The Disaster Tax Relief and Airport and Airway Extension Act of 2017 was signed into law on September 29th, 2017 and was enacted to provide numerous relief measures to aid individuals and businesses affected by Hurricanes Harvey, Irma, and Maria. Included in this legislation was the Hurricane Disaster Zone (HDZ) Employee Retention Credit, which provides affected employers with an income tax credit for wages paid to employees during the time these hurricanes affected the employers business operations. Eligible employers may receive a tax credit up to $2,400 per employee.
In order for a business to qualify for this tax, they must be located, at present, within specified counties within Texas (48 counties), Florida (48), Puerto Rico, and the US Virgin Islands (see listing of specific counties attached here) and had continued to pay their employees during business disruption caused by the disasters, even if those affected employees worked at a different business location as a result of the disruption.
Employers are entitled to a 40% tax credit for qualifying wages paid to employees, up to a maximum of $6,000 wage base, for the time their business location became inoperable due to the disasters. The wage time frame begins at the time the business was interrupted and continues through the time the business resumed significant operations or until January 2018, whichever comes first.
Similar to the eligibility of businesses, eligible employees are those whose major place of work was within a designated disaster zone during the appropriate date and time. Please be aware that an employee is not treated as eligible for the HDZ credit if an employer claims a WOTC credit for wages paid to that individual during the same time period; the credits are calculated on separate sets of wages. Qualified wages include wages paid, services performed by the employee, services performed by the employee at a different place of employee other than their primary place of employment, and services performed at their primary place of employment before major operations resume.
Proliant is ready to assist clients on our Tax Credit service with retaining this credit as well as answer any applicable questions and will keep you informed of further details as they are released from the IRS. Please stay tuned for more HDZ credit information from Proliant as further information is released from the IRS in the coming months.