Tax Credit Services

Disaster Relief Tax Credits

These credits were created to help businesses rebuild and to help individuals rejoin the work force in the aftermath of Hurricanes Katrina, Rita, Wilma and similar natural disasters. The federal government has joined with state and local governments to insure the rebuilding of infrastructures and physical facilities impacted as a result of the aforementioned disasters. There are two employer-related tax credits:

• Work Opportunity Tax Credit (WOTC) for employers that hire individuals affected by Hurricane Katrina; and
• Employee Retention Credit for employers that retain existing employees despite a loss of operations due to Hurricanes Katrina, Wilma or Rita.
  
  

Hurricane Katrina WOTC Credit:

• Available to all businesses who hire individuals that lived in the Hurricane Katrina core disaster area when the storm hit. Employers may qualify for this credit through December 31, 2005.
  
• WOTC provision is for employers with a location in the Katrina core disaster area that hire individuals who lived in the core disaster area prior to the storm. Employers may qualify for this credit through August 27, 2009.

In both cases, employers can earn up to $2,400 in tax credits per qualifying new employee.

Employee Retention Credit applies for Hurricanes Katrina, Rita and Wilma:

Applies to employers whose business suffered a loss of operations due to the aforementioned Hurricanes but continues to pay employees even though the business was inoperable. To qualify, the employer's inoperable location must be within certain designated hurricane-damaged counties.

If the employee performed no services or if the employee performed services at a different location following the hurricane, the employer may earn a retention credit. Employers can earn up to $2,499 in tax credits per retained employee.

Heartland Employee Retention Tax Credit

The credit is equal to 40 percent of the first $6,000 of qualified wages paid to each employee by an eligible employer during the period in which the business became “inoperable” until the date that significant operations were resumed. This credit equates to a potential savings of $2,400 for each employee that your business paid while your business was relocated or not operating.

To qualify, the business must be an eligible employer, which means that:

1. The business employed, on average, no more than 200 employees during the tax year before the disaster date (2007 in this case);
2. The company was conducting business immediately before the disaster;
3. The business was inoperable on any day on or after the date of the disaster and before Jan. 1. A business only needs to be inoperable for one day to qualify for this tax credit. Wages paid to employees qualify for this credit even if the employee performed services at a different location while the business was displaced or performed services at the principal place of business before operations fully resumed.

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