IRS Plans That Will Impact Construction Companies

As people across the Southeast try to clean up, repair and get back to normal after the devastating effects of Hurricanes Milton and Helene, the IRS has made announcements that may prove helpful to construction businesses and individuals. The agency also began processing about 400,000 Employee Retention Credit (ERC) claims.

ERC Announcement

IR-2024-266. On Oct. 10, the IRS announced it will continue 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.

Hurricane-Related Announcements

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. 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 Hurricane Debby but not Helene. Due Milton, they will receive disaster tax relief starting from Aug. 1, 2024, until May 1, 2025. 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 usually filed in March and April 2025, 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 or owning businesses in the aforementioned counties. The list of eligible localities is located at on the IRS tax relief in disaster situations page.

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 the highway 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 Hurricanes 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 can call the IRS disaster hotline at 866-562-5227.