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Update: Hurricane Tax Relief

October 7, 2017

Update: Hurricane Tax Relief

In the wake of the recent Hurricanes hitting the U.S., the Federal Government is aiming to help the businesses that were impacted by this devastation. Our tax credit partner, HIREtech, has kept us up to the minute on this emergency legislation and how we will continue to look out for your business and clients throughout this difficult time. Signed into law on Monday, October 2, 2017, is a tax reform package that applies “disaster-related employment relief” to victims of Hurricane Harvey, Hurricane Irma, and Hurricane Maria. Per the law, employers will be eligible to receive a tax credit of 40 percent of each employee’s wages (up to $6,000) who maintained employment during the time periods referenced.

The dates and definitions for eligibility are defined as follows:

  • Hurricane Harvey:

The term ‘‘eligible employer’’ means any employer—

(i) which conducted an active trade or business on August 23, 2017, in the Hurricane Harvey disaster zone, and

(ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after August 23, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Harvey.

The term ‘‘eligible employee’’ means with respect to an eligible employer an employee whose principal place of employment on August 23, 2017, with such eligible employer was in the Hurricane Harvey disaster zone.

  • Hurricane Irma:

The term ‘‘eligible employer’’ means any employer—

(i) which conducted an active trade or business on September 4, 2017, in the Hurricane Irma disaster zone, and

(ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after September 4, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Irma.

The term ‘‘eligible employee’’ means with respect to an eligible employer an employee whose principal place of employment on September 4, 2017, with such eligible employer was in the Hurricane Irma disaster zone.

  • Hurricane Maria:

The term ‘‘eligible employer’’ means any employer—

(i) which conducted an active trade or business on September 16, 2017, in the Hurricane Maria disaster zone, and

(ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after September 16, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Maria.

The term ‘‘eligible employee’’ means with respect to an eligible employer an employee whose principal place of employment on September 16, 2017, with such eligible employer was in the Hurricane Maria disaster zone. The retention credit is not a part of the Internal Revenue Code but instead will be enacted as a temporary tax provision. Although these provisions are not part of the WOTC program, there are many similarities between the two incentives. The goal of both credits 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. For those that have lost their homes, cars, and even loved ones, maintaining income is of the utmost importance in such times of hardship.

For more information about tax credits or the WOTC program please don’t hesitate to contact Tim Hester from the PaySphere team at tim.hester@payspherepayroll.com.

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