The Hurricane Florence Tax Relief Act was recently proposed via House Bill 6854. If passed, this Bill would create a tax credit for businesses located in the Hurricane Florence Disaster Zone that experienced inoperability as a result of the storm. The potential credit would be 40% of up to $6,000 in wages paid to employees during periods of inoperability, and until the business is able to resume significant operations, between September 13, 2018 and January 1, 2019.
The requirements for the new credit are nearly identical to the hurricane credits created by the Disaster Tax Relief and Airport and Airway Extension Act of 2017 and the Retention Credit for Employers in California Wildfire Disaster Zones created by the Bipartisan Budget Act of 2018. Additionally, as with those credits, this Bill would incorporate the rules of IRC Section 280C(a) such that employers who would receive the credit must reduce their deduction for salaries and wages by the amount of the credit.
As with previous disaster related tax credits, employee wages eligible for the Hurricane Florence Tax Relief Act credit would not be eligible the Work Opportunity Tax Credit. Therefore, it is important to work with First Advantage or your tax advisor or legal counsel, to ensure that all eligible wages are allocated in the most lucrative way.
As this Bill progresses through the Congress, we will continue to monitor its advancement and keep you informed of all major milestones. We will be working to assess whether this new credit may be available to your business, and your First Advantage Tax Account Manager would be happy to answer any questions you may have on this Bill or any other incentive programs.