President Trump signed into law the Disaster Tax Relief and Airport and Airway Extension Act of 2017 to deliver targeted tax relief to victims of Hurricanes Harvey, Irma, and Maria.
The law includes an employee retention tax credit for employers.
Qualifying businesses with locations in declared disaster counties can seek a tax credit for continuing to pay their employees during the timeframe that the business was impacted by the disaster. Employers can seek a 40% credit for wages paid to employees (up to a maximum wage base of $6,000) for a tax credit of up to $2,400 per employee during the period when a business location became inoperable or was significantly impacted due to the hurricane(s) up until the date the location resumed full operations, or until January 1, 2018, whichever comes first.
The Act does not define the terms “inoperable” or “resumed significant operations,” which is consistent with language from previous storm relief measures. An employer therefore has some flexibility in determining how to define “inoperable” or “resumed significant operations” for its business, based on its own business metrics and how it was uniquely impacted by each storm.
In addition to closures, business disruptions also qualify as inoperability factors with regards to the Employee Retention Credit. Consider the following scenarios by location/facility:
Have you experienced a decline in business revenue? Have you experienced not being fully staffed due to employee impacts? Have you experienced safety or cleanup efforts including things like mold mitigation that impacted your business flow? Have you experienced electrical or internet or phone call loss or interruptions? Consider all circumstances outside of business-as-usual…
MARS STOUT is assisting businesses throughout this process to pinpoint by location, conditions that would meet qualifying inoperability criteria.