Debunking the myths surrounding eligibility for disaster relief tax credits.
In December of 2019, IRC §38 was modified when H.R. 1865 (116), the Further Consolidated Appropriations Act of 2020 was signed into law (Public Law No: 116-94). This provided tax relief based on wages paid to employees whose principal place of employment at the time of the storm(s) was in a specified disaster zone. Employers located within disaster zones are eligible to receive up to $2,400 in tax credits per retained employee.
The law mentions that it covers the time that your business is “inoperable.” Many businesses don’t have a complete understanding of what renders the business inoperable, leading many to think they don’t qualify for this disaster relief tax credit. There are many special nuances that allow businesses to obtain the credit. Here we debunk some of the myths surrounding eligibility for the Employee Retention Credit (ERC):
1. Our business didn’t close, so we do not qualify for the ERC.
Your business could have remained opened during and after the impact period and your business can still qualify for the ERC. Synergi Partners takes into account the totality of how your business was disrupted by the natural disaster including financial and operational impacts. For
example, if your supply chain was disrupted or if you experienced revenue loss, your company can still potentially qualify for the credit.
2. We had no physical damage, so we are not eligible for the credit.
Even if your business didn’t receive any physical damage, you can still qualify for the ERC. Based on the special circumstances to your
business, Synergi Partners evaluates the disruption from the natural disasters. For example, if your employees were unable to get to work because of road outages or school closures, your business qualifies.
3. We didn’t make an insurance claim so our business doesn’t qualify.
Every business located in a disaster area is eligible to receive a tax credit of up to $2,400 for every employee retained after the disaster. The
ERC is NOT related to FEMA, SBA loans, property insurance claims, or business interruption funds. The ERC is a Federal disaster relief program that is a direct dollar-for-dollar reduction in business tax liability.
4. Our business saw an increase in revenue during/after the incident period, so we are not eligible.
Many industries saw an increase in revenue during/after the incident period, and they STILL qualify for the ERC. Synergi Partners will take
the burden off of your company and gather and analyze the data to deliver maximum credits to your business.
For more information on how your business can take advantage of the disaster relief Employee Retention Credit, please reach out to Synergi Partners at 843-519-0808 or firstname.lastname@example.org. We have the experience, innovation and leadership unrivaled in the area of tax credits, and will maximize your credits because our only focus is helping you obtain maximum results.