United States

Hurricane Disaster Zone Employee Retention Credit

A federal tax credit for businesses affected by a natural disaster

Congress recently enacted legislation that provides a federal income tax credit to certain employers who continue to pay their employees during periods that their place of business is inoperable due to the effects of one of the three recent hurricanes.


The credit, known as the Employee Retention Credit (ERC), is a general business credit and can be carried back one year and forward 20 years.  The credit is available to employers of all sizes.



What you need to know about the ERC...

What does the ERC offer?


— 40 percent of qualified wages paid to each employee during inoperability

— $6,000 in maximum wages; therefore, maximum credit is $2,400 per employee

A business is inoperable if physically inaccessible to:


— Employees

— Raw materials

— Utilities

— Customers

In order to be eligible for the credit, the employer must:


Have operated active trade or business in disaster area


Be located in a declared federal disaster zone


Have been inoperable after effective date of disaster


Not claim both the Work Opportunity Tax Credit (WOTC) and the ERC for the same employee for the same period

Helpful definitions

Hurricane disaster zone Hurricane disaster area Eligible employer Eligible employee Qualified wages
Portion of hurricane disaster area determined by the president to warrant public assistance. Area where a major disaster has been declared by the president before September 21, 2017. Employer whose principal place of business was in a disaster zone before the hurricane and became inoperable because of the hurricane. Employee whose principal place of employment was in a disaster area and the business became inoperable because of the hurricane. Wages paid by eligible employer to eligible employee on any date after the storm to January 1, 2018, during period business first became inoperable before storm to date when business resumes significant operations.

KPMG can help...


Analyze potential client locations


Identify eligible employees and calculate eligible wages


Assist in determining closure dates


Determine no double counting of wages between ERC and WOTC


Identify inoperable client locations


Determine process and prepare tax technical memorandums


Determine when operations resumed


Prepare applicable tax forms

Contact us


Karen Field

Principal-in-Charge, Compensation & Benefits Group

E: kfield@kpmg.com

View bio