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Analysis

Employers located in a qualified disaster zone may be eligible for federal disaster relief tax credits, up to $2,400 per eligible employee

Multistate Tax alert | February 6, 2020

This tax alert summarizes the Further Consolidated Appropriations Act, 2020 which includes a 2018 and 2019 Employee Retention Credit for employers affected by qualified disasters.

Overview

On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020 which includes a 2018 and 2019 Employee Retention Credit for employers affected by qualified disasters. The Credit may be worth up to $2,400 per eligible employee for qualified wages paid or incurred by an eligible employer.Qualified wages include wages paid or incurred during the time the employer’s trade or business located in a Qualified Disaster Zone was inoperable due to a disaster (up to 150 days after the disaster).

Inoperability

A location may be inoperable for more than a physical closure. Some examples of inoperability may include:

  • Reduced sales or customer visits
  • Increased employee absence
  • Reduced production or employee attendance
  • Supply chain delays

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Qualified disaster zone areas

The credit is applicable for employers impacted by qualified disasters, as designed. In 2018 and 2019, portions of multiple states were impacted by natural disasters, such as wildfires, floods, and hurricanes. These states include Georgia, Florida, South Carolina, North Carolina, California, and Texas.

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Analysis opportunity

Deloitte can perform an analysis on your business to identify locations and time periods for potential credits. After the analysis, Deloitte can advise on the potential applicability for a credit including studying the inoperability periods for each eligible location, calculating the available credits for each employee, and compiling any necessary documentation.

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Contacts:

Linda Bonelli, partner—Multistate, Deloitte Tax LLP, +1 312 486 2716

Raaj Kumar, partner—Multistate, Deloitte Tax LLP, +1 415 783 4681

Carl Obradovich, partner—Multistate, Deloitte Tax LLP, +1 404 631 3540

Carl Nerlich, managing director—Multistate, Deloitte Tax LLP, +1 212 436 4342

Brandon Pyers, senior manager—Multistate, Deloitte Tax LLP, +1 617 851 0639

Christine Brynaert, senior manager—Multistate, Deloitte Tax LLP, +1 312 486 1536

Michael Parsons, senior manager—Multistate, Deloitte Tax LLP, +1 213 593 4483

Mike Pangborn, manager—Multistate, Deloitte Tax LLP, +1 612 741 7686

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The Multistate Tax alert archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate developments relevant to taxpayers, tax professionals, and other interested persons.

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