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Hurricane IRMA - Employee Retention Credit

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     Congress passed legislation that provides a federal income tax credit to certain employers who continued to pay their employees during periods of time when their places of business are inoperable because of Hurricane Irma. Below describes the credit, which is available to employers of all sizes as a general business credit that can be carried back one year and forward 20 years.

     The credit is equal to up to 40 percent of wages paid by the employer to eligible employees (capped at $6,000 per employee) during the dates the employer’s place of business was inoperable due to the Hurricane:

 

Starting :               September 4th, 2017 and

Ending:                 The date the business resumes “significant operations,” or January 1, 2018

 

     Qualified wages include wages paid without regard to whether the employee performs any services, performs services at a different location from his or her principal place of employment, or performs services at the principal place of employment before significant operations have resumed. 

     For example, suppose an employer had to close a business location within an eligible disaster zone for 30 business days and paid its 5 employees assigned to that location for each working day that the office was closed. If the total wages paid to eligible employees for that period was $20,000, then the employer can claim 40 percent of wages paid, or $8,000, as a tax credit on its 2017 federal income tax return. 

 

SUMMARY:

It is our position that just about every business in Southwest Florida had to cease operations.  It is all based on fact and circumstances, but we have found that most businesses had to cease operations starting September 4th, 2017 (that is the earliest the IRS will allow) to prep for the hurricane, and operations did not significantly resume for at least a month.  Therefore, we are encouraging all employers to fill out our Employee Rentention Credit PDF and take the credit.

                Note: this is a Business Credit not a deduction, which reduces your tax liability dollar for dollar

(subjected to some restrictions but can be used for the next 20 years).

 

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