Tax Extenders Have Been Renewed and New Disaster Relief Available
(Florence, SC – January 6, 2021) – On Sunday, December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (H.R.116). The Act includes a tax credit package that provides a one-year extension through 2021 to the Indian Employment Credit (IEC), and a five-year extension through 2025 to the Work Opportunity Tax Credit (WOTC) and Federal Empowerment Zones (Fed EZ). The amendment applies to individuals who begin work for employers after December 31, 2020.
- Work Opportunity Tax Credit (WOTC): A Federal tax credit, ranging from $1,200 – $9,600, that is available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.
- Empowerment Zones (Fed EZ): An incentive to businesses located in an empowerment zone (EZ) to hire and retain employees who also live in the EZ. Businesses are eligible for a wage credit of up to $3,000 per eligible employee.
- Indian Employment Credit (IEC): A Federal tax credit for employers who hire registered Native Americans, referred to as “Native American Indians” or “American Indians” in Internal Revenue Service (IRS) documentation, and spouses of registered Native Americans, who live on or near a Native American reservation and work for an employer on that reservation.
In addition to extending these tax credit programs, the package extends disaster relief to businesses impacted by the Iowa derecho, the wildfires in California and Oregon and Hurricanes Laura and Sally, along with other storms and natural disasters. Tax relief is available to businesses in presidentially declared disaster areas for major disasters (other than COVID-19) declared after Dec. 31, 2019, through 60 days after the date of enactment.
Businesses located within a disaster zone may receive up to $2,400 in tax credits per retained employee. The credit, known as the Employee Retention Credit (ERC), is applicable to designated disaster zones for the following natural disasters:
- Alabama Hurricane Sally; Hurricane Zeta
- California Wildfires
- Florida Hurricane Sally
- Iowa Severe Storms and Flooding
- Louisiana Hurricane Laura; Hurricane Delta
- Michigan Severe Storms and Flooding
- Mississippi Severe Storms, Tornadoes, Straight-line Winds, and Flooding
- Oregon Severe Storms, Flooding, Landslides, And Mudslides; Oregon Wildfires and Straight-line Winds
- Puerto Rico Tropical Storm Isaias; Severe Storm and Flooding
- South Carolina Severe Storms, Tornadoes, And Straight-line Winds
- Tennessee Severe Storms, Tornadoes, Straight-line Winds, And Flooding
- Utah Earthquake and Aftershocks
The Employee Retention Credit, available to employers of all sizes, is calculated based on the number of days your business was disrupted as well as the number of days it took to return to significant operations post disaster. The credit can be carried back one year and forward 20 years and cannot be taken on the same wages used to calculate the WOTC program for an eligible employee for the same period.
For more information on how to take advantage of these valuable tax credits, please contact Synergi Partners.
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About Synergi Partners
Comprised of tax credit veterans with many years of experience serving clients of all sizes and in virtually all industries, Synergi Partners specializes in helping employers take advantage of federal and state tax credit programs, as well as disaster relief incentives.
With an executive team made up of thought leaders who have made significant contributions to the tax incentives industry, Synergi Partners’ main goal is to provide the best service available and to achieve maximum value for its clients.