Disaster Zone Incentives & Hurricane Tax Relief Credit
Help when disaster hits.
"TCC does not miss a beat. They found a huge missed opportunity, twice!" - VP, Tax, F500 Manufacturing
Knowing your Options
The tax credits for businesses affected by hurricanes and wildfires and other disasters can be material, depending on a number of quantitative and qualitative factors.
Beyond the Legislation
H.R. 1865, the “Further Consolidated Appropriations Act, 2020” signed by the President on December 20, 2019 established parameters for claiming tax credits as part of disaster relief for federally designated disasters that occurred in 2018 and 2019. The tax credit is similar to the 2017 legislation for Hurricanes Harvey, Irma, Maria, and California wildfires. Businesses located in areas designated by FEMA for a certain level of relief whose operations were impacted by the disaster, and who continued to pay their employees during a period of inoperability are eligible to receive a retention credit for a portion of those wages. The definition of inoperability and instructions on how to measure the physical and economic impact of the disasters are not defined by the statute. TCC, utilizing our experience with previous disaster relief legislation, can assist impacted companies to capture this incentive.
Our first step with clients is to collaborate on choosing the appropriate metric for measuring operability. We look at operation levels heading into, during and coming out of the disaster as compared to when significant operations resumed. The key is to identify a metric that's measurable and supportable with data.
Possible metrics for measuring operability include (compared to pre-disaster levels):
• Sales volume
• Production output
• Total workforce hours or number of who worked
• Physical damage to building
• Inventory levels
When pulling in payroll to generate this credit, TCC always prioritizes flexibility. Our technology was built with agility in mind, because it’s just not always practical for a client to provide data according to our ideal specifications. In finding a way to yes, we identify alternatives that avoid burdening our client.
On the heels of a natural disaster, there are more questions than answers. TCC delivers the clarity companies are looking for. Our guidance is informed by our active role in the state and federal legislative efforts relating to tax incentives and by our 20+ years of experience.