Hello, 2021!

Essential Updates:

West Coast, East Coast, and Federal

It’s time for our annual tax-exempt west coast, east coast and federal updates. Amid COVID-19, we want to ensure you are up to speed on essential changes in tax-exempt law.

nonprofit.png

California

Attorney General – 2021 Initial & Annual Filing Updates
Effective January 1, 2021, the Attorney General’s office has introduced the following changes for California charities:

  • The Form CT-TR-1is a new form for charitable organizations whose total revenue is under $50,000 each year. The form is to be filed alongside the RRF-1, Annual Registration Renewal Fee Report, and takes the place of the IRS Form 990-PF. Note this form is not applicable to private foundations, which will need to continue filing the IRS Form 990-PF.

  • The Form CT-1, Initial Registration Form, now requires organizations to provide all DBAS used by the charity.

  • The Form RRF-1has been revised and now requires organizations to provide additional donation disclosure information.

Franchise Tax Board - 2021 Form 3500 Updates
The Franchise Tax Board introduced the following changes also in effect as of January 1, 2021:

  • The Form 3500 Exemption Application will no longer require filing fees. The Franchise Tax Board will also be releasing a revised version of Form 3500 this year, with the 2020 version still available through online request.

  • The Form 199Exempt Organization Annual Information Return will also no longer require filing fees.

Secretary of State - 2021 Expedited Services and Electronic Filing Updates
As a result of the ongoing pandemic, the California Secretary of State has both suspended and expanded various services offered through the agency:

  • Expedited and preclearance service requests are suspended until further notice. Stay up to date with their latest customer alerts available here.

  • For more accessible filing, the agency has expanded their online services; in fact, the Secretary of State has prioritized online submission over non-electronic filings, including the filing of Articles of Incorporation. Organizations should continue using wet signatures for all documents submitted to the agency, including documents that are e-filed.

2021 Second-Round California COVID Relief
With small businesses still combatting losses associated COVID-19, California has provided them with the opportunity to regain financial strength:

  • Though its first round of applications have closed, the California Small Business COVID-19 Relief Grant Program will begin accepting applications for its second round from February 2-February 8. The grant program, administered by Lendistry, will provide eligible applicants with grants from $5,000 to $25,000 in an attempt to strengthen small businesses and nonprofits impacted by the pandemic.

New York

Department of State - 2021 Forms & Filings Updates
For our east coast clients, the following changes occurred at the top of the year in New York State:

  • The CHAR 500, the annual filing form for charitable organizations, submitted with the New York Charities Bureau, is now also to be submitted to the New York Department of State. Submission instructions have yet to be released by the Department of State, but charities should continue submitting their documents online with the Charities Bureau.

  • Organizations who are registered as 501(c)(3) are now required to provide additional donation disclosure information. This change is specific to 501(c)(3) organizations that make in-kind donations reaching or exceeding $10,000 to 501(c)(4) organizations, whose lobbying efforts exceed $15,000 in a calendar year.

Federal

Internal Revenue Service - 2021 Electronic Filing Updates
New this year from the federal level, the Internal Revenue Service released the revised form:

  • Form 1024-A, the application for Section 501(c)(4) tax-exempt status, may now be submitted online. Though mail-in submissions are still being accepted, the form will be transitioning to online submission only come April 5, 2021. Additional year-round updates on federal tax-exempt organizations are available on the IRS website.

COVID Relief - 2021 Paycheck Protection
Program 2.0

Relief has been reintroduced for small businesses nationwide with the second federal protection program:

  • Applications for the Paycheck Protection Program (PPP) 2.0 are now open. Funded through the Economic Aid Act, the $248 billion package has expanded eligibility to include additional small businesses, such as nonprofit housing cooperatives.

  • Program priority will be given to organizations who did not receive either the 2020 PPP loan or whose initial PPP was not forgiven. Applicants applying for a Second Draw PPP are eligible only if they (i) have utilized the full amount of their First Draw PPP; (ii) have no more than 300 employees; and (iii) prove at least a 25% reduction in gross receipts from 2019 and 2020.

  • Each loan will be calculated through a methodology developed by the Small Business Administration and Department of the Treasury. For first Draw applicants, the maximum loan amount is capped at $10 million, and at $2 million for Second Draw applicants.

  • Organizations interested in the program need to apply before the March 31, 2021 deadline.

2021 Tax Credit Updates

New Market Tax Credit (NMTC) - Extension
The New Market Tax Credit (NMTC) program, aimed at community and economic development, has been extended as follows:

  • The NMTC program received a five-year extension. Ending in 2025 and totaling $25 billion, the program this round will provide $5 billion annually to support the growth and expansion of housing, social services and healthcare facilities in low-income neighborhoods throughout the United States.

Low-Income Housing Tax Credit (LIHTC) – California State Budget
Action towards assisting unhoused and low-income communities will continue in California under the LIHTC program as follows:

  • In his proposed state budget for the 2021-2022 fiscal year, Governor Gavin Newsom included allocating an additional $500 million to Low-Income Housing Tax Credit (LIHTC).

  • The proposed budget also includes an additional $1.75 billion to continue supporting the state’s unhoused neighbors and to establish short-term mental health centers amidst the pandemic.

Comment