Disasters create disruptions and havoc to people and to businesses , as was the case with Hurricane Harvey, Irma and Maria. In line with this, last September 29, 2017 marked the decision of President Donald Trump to approve the Disaster Tax Relief and Airport and Airway Extension Act of 2017. This law provides tax relief for employees affected by Hurricane Harvey, Irma and Maria. Furthermore, an employee retention tax credit for employers is also included.
According to the Disaster Tax Relief and Airport and Airway Extension Act of 2017 *1, employers are allowed an employee retention tax credit for employers affected by the hurricanes. “The credit is equal to 40% of the qualified wages (up to $6,000 per employee) paid to an employee whose principal place of employment on specified dates was in a hurricane disaster zone.” This calculates to a tax credit of up to $2,400.00 per eligible employee.
Section 503 (A) *2 describes and “Eligible Employer” as one that was conducting active trade or business on August 23, 2017 (Hurricane Harvey), September 4, 2017 (Hurricane Irma), and September 16, 2017 (Hurricane Maria), within the respective disaster zone for the hurricane they were affected by. The Eligible Employer must have been inoperable on any day after the dates stated above and before January 1, 2018 as a result of damage sustained from the hurricane.
Section 503 (B) *2 uses the same dates above for each of the three hurricanes to describe and “Eligible Employee.” The employer must have been the principle place of employment on the respective date.
Section 503 (C) *2 defines “Qualified Wages” as wages “as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such code” that were paid or incurred by the eligible employer to the eligible employee on any day after the dates described above and before January 1, 2018. This refers to the date the employer first became inoperable at the principal place of employment to the date that the employer resumed significant operations at the same principal location.
Please consult your accounting professional to get more information and to find out if you qualify for the employee retention tax credit described above.
*1 Disaster Tax Relief and Airport and Airway Extension Act of 2017, Pub. L. No. 115-63, H.R. 3823 (Summary)
*2 Disaster Tax Relief and Airport and Airway Extension Act of 2017, Pub. L. No. 115-63, H.R. 3823 (Text)