The President recently signed the new Budget Agreement, enacting Section 20103: Employee Retention Credit for Employers Affected by California Wildfires, which extends the Employee Retention Credit to “retained employees” for employers in the California Wildfire Disaster Zone similar to the recent Disaster Tax Relief Hurricane Bill. Individuals who reside or have a business in Butte, Lake, Mendocino, Napa, Nevada, Orange, Solano, Sonoma, and Yuba counties may qualify for tax relief.
The legislation takes direct targeted actions to help employers and communities that were impacted. The retention credit covers those as follows:
- Employers who had business/employees in the California Wildfire Disaster Zone
- Employers whose business was inoperable on any day after October 8, 2017 and before January 1, 2018 as a result of damages sustained by the wildfires
- Employers who had employees with qualified wages that include those paid after October 8, 2017 and before January 1, 2018 beginning on the date the business first became inoperable at the principle place of employment and ending on the date the business resumed significant operations at such principle place of employment
Specifically, for businesses that were inoperable at the employee’s principal place of employment in the designated wildfire disaster zone, the credit is equal to 40% of the first $6,000 in wages paid to the employee during any day after October 8, 2017 and before January 1, 2018. This credit will apply even if the employee performs no services, performs services at a different place of employment than the principal place of employment prior to the wildfires, or performs services at the affected site prior to the resumption of significant operations.
We will continue to communicate with any updates or additional information. If you have locations in these affected areas, please contact us for further assessment. As always, please feel free to reach out to us with any additional questions or concerns.