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Tax Blog

Retention Relief for Employers Affected by the 2017 Hurricane Season

Attention employers/victims of Hurricanes Harvey, Irma, and Maria, on September 29, 2017, President Trump signed into law the Disaster Tax Relief and Airport and Airway Extension Act of 2017. This act is designed to deliver targeted tax relief for qualified businesses with locations within designated disaster zones. The law also includes an employee retention tax credit for employers.

This allows employers to seek a retention tax credit for continuing to pay employees during the timeframe that the business was impacted by the natural disaster(s). This portion of the law states that employers can seek a 40% tax credit for wages paid to employees (up to a maximum wage base of $6,000) during the period the business location became inoperable due to the hurricane(s); up until the date the location resumed operations, or until January 1, 2018, whichever point occurs first. This credit cannot be taken on the same wages used to calculate the WOTC program for an eligible employee for the same period.

The coverage areas are the designated disaster zones for Hurricane Harvey, Hurricane Irma, and Hurricane Maria. Currently this includes: Hurricane Harvey: Counties in TX (39); Hurricane Irma: Counties in FL (48), Counties in GA (7), County-equivalents in US Virgin Islands (2); and Hurricane Maria: All of Puerto Rico: 78 municipalities.

The retention credit is not a part of the Internal Revenue Code but instead will be enacted as a temporary tax provision. The goal of the credit is to incentivize employers to retain individuals facing difficulties maintaining employment and/or faced with significant barriers to employment. These hurricanes have left numerous people unemployed, but furthermore, have left them with uncertainty about when and if they can resume work. Feel free to contact the professionals at the Center for assistance in understanding the temporary tax provision and gaining the maximum benefit allowed for retaining employees in your affected business.

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