The House – Senate Conference has come to an agreement on what is now dubbed The Middle Class Tax Relief and Job Creation Act of 2012. Expectations are high that both the House and Senate will quickly pass the bill. President Obama has already indicated he will sign the bill.
Unfortunately, the tax extenders, including the general WOTC extension, were completely excluded from this legislation. All WOTC categories except for those favoring military veterans must now wait to be extended by another yet future tax bill.
As I’ve summarized before, this situation is not unusual for the Work Opportunity Tax Credit (WOTC) program. Of the eight times Congress has acted to renew or extend the WOTC program, three were passed retroactively months after the program’s legislative authority had expired.
- The first was in March 2002 after WOTC expired on December 31, 2001.
- The second was in October 2004, about ten months after WOTC expired on December 31, 2003.
- The worst example to date was in December 2006, when the program was reauthorized almost 12 months after its expiration.
In each of these events, the renewal was made effective retroactively back to the date of expiration. In other words, employers were eligible to claim tax credits generated by properly certified employees hired between the expiration date and the date the WOTC program was renewed.
We continue to anticipate a similar re-authorization in 2012. For this reason, my firm will continue to process and submit WOTC applications under all employee-eligibility categories — not just for veterans.
As employers consider their strategy for 2012, they should remember that even though a general extension has not yet been passed, eligibility-categories for hiring military veterans are already authorized through 2012 by the VOW to Hire Heroes Act of 2011. The amount of tax credit currently offered for hiring unemployed veterans goes as high as $9,600 per qualifying hire.
This is an excellent opportunity to more affirmatively recruit veterans for your workforce.