are required, but documentation of the position is recommended, Delgado said.

Expenses could include travel costs incurred to prevent COVID-19 spread, medical expenses related to COVID-19 that aren’t covered by insurance, child care expenses stemming from COVID-19, and sanitation or protective items such as masks and gloves, according to Delgado.

Nonprofits may also take advantage of employee retention and emergency sick leave payroll tax credits, Family and Medical Leave Act tax credits, and a two-year 2020 payroll tax deferral, Delgado noted.

Quesenberry noted that under the CARES Act, individuals can deduct up to $300 of charitable contributions if they don't itemize deductions. Those who itemize can take a charitable deduction of up to 100 percent of adjusted gross income. For corporations, the CARES Act permits a deduction of 25 percent of taxable income, up from 10 percent.

Copy RID