Could You Qualify for Disaster Relief Tax Credits?
By Jason Fry
Note: These disaster credits do not cover businesses that are impacted by Coronavirus. Join our webinar to hear experts discuss the most recent legislation and issues related to Form I-9 and unemployment. It's unfortunate when any business suffers from a disaster, but at the very least there are tax credits to help offset the negative impact. If a natural disaster negatively affected your business in 2018 or 2019, then you may qualify for disaster relief tax credits. President Trump signed the 2019 Taxpayer Certainty and Disaster Relief Act into law on December 20, 2019. This act temporarily renews approximately two dozen credits, including disaster credits.
Qualifying businesses could receive up to $2,400 per eligible employee for wages paid or incurred during the time the employer’s business was located in a qualifying disaster zone.
Qualifying for Disaster Relief Tax Credits
There are two important considerations when determining if you could qualify for a disaster relief tax credit: business location and inoperable status.
1. Were you located in one of the qualifying disaster zones?
As of March 4, 2020, the 2019 Taxpayer Certainty and Disaster Relief Act recognized nineteen states with disaster zones.
2. Was your business inoperable (even for one day) due to a natural disaster in 2018 or 2019?
Disaster relief credits cover the period a business location became inoperable due to qualifying disasters up until the date the location resumed operations, or until January 1, 2020, whichever comes first. A business is considered inoperable for a number of reasons beyond business closure:
Employee absence increase
Fewer customers visiting physical location
Supply chain delays and interruptions
Physical business closures
Capture Your Disaster Relief Tax Credits
We can help you make the most of your potential tax credit opportunity. Depending on your current services, Equifax may already have much of the data needed to help you manage your disaster credits, including:
Fast data transfer methods are available for additional data requirements, if applicable
We simply need answers to a few questions to start preparing your detailed credit analysis and compliance report.
How long did the disaster impact your operations?
How long do you expect operations will be impacted for those locations that are still inoperable?
Finally, did you pay your employees during that time frame?