October 17, 2013
Throughout the country, nonprofits have seen increased fees and reductions in tax credits as governmental bodies struggle to balance budgets following the recession. Nonprofits in Chicago, Illinois and the nearby suburb of Downer's Grove are seeing fees related to water usage for the first time.
Downer's Grove instituted a utility fee to pay for stormwater in place of property taxes, so tax exempt nonprofits are feeling the burden of a new bill. While the village is floating plans to reduce the rate for local nonprofits, they will still be required to pay the fee. In Chicago, nonprofits are dealing with the loss of an exemption from water payments that some organizations claim will affect the services they offer. The city and nonprofits are still discussing a resolution, including a graduated fee based on a nonprofit's net assets.
As nonprofits deal with the loss of tax exemptions or immunity to other fees they find themselves coping with new expenses. For some nonprofits, these fees are coming at a time when funding and revenue have already suffered.
Nonprofits have options to UI tax
While nonprofits and governmental bodies continue to iron out future fees and tax exemptions, nonprofits do have an alternative when it comes to avoiding UI tax. Nonprofits and governmental organizations can opt out of state UI tax and its pooled trust funds under tax law that allows such entities to reimburse the state only for the amount specifically paid to former employees. Private employers pay a set rate each year which is often much greater than the actual amount of reimbursements.
Just as some local governments have started to levy new fees on nonprofits, states have been forced to raise UI tax contributions on employers to pay back federal debt incurred during the recession. Some states borrowed from the federal government to pay UI claims, which spiked during the recession, and did not pay the loan back within the two-year time limit. In states with UI debt to the fed that is over two years old, federal mandates will raise the employer contribution to state UI tax pools every year until the debt is paid back.
For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Companies at FNCUI@firstnonprofit.com or visit www.firstnonprofitcompanies.com.
Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.
My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!
First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!
My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!
I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years
ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!
I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!