If your business is among the many that became inoperable during the California wildfires, you may be entitled to a tax credit.
Employers who retained employees during the wildfire recovery period may be eligible to generate a tax credit under the Employee Retention Credit for Employers Affected by California Wildfires provision of the Bipartisan Budget Act of 2018.
About the Credit
The credit amounts to 40% of an eligible employee’s wages up to $6,000.
If an employee meets the eligibility criteria, the credit provides employers with up to $2,400 for any employee they retain—and pay wages to—while their business was inoperable. The credit applies to wages paid up to either January 1, 2018, or until the business location resumes operations—whichever comes first.
Eligibility Criteria
Employee Qualifications
Employers can receive the credit if their employees meet the following criteria:
- They were performing all of their employment at the affected location prior to the wildfires
- They’re paid wages despite being unable to perform services, or they’re relocated to other locations in order to resume their work
The credit is available as a one-time credit for each eligible employee, and it can’t be used against the same wages for the Work Opportunity Tax Credit for the same employee.
Employer Qualifications
Businesses qualify for the credit if they are located within a California wildfire disaster zones and became inoperable as a result of damage sustained by wildfires on or after October 8, 2017, and before January 1, 2018.
The designated disaster zones include the following counties:
- Butte
- Lake
- Mendocino
- Napa
- Nevada
- Orange
- Sonoma
- Yuba
Learn More About the Credit
The new Employee Retention Credit for Employers Affected by California Wildfires is similar to the Employee Retention Credit for Employers Affected by Hurricanes Harvey, Irma, and Maria. To learn more about the disaster tax credit, read our Alert for companies that sustained damage during a hurricane.
We’re Here to Help
For more information or for help determining if your locations and employees will qualify your business for the tax credit, contact your Moss Adams professional or email statetax@mossadams.com.