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Hurricane Retention Tax Credits for Business

What you need to know about tax and business incentives to help you if your business has

been impacted by a hurricane

PRESENTED BY

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We hope that you never need to know thechallenges of running your business in the

aftermath of a hurricane. In 2018, thousands of businesses were challenged by disastrous storms. Hurricanes Florence and Michael were devastating for many, and impacted many more over the weeks that followed.

During this time, businesses were helping their employees in ways they never imagined. While dealing with their own personal challenges, employers also were stepping up to offer grants, paid time off, loans and more for their employees.

To help employers recover, Congress extended tax credits for businesses in these areas for

Financial recovery assistance with Hurricane Relief Tax CreditsTax Credits can help alleviate some of the financial impact

that you might experience after a natural disaster

Since 2005, the U.S. Government has provided help in the form of tax credits for businesses indesignated disaster zones. Synergi Partners has been deeply immersed in disaster relief tax creditsfrom the beginning, working closely with legislators and generating hundreds of millions of dollarsfor thousands of clients over the past fifteen years.

Disaster Relief Credit History

For details about the disaster credits, go to:

SynergiPartners.com/disaster-credits

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wages and other losses experienced as a result of these natural disasters.

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 em-ployment at the time of the storm(s) was in a specified disaster zone that suffered damage as a result of those storms. Similar to the

Work Opportunity Tax Credit (WOTC), thesecredits are obtained by claiming them on thefederal income tax of the business.

Details about the Employee Retention Credit for Employers Affected by

If you paid wages to your employeeswhen your business was shut down ornegatively impacted by the hurricane,you may be entitled to tax credits.

Qualified Disasters.https://www.congress.gov/bill/116th-congress/house-bill/1865

“In General.—For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the 2018 through 2019 qualified disaster employee retention credit shall be treated as a credit listed at the end of subsection (b) of such section.”

“For purposes of this subsection, the 2018 through 2019 qualified disaster employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. The amount of qualified wages with respect to any employee which may be taken into account under this subsection by the employer for any taxable year shall not exceed $6,000."

"QUALIFIED WAGES.— include wages that: (1) first became inoperable at the principal place of employment of the employee (determined immediately before the qualified disaster referred to in such paragraph) and before the earlier of—(A) the date on which such trade or business has resumed significant operations at such

principal place of employment, or (B) the date which 150 days after the last day of the incident period of the qualified disaster referred

to in paragraph (1)."

1. Hurricane disaster areas. You must be conducting business in one of the geo-graphic areas included in the qualified disaster zones.

2. Timeframe for eligibility. The overall start and ending time frame for this credit is the period beginning on the first day of the incident, ending 150 days after the incident.

3. Operational impact. The credit covers theperiod of time from the start of the impact toyour business through the time when yourbusiness returned to “normal” operation.

4. Employees and wages. You were payingwages to your employees while your busi-ness was inoperable, or in some waynegatively effected from this disaster.The amount of the credit is up to $2,400per eligible employee.

What does this mean for your business?Consult with your tax credit specialist or contact us for more on how this applies specifically toyour business, but here are the key takeaways from the law:

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Now let’s break down those key points a little further:1. Hurricane disaster areas.

The Government has designated specific areas as disaster areas. Although your business may have been impacted, it is only eligible for credits related to Florence or Michael if it is located within the qualified areas. Should you be in a border-line area, get in touch with us at Synergi Partners for an evaluation.

For a complete list of the eligible areas, see synergipartners.com/disastercredits.

2. Timeframe for eligibility.The two hurricanes impacted businesses starting on September 14, 2018. Depending on which of the hurricanes affected your business, there are different start dates of eligibility. See the chart below.

a. Florence, impacted businesses in North Carolina, South Carolina and Virginia starting after September 13, 2018 and before February 11, 2019.

b. Michael, impacted businesses in Florida, Georgia and Alabama starting after October 9, 2018 and before March 9, 2019.

3. Operational impact.The law mentions that it covers the time that your business is “inoperable.” However, with a Synergi Partners Operational Impact Analysis, we help to determine the time-frame that your business was disrupted. In other words, the period of time your business was affected by direct physical damage, indirect physical damage or eco-nomic damage. The credit will expire on the day that your business returns to its normal operation, or 150 days after the initial day of impact, which ever came first.

4. Eligible Employees and wages.Employees whose principal place ofemployment is your business that is inthe disaster zone are eligible. So, if youremployee also has another job, workingwith you needs to be their primary placeof employment and in the disaster area.

Eligible wages are those that are paid tothe employee, whether or not they areperforming work at their original location.In other words, they could be working ata different location or not working at all.What this means is that during the timethat your business is impacted, the Gov-ernment wants to help businesses whohelp their workers by continuing to paythem during the time that the business isimpacted by a disaster. This could includethe employee not being able to performtheir regular tasks for some reason, or ifthey are temporarily transferred to an-other location to do their regular tasks(even if that location is not affected).

AREAS REVIEwED

Employee Retention Credit: Case Study

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The amount of the credit is calculated as apercentage of the wages of the employee thatis paid. During the eligible time that your

business is negatively affected, 40% of the wagesthey are paid (up to $6,000), can be claimed for acredit, up to $2,400 per eligible employee.

(Important note: if you are already claimingWOTC for that employee during the same period of time, you cannot also claim HRTC. The credit you claim should be one or theother, ie, WOTC or HRTC, but not both.)

If you reach out to Synergi Partners, we canhelp you determine the best way to apply for the credits you are eligible for, based on the variables of primary employment, WOTC and HRTCs.

Mary works at a regional grocery chain, whichis closed after the hurricane because ofdamage. She is transferred temporarily

to another store. Her wages during her displacement are eligible for tax credits.

Lorinda’s business was in the disaster area but remained open. Three of her employees were unable to work when their neighborhood schoolwas closed due to disaster damage. She had paidher employees their regular wage during that time,so those wages would be eligible for tax credits.

Charles was unable to work when his companywas closed for a time due to hurricane damage.He, and the other employees were paid eventhough they did not work. Those wages would

be eligible for tax credits.

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Here are a few examples to see how we have been able to help our clients.

Our client, a Bar andRestaurant chain, has

seven locations and 735employees – many of whomare also WOTC eligible.Each location of the restau-rant was impacted in a dif-ferent way. Damage to thebusiness was not largelydue to physical damage.Disruptions to the loca-tions included lost inven-tory because of spoilagedue to power loss anddamage, lost revenue from closures and eco-nomic impact of declining revenue from thecustomer base being out of the neighborhood.

After performing a series of analyses, we calculated a total credit of $292,000.

Example #1: Synergi Partners helps restaurant chain with Hurricane Relief TaxCredits recover nearly $300,000.

Our client, a construction company in Texas,was impacted by Hurricane Harvey and

had worked with their C.P.A. to prepare and filetheir returns, including their eligible tax credits.When we were engaged to review the claimand provide an Operational Impact Analysis,we found that the C.P.A. correctly calculated

the eligible payroll credits, but had not donethe in-depth analysis on the impact to thebusiness based on direct, indirect and eco-nomic damages.

As a result, we discovered our client waseligible for an additional $50,000 in credits.

Example #2: Synergi Partners helps construction company with Hurricane ReliefTax Credits recover an additional $50,000.

Hurricane Harvey -T & T Construction, Pasadena, TX “I originally thought our CPA would have gotten us everything we were entitled to, but after hearing Synergi’s presentation I understood that most CPAs aren’t prepared to spend the additional time required to review all that goes into calculating the full tax credit....Synergi looked into how our daily operations were affected and found an additional $50,000

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Our client, a commercial truckingcompany, was damaged by Hurri-

cane Irma in a number of ways. Al-though they were directly impacted bythe disaster, they were also economi-cally impacted by the inability to oper-ate and travel within the disaster zone.

Synergi Partners worked with them to complete an Operational Impact Analysis;determining the level of impact acrossDirect, Indirect and Economic areas.

Synergi Partners. Tax Credit SpecialistsWe know from personal experience how devastating a natural disaster can be. To helpyou recover, Synergi Partners can make sureyou, your C.P.A. or Finance teams have thesupport you need to get 100% of the tax andbusiness incentives open to you.

Synergi Partners is your best solutionWith experience, innovation and leadershipunrivaled in the area of tax credits, our onlyfocus is helping you obtain and use the cred-its, stimulus and incentives that are available.

• Over 150 years of collective experience inthe executive team and leadership recognized at the highest levels

• Expertise in hurricane tax credits sincetheir inception in 2005

• Independent and accountable to your business, not stockholders

• Collaborative with your finance team, C.P.A.or tax team

• Worry-free service with reporting that iscompliant and “audit-ready,” for any level ofassessment or analysis that may be required

• Hundreds of millions of dollars for thousandsof clients over the past fifteen years.

Example #3: Synergi Partners helps commercial trucking company with HurricaneRelief Tax Credits recover $1,400,000.

Reach out to us today for a free consultation.

We were able to assist them with their claim thatresulted in credits of approximately $1.4 million.

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