In early May, the Senate took up but failed to advance a $48 billion package of COVID relief for restaurants and other for-profit businesses. That stalemate leaves legislation (H.R. 6161/S. 3625) that would restore the Employee Retention Tax Credit (ERTC) for small businesses and nonprofits as the best and perhaps only viable proposal that could be enacted in the near term. The legislation enjoys strong bipartisan support, with more than 100 cosponsors in the House and Senate, and a growing recognition that Congress made a mistake when it repealed the refundable payroll tax credit for the fourth quarter of 2021. A broad coalition of small businesses and charitable nonprofits is making the case that “employers still require financial relief to provide the final push in recovery from economic hardships caused by the COVID-19 pandemic.” See sign on letter.
The urgency of the issue for charitable nonprofits was made clear recently in Inaction On Retention Credit Risks Nonprofit Staff Cuts (Law360, premium). The article explains that for nonprofits “the credit offered a means to keep workers on payroll and even raise their wages.” Further, nonprofits that “were counting on the credit for the fourth quarter of 2021 in their budgeting are having to adjust, and services and employment could suffer as a result.” The article includes quotes from representatives of the League of American Orchestras, National Council of Nonprofits, Opera America, and YMCA of the USA, all explaining that a failure of Congress to reinstate the ERTC as soon as possible will result in more layoffs for nonprofit employees, longer waiting lists for services, and loss of essential services in local communities.