February 15, 2018 Bipartisan Budget Act expands disaster zone employee retention credits to California wildfires On February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (Pub. L. 115-123) (the "Act") which, in part, provides expanded relief measures to individuals and businesses affected by the California wildfires in 2017. Section 20103 of the Act creates the California Wildfires employee retention credit. Eligible employers are entitled to take a tax credit of up to $2,400 for each employee retained during the California wildfire disaster period described in the Act. Credit overview Qualifying businesses with locations in the designated California wildfires disaster zones may seek an Employee Retention Credit for continuing to pay their employees during the period in which operations were disrupted by the disaster. Employers may seek a 40% Employee Retention Credit for qualifying wages paid to employees (up to a maximum $6,000 wage base) for the period in which their business location was inoperable due to the disaster. This paid wages recovery period runs from October 9, 2017 up to the date the qualifying business resumed significant operations, or until January 1, 2018, whichever comes first. Eligible employees Eligible employees are employees, with respect to an eligible employer, whose principal place of employment on October 8, 2017 was in the California wildfires disaster zone (as described in Section 20101 of the Act and as designated by the President as a major disaster area). An employee is not treated as an eligible employee for any employer for any period if the employer is allowed the Work Opportunity Tax Credit for that individual for such period. More specifically, both credits cannot be applied to the same set of qualifying wages; both credits can be calculated, however, on behalf of the same individual. Qualified wages Qualified wages are wages paid or incurred by an eligible employer for an eligible employee on any day after October 8, 2017, and before January 1, 2018, during the period: (1) beginning on the date on which the trade or business first became inoperable at the employee's principal place of employment immediately before the wildfires to which the declaration of the California wildfire disaster area relates; and (2) ending on the date on which the trade or business has resumed significant operations at the principal place of employment. Qualified wages include wages paid whether or not the employee performs any services, performs services at a different place of employment other than the principal place of employment or performs services at the principal place of employment before significant operations have resumed. Qualified locations The coverage area includes all designated counties in the California wildfires disaster area that have been designated as eligible for individual only or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. The disaster relief bill that the House passed in December (H.R. 4667) only included disaster zones that were within areas declared by the President during 2017 to be major disaster areas. The Act expands eligibility for the California wildfires employee retention credit to disaster zones that are within areas declared by the President between January 1, 2017, through January 18, 2018, to be major disaster areas. ———————————————
| |||||||||||||||
| |||||||||||||||
