WOTC-like Employee Retention Credit For Employers Affected By Hurricanes Harvey, Irma and Maria

Have your heard?

Congress passed and President Trump signed a bill on September 29 that provides a temporary WOTC-like tax benefit for businesses impacted by three recent powerful hurricanes.

H.R.3823 – Disaster Tax Relief and Airport and Airway Extension Act of 2017 includes the “Employee Retention Credit for Employers Affected by Hurricanes” Harvey, Irma and Maria.

Eligible employers include any that *conducted an active trade or business *within one of the bill’s defined disaster relief zones *on the date the hurricanes struck, whose business then *became inoperable between that date and December 31, 2017 because of the hurricane.

Eligible employees are persons who worked for such a business, whose principal place of employment was within the disaster relief zone at the time the hurricane struck.

Like WOTC, the tax credit amount equals 40% of the first $6,000 in wages paid.  Consideration is limited, however, to wages paid during the relief period, which ends December 31, 2017.

An eligible employee could have also generated the Work Opportunity Tax Credit (WOTC) prior to the hurricane.  Wages paid to such a WOTC-employee are eligible for the Retention Credit unless those same wages are concurrently generating the WOTC benefit itself.  In other words, you can’t claim both benefits on the same wages — but you can claim the two benefits one after the other.

Congresswoman Carol Shea-Portal’s Military Spouse Hiring Act Would Expand WOTC Target Groups

Photo by Allegra Boverman.

It’s called the Military Spouse Hiring Act (H.R.2318). If passed, military spouses would become the newest Target Group for the Work Opportunity Tax Credit (WOTC).

Congresswoman Carol Shea-Portal (D, NH) introduced this simple proposal to the House Committee on Ways and Means on May 3 of this year.

When I stumbled across this bill today, I felt embarrassed at first. How could I have overlooked it?  Then I dug a little deeper.

For a bill with 28 bipartisan co-sponsors, it received surprisingly little media coverage. Try a Google search using the bill’s title.  I just did.

There is not a single main-stream media source within the entire first two pages of results. Everything is either government or military oriented — good sources for their unique constituents but most people aren’t tuned in there.

Nothing new has happened in the Congressional record since May, when it was referred to committee.

I’ll continue to monitor this and will keep you informed.

What’s New?

Seriously, I’m asking you.  What’s new in your WOTC world?

We would love to hear about your work adventures, your plans, your challenges.

There’s not much news right now about WOTC on the national front. We know there are some suggestions floating around for program expansion.  And every once in while, a feel-good story or a local workshop pops up in a headline or a press release.

Are you working in a state workforce agency somewhere in our great nation? I know some of the agencies are facing challenges with updating their technology. It happens every time Congress changes or expands the WOTC program’s eligibility requirements.

Are you working in a state that is suffering from an extended backlog of WOTC applications? I’m not offering criticism. We all have our challenges. What do you need? What do you wish you had? What would make it better?

How about veterans? Is anyone expanding their domain in a way that might help more veterans use the WOTC program to get jobs?  We’ve seen how difficult it is, perhaps it’s impossible, to change the world on a large scale. So many variables, so much money, bureaucracies, disconnected organizations and systems. Yet, a few dedicated people could make a meaningful difference locally for military veterans in their own community.

Tells us.  What’s new with you?

US Legislators from Illinois Unveil Proposal to Expand WOTC for At-risk Youth

An article today in Enews Park Forest highlights proposals by US Representative Robin Kelly and US Senator Dick Durbin to expand the Work Opportunity Tax Credit (aka WOTC).  They’re calling it The HERO for At-Risk Youth Act.

Specifically, the bill would provide a tax credit of up to $2,400 for businesses that hire and train youth ages 16-25 who are out of school and out of work. The legislation would also expand the summer youth program under the Work Opportunity Tax Credit (WOTC), which provides a tax credit to businesses which hire for summer employment youth ages 16-17 who are enrolled in school and who live in highly distressed urban communities known as Empowerment Zones, by doubling the amount of the credit to $2,400 and expanding the program to include year-round employment.

The first part sounds like a remake of WOTC’s now expired Disconnected Youth target group.  I’ll report more as things progress (if they progress).

Congress Renews Effort to Expand WOTC with Foster Youth Target Group

Last September, Democrat Representative from Washington State, Jim McDermott introduced HR 5947, the Improved Employment Outcomes for Foster Youth Act of 2016. That bill died with the passing of the last Congress.

A similar bill has now been introduced to the new Congress.  H.R.2060 and S.885 were both introduced to their respective chambers on April 6, 2017. While the text of the new bills is not yet available, both of their titles state that they would “amend the Internal Revenue Code of 1986 to include foster care transition youth as members of [WOTC] targeted groups.”

See my post from last September for detailed coverage of the original bill.  My guess is that the current bills are very similar.

DOL Issues Revised Forms for Work Opportunity Tax Credit WOTC

The Department of Labor has issued revised and updated forms including the ETA 9061 Individual Characteristics Form and ETA 9175 Long Term Unemployment Recipient Self Attestation Form.

There are significant changes on both forms, simplifying and clarifying the requirements for Long Term Unemployment Recipients or LTURs. Number 23 on ETA 9061 has been reduced from a double-parted (2 check boxes) to a single-check box question. The new language is easier to understand and less likely to trip-up new hires.

The ETA 9175 Self Attestation Form or SAF, has been greatly simplified.  The employer’s tax ID line has been removed. The statement section has also been completely revised.  See pic below.

Revised SAF

These simplifications will be a great blessing to new hires and the state workforce agencies that evaluate their eligibility.  The changes, however, will require design-level changes to the computer-based software and databases used by agencies to manage the data provided on the forms.  The same is true for survey- and application-management systems used by employers and authorized agents.

A grace period for transitioning to the forms has been granted through April 11, 2017. That’s 39 days from today.  The race is on!

Good luck everyone!

PassGo Ohio State University Student Group Connects WOTC Eligible Ex-felons with New Employers

Found an interesting article published in The Lantern about PassGo, a student group at The Ohio State University.  PassGo partners with other non-profits offering training and job counseling to ex-felons.  It uses the Work Opportunity Tax Credit program as an additional tool to help connect these rehabilitated men and women with private employers in the community.

The program started when a group of students found the Work Opportunity Tax Credit and felt many local businesses were unaware of the tax credit’s advantages. Since then, PassGo has connected with other local organizations also aiming to connect ex-offenders with the opportunities and resources necessary to resuming life after prison.

Smart thinking.  And a great business idea.

Student Loan Repayment Act of 2016 Would Add Student Debtors as New WOTC Target Group


Representative Dennis Ross (FL Republican)

An interesting opinion piece by Representative Dennis Ross (Republican from Florida) titled “Responsible solutions to repaying student loans,” recently popped up in Florida Politics. Ross was contributing as a guest writer.

Ross introduced the Student Loan Repayment Act to the US House of Representatives in September this year.  Student debtors carrying at least $10,000 in education loans, who have earned an Associate’s Degree or better, would be classified as qualified “Student Loan Repayers.”  This large group of Americans would thus become a new target group under the Work Opportunity Tax Credit (WOTC) program.

The bill also proposes tax benefits to employers who help employees repay their student loans via matching contributions to an employer-administered Student Loan Repayment Plan.  See the full text of the bill here.  As of today, the bill has no co-sponsors.

McDermott Introduces House Bill to Expand WOTC for Foster Youth

Jim McDermott, D of Washington

Jim McDermott, D of Washington

Democrat Representative from Washington State, Jim McDermott on September 8th introduced HR 5947, the Improved Employment Outcomes for Foster Youth Act of 2016.

This bill proposes to expand the Work Opportunity Tax Credit (WOTC) to include “foster care transition youth” as an 11th qualifying target group. These are individuals, not yet 27 years old, who have been in foster care after a certain age.

The maximum tax credit generated would be $2,400, similar to most other WOTC categories.

At this time, the bill is also supported by 5 additional House cosponsors, including: David G. Reichert (R-WA), Lloyd Doggett (D-TX),  Danny K. Davis (D-IL), Tom Reed (R-NY) and Karen Bass (D-CA).

Let’s Us Know! How Do You Handle Delayed WOTC Certifications?

Hello friends and readers, this is Vaughn Hromiko, here.  This post is meant as a question to employers and agents . . . and anyone involved with the Work Opportunity Tax Credit program.  I would love to hear from you.

The Question:  How do you (or your CPA, or your company, or others you have observed), handle the claiming of Work Opportunity Tax Credits for employees whose WOTC certifications are delayed until after the tax-return filing deadline?

Perhaps you would:

  • Lump the employee’s credit into the following tax year?
  • Claim the tax credit by amending the employer’s return?
  • Something else?

You can post a response in the comments or you are welcome to respond privately by email to response@WOTCPlanet.com.  I won’t share identifying information about anyone who responds privately.

Background. This problem is destined to be more significant than ever for WOTC employees hired in 2015. State workforce agencies nationwide are experiencing extended delays in issuing Work Opportunity Tax Credit (WOTC) certifications for 2015 hires. This problem stems from Congress’ long delay in passing legislation to reauthorize WOTC after it expired in 2014.

The reauthorization bill, which was finally passed on December 18, 2015 also created a new WOTC Target Group, the “Long Term Unemployment Recipient”.  While this program expansion was welcomed, it placed new demands on state workforce agencies. They now have to update their procedures, databases and management software to handle the new eligibility criteria.

As soon as the bill passed, agencies knew this work would be required.  However, before any substantial planning or development could happen, they would need updated forms and specific guidance from both the IRS and Department of Labor.

The IRS issued an updated Form 8850 at the end of March, 2016. The updated ETA Form 9061 and related guidance were then finally issued on June 17, 2016.  It was only then, with all requirements finally defined, that agencies could make substantial headway in updating their systems.

Given the uncertainties created by this elongated series of updates, the IRS has given employers until September 28, 2016 to submit WOTC applications for their 2015 hires.  As of this late date in August, many agencies are still working to update their information systems and can not yet process the new WOTC target group.

Lay this schedule over the basic tax-return requirements for companies on a calendar-year filing schedule. Original tax-return filing dates passed months ago in March and April. Businesses and individuals that have requested a filing extension from the IRS will hit their final deadlines in mid-September and October.

Many WOTC certifications for 2015 hires will still be pending, even at that late date.