Unemployment reimbursement relief for nonprofit employers

Published On: August 6th, 2020|By |Categories: RSM, Article, Nonprofits|4.6 min read|

TAX ALERT  | 

Authored by RSM US LLP

On Aug. 3, 2020, the President signed into law P.L. 116-151, the ‘Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020,’ which expands emergency unemployment reimbursing payment relief for governmental entities and nonprofit organizations.

Background

Under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the federal government will pay 50% of the unemployment costs incurred by nonprofit employers that elected to make reimbursing payments in lieu of paying unemployment taxes. All unemployment claims filed between March 13, 2020 and December 31, 2020 qualify for the federal reimbursement. However, nonprofit employers have still been required to pay 100% of their reimbursing payments upfront. The federal government then subsequently reimburses the employer’s state for its 50% share of the unemployment obligation, at which point the state refunds the 50% portion to the employer.

Reimbursing employers typically receive monthly or quarterly statements of benefit charges from their state unemployment agency. These statements reference who was paid unemployment benefits and in what amount. The statements are typically issued within the month following the completion of each calendar month or quarter. At the same time, a statement of billing is issued mirroring the total amount of charges incurred for that particular month or quarter. A billing statement will ordinarily request payment within 30 days of the date of mailing. An employer’s failure to timely pay their bill would subject the employer to penalties and interest. The CARES Act provides flexibility to relax those penalties in the event that nonprofit employers are not able to pay timely due to economic hardship.

Employer payment relief

Considering the economic pressures and cash flow concerns facing nonprofit organizations amid the COVID-19 pandemic, the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 now allows nonprofit employers to pay only 50% of their reimbursing payment obligation up front, while the state awaits payment of the remaining 50% from the federal government.

Nonprofit employers should exercise diligence in the inspection of all benefit charge statements they receive. States are experiencing a high volume of fraud associated with unemployment applications, including claims filed by employees who either never filed for benefits or never worked for them. Employers should timely challenge any payments they deem improper by following the protest rights contained within those statements. Additionally, employers should be aware that a number of states are offering flexibility with respect to reimbursing payment due dates or have elected not to charge reimbursing employers for any COVID-19 related unemployment claims, which may provide additional relief to affected employers.

Do you have questions or want to talk?

Call us at (800) 232-9547 or fill out the form below and we’ll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Eric Oscarson, Tim Ellenwood and originally appeared on 2020-08-06.
2020 RSM US LLP. All rights reserved.
https://rsmus.com/what-we-do/services/tax/federal-tax/unemployment-reimbursement-relief-for-nonprofit-employers.html

 

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

RSM

Insero & Co. CPAs, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how Insero & Co. CPAs can assist you, please call (800) 232-9547.

Share

Subscribe

Join our mailing list for insights and tools to help you achieve your goals delivered right to your inbox.

Go to Top