2017 Natural Disasters: Does Your Company Qualify for Tax Relief?

Tomas Nally, Managing Director

tnally@alvarezandmarsal.com

Joshua Henke, Senior Director

jhenke@alvarezandmarsal.com

May 3, 2018 / North America

The Disaster Tax Relief and Airport and Airway Extension Act of 2017 established an Employee Retention Credit for businesses in areas affected by Hurricanes Harvey, Irma and Maria. The Employee Retention Credit was later expanded to cover areas affected by the California wildfires by the Bipartisan Budget Act of 2018.

WHAT DO YOU NEED TO KNOW?

The Benefit:
The Employment Retention Credit provides a general business credit of 40% of the wages paid to eligible employees (not to exceed $6,000 per employee) from an effective date through the earlier of:

  • A. The date the business returned to “significant operations;” OR
  • B. January 1, 2018

As a general business credit, the Employee Retention Credit can be applied against 2017 federal income taxes or carried back one year / carried forward 20 years.

HOW WILL IT AFFECT YOU?

You and your business will qualify for this Employee Retention Credit if…

You are an “Eligible Employer” who:

  • • Actively conducted trade or business in a disaster zone as of relevant effective date; AND
  • • Was “inoperable” any day after the effective date and before January 1, 2018
    • • This means it’s not limited to sustaining damage to facilities

It is located in the following affected areas:

Texas
Effective Date: August 23, 2017
Counties: Arkansas, Austin, Bastrop, Bee, Brazoria, Caldwell, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, and Wharton.

Florida
Effective Date: September 4, 2017
Counties: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Union, and Volusia.

Georgia
Effective Date: September 4, 2017
Counties: Camden, Charlton, Chatham, Coffee, Glynn, Liberty, and McIntosh.

Puerto Rico (All Municipalities)
Effective Date: September 16, 2017
Counties: Canóvanas, Cataño, Culebra, Dorado, Fajardo, Loíza, Luquillo, Toa Baja, Vega Baja, and Vieques (Hurricane Irma).

United States Virgin Islands (UVSI)
Effective Dates: September 4, 2017 & September 16, 2017
St. Croix, St. John & St. Thomas

CALIFORNIA
Effective Date: After October 8, 2017 and before November 1, 2017
Counties: Butte, Lake, Mendocino, Napa, Nevada, Orange, Sonoma, and Yuba.
Effective Date: After December 4, 2017
Counties: Los Angeles, San Diego, Santa Barbara, and Ventura.

Texas
Effective Date: August 23, 2017
Counties: Arkansas, Austin, Bastrop, Bee, Brazoria, Caldwell, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, and Wharton.

Florida
Effective Date: September 4, 2017
Counties: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Union, and Volusia.

Georgia
Effective Date: September 4, 2017
Counties: Camden, Charlton, Chatham, Coffee, Glynn, Liberty, and McIntosh.

Puerto Rico (All Municipalities)
Effective Date: September 16, 2017
Counties: Canóvanas, Cataño, Culebra, Dorado, Fajardo, Loíza, Luquillo, Toa Baja, Vega Baja, and Vieques (Hurricane Irma).

United States Virgin Islands (UVSI)
Effective Dates: September 4, 2017 & September 16, 2017
St. Croix, St. John & St. Thomas

CALIFORNIA
Effective Date: After October 8, 2017 and before November 1, 2017
Counties: Butte, Lake, Mendocino, Napa, Nevada, Orange, Sonoma, and Yuba.
Effective Date: After December 4, 2017
Counties: Los Angeles, San Diego, Santa Barbara, and Ventura.

If you are otherwise:

  • • An employee whose principal place of employment on the effective date was in the disaster zone
  • • Have wages paid beginning on the effective date or the date the business location first became inoperable ending on the date in which the business location resumed operations or December 31, 2017.

WHAT CAN A&M TAXAND DO FOR YOU?

A&M Taxand is a team of experienced tax credits and incentives professionals who can assist clients with employee retention credits.

We will advise and help closely examine the following for taxpayers if they qualify and can pursue 2017 Employee Retention Credits:

  • • Whether business locations are in designated disaster zones
  • • Period in which business locations were inoperable
  • • Wages paid to eligible employees during inoperable period
  • • Proper amount of employee retention credit and how its utilized

Under the current state of tax reform, we advise our clients to be proactive and take necessary precaution. It’s best for any company to optimize the most viable and/or beneficial tax planning opportunities moving forward.

To learn more about our services, visit: https://www.alvarezandmarsal.com/expertise/tax


North America