New Legislation proposed for businesses in CT, NJ & NY affected by the tragedy of Hurricane Sandy
On December 9th, 2012 Senator Charles Schumer (D-NY) and Senator Robert Menendez (D-NJ) introduced legislation to reduce taxes for individuals and businesses in the Hurricane Sandy Disaster Areas.
The proposal, among other things, calls for a hiring incentive of 40% of the first $6,000 wages paid for individuals who lived in the “core disaster area” on October 27, 2012 and (i) are hired to work in a business located in the area on or after that date but before October 27, 2014 or (ii) were displaced by the hurricane and hired between October 27, 2012 and January 1, 2013.
The incentive would also apply with respect to individuals displaced by the hurricane and who are hired elsewhere, but the duration of that benefit will be much shorter. A retention credit also will be offered for disaster-damaged businesses that continued to pay their employees after 10/27/2012 even though such businesses were inoperable (likely to mean a reduction of more than 20% in sales or volume).
The retention credit also is proposed to be set at 40% of the first $6,000 wages paid relating to the period the business was inoperable (but not past March 1, 2013). The details are being worked on by the technical tax staffs in the Senate Finance Committee.
Brian Kelly with CMS Tax Credit Services indicates this is consistent with legislation that was passed for victims of Hurricane Katrina back in 2005. Brian Kelly stated that “This is a terrible event the people & businesses of CT, NY & NJ are going through, however the proposed legislation by Senator Charles Schumer (D-NY) and Senator Robert Menendez (D-NJ) is good legislation. If passed, it will be similar to the services we provided to employers when Hurricane Katrina hit back in 2005”.
“This legislation will make it easier for families and small businesses affected by the storm to marshal more of their resources for recovery,” Schumer said.
Read more: http://www.nydailynews.com/new-york/bill-proposes-tax-breaks-hurricane-sandy-cleanup-efforts-article-1.1216490#ixzz2Ioswb9y9
Other components of the proposed tax benefits include deductions for repair related expenses, penalty-free borrowing from retirement accounts and a host of others. The sponsors are hoping to gain enactment of the legislation in a year-end tax deal, or at the latest, in a hurricane relief bill that would be taken up in January.
Senator Charles Schumer (D-NY) and Senator Robert Menendez (D-NJ) legislation also includes:
“Worker retention credit—This provision would provide a credit for disaster-damaged businesses that continued to pay their employees’ wages, regardless of whether they performed services (i.e., the business was not operating, but keeps paying employees). Eligible employers would be those who (1) had active businesses in the disaster area that were rendered inoperable due to damage caused by the severe weather and (2) employed no more than 200 employees per day during the year before the disaster. The credit would equal 40% of the employee’s first $6,000 in wages paid between the date the business became inoperable and the date it resumed significant operations, but before March 1, 2013. http://www.schumer.senate.gov/Newsroom/record.cfm?id=338083&&&search_field=Hurricane%20Sandy
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