Arts Advocacy Update
The U.S. Small Business Administration (SBA) is nearing the end of its disbursement of grants under the $16 billion Shuttered Venue Operators Grant (SVOG) Program. The SBA has disbursed $13.4 billion in grants as of November 29 according to the latest program progress report.
The SBA has been sending out notices of invitation to eligible initial award grantees on a rolling basis under its reconsideration 2.0 process. Eligible grantees who receive such a notice of invitation will have an opportunity to update their 2021 financials and/or correct errors in the initial submission of their financials to receive their initially requested initial grant awards and to also determine their eligibility for a supplemental phase grant award with the federal agency.
Please note that eligibility for a supplemental phase grant award is based on suffering a 70% or greater earned revenue loss of any quarter in 2021 compared to the similar quarter in 2019. Initial award grantees who still have a “supplemental under review” status should complete and submit their pending action items under the reconsideration 2.0 process as soon as possible to update their 2021 financials to confirm eligibility for a supplemental phase grant award and/or receive their initially requested initial grant award amount.
The SBA also released the latest public data concerning the program and its grantees as of November 29. The SBA will begin implementing the grant award closeout process in mid-December and is planning to host technical assistance webinars in the coming weeks to further assist grantees with their final financial reporting and the closeout of their grants. Further questions can be directed to Tony Shivers, OPERA America's director of governmentaffairs, at TShivers@operaamerica.org.
U.S. Senate Committee Approve Chair Nominees for National Endowment for the Arts and National Endowment for the Humanities
The U.S. Senate Health, Education, Labor, Pensions (HELP) Committee held a markup on December 2 to consider the nominations of Dr. Maria Rosario Jackson as chair of the National Endowment for the Arts and Shelley Lowe as chair of the National Endowment for the Humanities. Both nominees have been approved by the committee via unanimous voice vote and will be scheduled for a full vote of approval on the U.S. Senate floor. It is anticipated that the vote will be scheduled by the end of the year. OPERA America does not anticipate any issues with the nominees’ confirmations and looks forward to working with both chairs on various issues of interest, particularly equitable opportunity and access issues, once approved by the U.S. Senate
Congress passed legislation on December 3 — Further Extending Government Funding Act (P.L.117-70) — to temporarily fund the federal government at FY2021-enacted funding levels until February 18, 2022. If Congress had failed to act by December 3, the federal government (including all federal arts and cultural-related agencies) would have had to shut down.
The National Endowment for the Arts (NEA) and National Endowment for the Humanities (NEH) are currently receiving their FY2021-enacted funding levels of $167.5 million each. In July, the U.S. House passed H.R. 4502, providing a proposed $201 million each for the NEA and the NEH. The U.S. Senate has released legislation to provide a proposed $185.2 million each for the NEA and NEH. OPERA America is engaging Congress and working with its partners across the arts and cultural sector to pass funding legislation that provides $201 million each to the NEA and NEH.
OPERA America encourages its members and interested stakeholders to lean in with their voices to urge their federal elected officials to pass legislation that provides $201 million to both federal agencies. Please utilize this OPERA America action alert to quickly and effectively urge your federal elected officials to pass the $201 million for the National Endowment for the Arts.
Congress passed and the President signed the $1.75 trillion Infrastructure Investment and Jobs Act (P.L.117-58) on November 15, a “traditional” infrastructure package that invests in the nation’s roads, bridges, ports, rails, broadband network, and utilities. One of the pay-fors for this infrastructure investment package is the elimination of the Employee Retention Tax Credit (ERTC) for the fourth quarter of 2021.
OPERA America has been aggressively engaging Congress and working with its partners across the arts and cultural sector, business community, and the nonprofit sector to reinstate the ERTC for Q4-2021 and to extend the ERTC into 2022. Here is one of the support letters from national stakeholders that OPERA America signed onto that was sent to congressional leadership earlier this fall.
The Internal Revenue Service (IRS) released guidance on December 6 (Notice 2021-65) concerning the revocation of the ERTC for the fourth quarter for recipients — both employers who received advance payments and employers who reduced employee tax deposits. Please note that employers who received advance payments will have to pay the credit back by the due date of their applicable tax returns. Further details are below concerning the recently released guidance.
- Advance payments received under the ERTC for the fourth quarter (Q4) must be repaid by the typical due date for the employer for applicable employment tax return that includes Q4. (Due dates vary by employer size.) Failure to repay the advance on time may result in failure to pay penalties.
- Reduced payroll tax deposits made by the employer in anticipation of ERTC must be repaid. The IRS will waive failure to deposit penalties for amounts due on or before December 20, 2021, if (1) the employer reduced payroll tax deposits in anticipation of the ERTC, (2) the employer deposits the amounts owed by December 31, 2021, and (3) the employer reports the tax liability resulting from the termination of the ERTC on the applicable employment tax return or schedule that includes the period from October 1 through December 31, 2021.
The Notice provides that no waiver of penalties is available for payments due after December 20, 2021. The IRS may consider reasonable cause relief for an employer that does not qualify for relief under this Notice 2021-65.
There is a bipartisan bill to be introduced shortly in the U.S. House of Representatives called the Employee Retention Tax Credit Reinstatement Act, which would restore the final quarter of ERTC. A summary of the bill is available here. Once the bill is introduced, OPERA America will alert its members and interested stakeholders to urge passage with their federal elected officials. Additional advocacy efforts are focused on engaging leadership on the congressional tax policy committees to look at ways to prevent penalties for entities that pursued advanced credits for Q4-2021 before the bipartisan infrastructure bill went into effect on November 15. There are also current efforts in engaging the U.S. Department of Treasury to provide relief to taxpayers who took advantage of the ETRC after October 1, but before passage of the legislation in mid-November.
OPERA America is also an active member of the National Council of Nonprofits (NCN). The organization recently released the following statement:
National Council of Nonprofits Statement: “This guidance may be as good as the IRS thought it could provide under the law, but it is not good enough. Not for the thousands of employers that were hiring workers in reliance on this important tax incentive, and certainly not for the tens of thousands of workers who may lose their jobs because of the repeal of the employment tax credit. Notice 2021-65 provides very narrow accounting relief for charitable nonprofit employers suffering major staffing challenges because they cannot raise prices or reimbursement rates needed to increase salaries. The ERTC was a lifeline for nonprofit employers and employees; it must be restored and extended.”
OPERA America has been working with its partners across the arts and cultural sector and nonprofit sector to extend and expand the universal non-itemized deduction for charitable cash contributions. Currently, the non-itemized charitable deduction is $300 for individual filers and $600 for joint filers. Legislation has been introduced in the U.S. House and U.S. Senate to make the universal charitable deduction permanent, including the Charitable Giving Tax Deduction Act (H.R.1081) and the Universal Giving Pandemic Response and Recovery Act (S. 618, H.R. 1704). OPERA America recently signed a nonprofit sector-wide support letter to be sent to Congress to extend and expand the deduction into 2022. The Charitable Giving Coalition is soliciting additional organizations to support the letter. The deadline is December 3.