Employee Retention Credits under the Disaster Tax Relief and Airport and Airway Extension Act of 2017

On September 29, 2017, the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (the “Act”) was signed into law, providing certain temporary tax relief for the victims of Hurricanes Harvey, Irma and Maria. Such relief included a provision on special employment-related tax credits.

Under the employee retention credits provisions of the Act, employers with businesses in a federally declared disaster zone may be eligible to receive a credit equal to 40% of wages paid to employees (limited to $6,000 of wages per employee) in such disaster zones during the time the business was inoperable due to the storm. These wages must have been paid within the eligible period, which runs from August 23, 2017, for Hurricane Harvey; September 4, 2017, for Hurricane Irma,; and September 16, 2017, for Hurricane Maria, through the earlier of the date on which the business resumed significant operations, or January 1, 2018. For purposes of this credit, it is of no consequence whether the employee performed any services during this time in connection with such wages, as long as the employee’s principal place of employment on the applicable dates listed above was located in a disaster zone.

In light of the aforementioned, it is important to note that wages of an employee included in a calculation for a credit under the Work Opportunity Tax Credit program may not be taken into account again in the same period for purposes of the employee retention credit.

Please contact your Marcum tax advisor for additional guidance regarding the employee retention credits under the Disaster Tax Relief and Airport and Airway Extension Act of 2017.