Important IRS Moves That Positively Impact Construction Firms

As businesses and people across the Southeast are cleaning up, repairing and getting back to normal after the devastating effects of Hurricanes Milton and Helene, the IRS has made announcements that may prove helpful to contractors and other. The agency also is processing about 400,000 Employee Retention Credit (ERC) claims that can benefit construction companies. 

Hurricane-Related Relief 

On Oct. 11, the IRS issued the following announcements, which are likely welcome news to those impacted by the storms. 

IR-2024-264—Hurricane Milton relief for individuals and businesses in Florida. This announcement provides assistance to people and businesses in 51 Florida counties, through May 1, 2025. This coverage includes people and companies in six counties—Broward, Indian River, Martin, Miami-Dade, Palm Beach and St. Lucie—that did not qualify for relief under Hurricanes Helene and Debby. Relief is also extended to individuals and businesses in 20 counties covered under Debby but not Helene. 

Because of Milton, they will receive disaster tax relief until May 1. These counties are Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns and Volusia. 

This move means that all affected taxpayers in Florida are allowed until May 1 to file their federal individual and business tax returns and make payments. The relief also applies to 2024 individual and business returns that would be filed during March and April, as well as 2023 individual and corporate returns with justifiable extensions and quarterly estimated tax payments. 

The IRS is offering relief to all areas identified by the Federal Emergency Management Agency (FEMA). Tax relief is available to individuals living in or owning businesses in the aforementioned counties. The list of eligible localities is located at Tax relief in disaster situations. 

IR-2024-265—Granting dyed diesel penalty relief. Due to the effects of Hurricane Milton, the IRS is refraining from imposing penalties for dyed diesel fuel with a sulfur content not exceeding 15 parts per million used or sold for use on highways throughout Florida. This penalty relief is available to anyone who uses or sells dyed diesel fuel in vehicles intended for highway use.  

During the relief period, the IRS will not penalize parties that fail to make semimonthly tax deposits for dyed diesel fuel used in or sold for diesel-powered vehicles on Florida highways. Usually, dyed diesel is used for farming and home heating or sold to local governments, making it exempt from excise taxes.  

More information about the tax requirements is available at IRS Publication 510, Excise Taxes. 

IR-2024-266—Help for Hurricane Milton and Helene victims. The IRS is offering tax-related assistance to those impacted by these storms. The agency has set a May 1 deadline for tax filings and payments, giving individuals and businesses more time.  

In addition, the agency reminds taxpayers that disaster payments are generally not taxed, and they may qualify for disaster loss deductions. Also, those who participate in retirement plans may be able to take disaster-related distributions without penalty.  

For more information, disaster victims are encouraged to call the IRS disaster hotline at 866-562-5227. 

ERC Claims 

On Oct. 10, the IRS announced, with IR-2024-266, that it was continuing to process Employee Retention Credit claims. Approximately 400,000 claims are in progress, totaling some $10 billion of eligible claims. 

The agency is still navigating a substantial amount of claims from the pandemic-era credit, so claims for small businesses are ongoing. Many ERC claims originated due to aggressive marketing by promoters, resulting in a significant batch of unfounded and ineligible claims. 

The claims being processed include eligible and ineligible claims. Refund checks are being mailed for eligible claims, and more are expected in the coming weeks and months. 

Seek Advice 

These are challenging times for individuals and small businesses. If you have questions about how the IRS announcements affect you and your company, do not hesitate to consult an accounting professional. 

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.