Today’s Budget Deal Reauthorizes Empowerment Zones Retroactively for 2017

Employers interested in the Work Opportunity Tax Credit (WOTC) and the federal Empowerment Zone program received good news this morning. Just after 5:30 AM,  President Donald Trump announced that he had signed the Bipartisan Budget Act of 2018.

With this deal, numerous expired tax benefits were retroactively reauthorized including federal Empowerment Zones.  Renewing Empowerment Zones also impacts the WOTC program.

Qualification under WOTC Target Groups D and F, “Designated Community Resident” and “Summer Youth,” respectively, among other things requires that an employee reside within an authorized Empowerment Zone.

The Empowerment Zone program had expired on December 31, 2016.  Anticipating that Congress would eventually reauthorize the program, thousands of employers have continued submitting WOTC applications for employees who reside in the zones.  Recently, State Workforce agencies began sending out Denial Letters for those applications.  Those denials will now have to be challenged and reversed.

Advice to employers and WOTC consultants: Review all denials and promptly appeal any denials under Target Groups D and F for 2017 new hires.

Unfortunately, the authorization only covered 2017.  In practical terms, the Empowerment Zone program expired again on January 1, 2018.  Better luck with the next bill.

Democrats Favorable to Including Bi-Partisan Extenders Bill in Next Tax Bill

Some rough politics are on the horizon as Congress tries to divert the U.S. economy’s path away from the 2013 fiscal cliff.  A small but not unimportant element in this effort is the passage of a tax extenders bill covering WOTC, empowerment zones and renewal communities, the research and development credit, and others similar tax incentives.

This morning, our friend, Paul Suplizio (President of the WOTC Coalition) offered some constructive feedback and advice to businesses and lobbyists who favor passage of  tax extenders.   His comments come in the wake of President Obama’s recent press conference.

The following correspondence is published here with permission.


From: Paul Suplizio
Thursday, November 15, 2012 4:13 AM
Subject: Obama Demands Passage Of Tax Bill First

November 15, 2012

President Obama argued forcefully at his press conference yesterday to pass the tax bill first, as part of a “fiscal cliff” deal, and deal with spending issues later.

Claiming the election yielded a mandate for middle class tax relief and higher rates for the wealthy, the President insisted on ending the Bush tax rates “for people who don’t need them.”

Clearly, your Coalition wants any tax bill that emerges to carry an extension of WOTC and other tax extenders along lines of S.3521, the bi-partisan Baucus/Hatch “Family and Business Tax Cut Certainty Act.” We are getting a favorable reception from Senator Reid, Senator Baucus, and other Senate and House Democrats for adding S.3521 to whatever tax bill or bills start moving.

Treasury is pushing hard for settling the question of tax rates and benefits before December 31st so IRS and taxpayers won’t be in the dark when filing their 2012 returns. The IRS Commissioner has written Congress again urging prompt action, saying more than 60 million taxpayers—about half of all filers—will be affected if Congress fails to act.

We should be pressing Republican senators and congressmen to make sure WOTC extension is included in any bill to extend the Bush tax cuts. Our approach should be sensitive to the fact that both Republican leaders—Speaker Boehner and Senate Minority Leader McConnell—are opposed to raising tax rates on the wealthy and will be making that case when they meet with the President tomorrow. This issue takes precedence for Republicans, WOTC and the tax extenders aren’t on their front burner right now.

Still, we have to use the lobbying time available, and it’s precious little. To Republicans in the Senate and House, we can still be pressing our message, “A million jobs are at stake in WOTC extension, we need your help to make sure WOTC won’t be forgotten in any deal on the Bush tax cuts, or in any bill brought by the Ways and Means Committee.”

A transcript of the President’s press conference is available at, click on “Briefing Room” and then “Speeches & Remarks.”

Here’s the nub of his message:

“And so the most important step we can take right now is if we right away say 98 percent of Americans are not going to see their taxes go up; 97 percent of small businesses are not going to see their taxes go up. If we get that in place, we are actually removing half of the fiscal cliff. Half of the danger to our economy is removed by that single step. And what we can then do is shape a process by which we look at tax reform—which I’m very eager to do. I think we can simplify our tax system. I think we can make it more efficient. We can eliminate loopholes and deductions which have a distorting effect on our economy. . . .

“Can we all step back and say, here’s something we can agree on—we don’t want middle class taxes to go up? Let’s go ahead and lock that in. That will be good for the economy. It will be good for consumers. It will be good for business. It takes the edge off the fiscal cliff. And lets also then commit ourselves to the broader package of deficit reduction that includes entitlement changes and it includes potentially tax reform . . .”

President, WOTC Coalition

ETA Form to Be Short Lived – Empowerment Zone Omitted from New WOTC Characteristics Form

It is quite sad.  Just 2 days before the Senate Finance Committee completed its markup of the Family and Business Tax Cut Certainty Act of 2012, the Department of Labor issued Training and Guidance Letter (TEGL) 04-2012.

TEGL 04-2012 introduces the Department’s updated Form ETA 9061, which is the Individual Characteristics Form included in the WOTC program’s employee-application for certification.

Why is it sad?

  • TEGL 04-2012 intentionally omitted the WOTC programs’ Empowerment Zone element for the Designated Community Member target group.
  • It also completely omitted the Summer Youth target group because by definition a Summer Youth is someone who lives within an Empowerment Zone.

These omissions make some sense, given the fact that the Empowerment Zone program expired on December 31, 2011.  However, the Family and Business Tax Cut Certainty Act of 2012 (aka tax extenders bill) now proposes to retroactively renew the Empowerment Zone program for 2 years through December 31, 2013.

In other words, when the tax-extenders bill becomes law, the updated Form ETA 9061, which omits all reference to Empowerment Zones, will have been rendered retroactively obsolete before it was even published.

There is a potentially BIG administrative hassle hiding in this little mess.  TEGL 04-2012 gives employers and their representatives 90 days to complete their transition from the old ETA 9061 to the updated version.  It doesn’t make sense, however, to use the new form now or in the future if the tax extender bill will have rendered it obsolete retroactively to January 1, 2012.

Depending on when Congress is able to pass the tax-extenders, employers who transition in time for the current 90-day deadline will almost certainly face another transition as the Department of Labor issues a second update to reverse the omissions of the recent form.

Let us suggest to the Department of Labor that it should temporarily suspend the transition requirements of TEGL 04-2012. Allow employers and State Workforce Agencies to continue using the current versions of their ETA Forms until all of the pending tax-extender issues affecting WOTC have been fully settled by Congress and the President.

Family And Business Tax Cut Certainty Act Of 2012 Will Extend WOTC and Empowerment Zones

Good news came smiling out of Washington, D.C. this week for the Work Opportunity Tax Credit (WOTC) program and a number of other tax extenders. Some of you have contacted me with leads and insights, for which I thank you all.

On Wednesday, Senator Max Baucus, Chairman of the Senate Finance Committee (a Democrat) and Senator Orin Hatch, the Committee’s top ranking Republican announced that a bipartisan agreement had been reached for the nervously-awaited tax extenders bill.

The next day, the Senate Finance Committee completed its markup of the Baucus-Hatch tax extenders bill, known as the Family and Business Tax Cut Certainty Act of 2012.

Of the 73 programs considered in the bill, 21 programs were cut from the final markup (a 25% reduction). According to Senator Hatch’s announcement of the agreement, this reduction marks a trend in the direction of Congress. Referring to Senator Baucus, Hatch states,

“My friend the Chairman has often said we need to get away from being an extenders Congress or a maintenance Congress. And I agree. We should not continue extending provisions in a stop-and-go fashion.”

“You cannot find many people who believe Congress should continue dealing with tax extenders in a business as usual manner. And this markup is not business as usual. The Chairman’s mark reverses the trend on extenders. The tide is turning. For the first time in my 21 years on this committee, we are deliberately moving in the opposite direction.”

Chairman Baucus had similarly cordial remarks.

“The bipartisan bill we’re considering today will extend tax cuts that have expired or will expire at the end of this year for American families and businesses. This bill supports jobs across the country. “

“It took a lot of hard work on the part of every member of this committee. Everyone had to compromise because we all know how important these tax cuts are, and how important it is to provide Americans with certainty about their tax liabilities next year.”

Of most immediate interest to readers of the WOTC Planet: The bill extends both the Work Opportunity Tax Credit and the Empowerment Zone program retroactively through December 31, 2013. That’s a 2-year extension.

We’ll continue following the progress of this bill for you.

Document Links:

Description Of The “Family And Business Tax Cut Certainty Act Of 2012”

Markup Statement of Senator Max Baucus (D-Mont.)

Hatch Statement at Finance Committee Markup On Tax Extenders Legislation


Tax Extenders NOT Included in Continuing Resolution

Congress passed the Continuing Resolution yesterday, providing funds to keep the government going through December 3rd.  While many hoped the legislation would include Senator Baucus’ Tax Extenders Bill, those hopes were dashed.  That, however, was not a surprise.

The lame duck Congress will reconvene in November at which time there will be a new opportunity to deal with the various expired tax provisions.  There are no guarantees but we’re keeping our fingers crossed.

Here’s a short list of programs that would be included in the tax extenders bill.  Please see the bill’s summary from the Senate Finance Committee’s legislation page.   As I mentioned before, there is a lot more to this bill that I am not mentioning here.

  • Research & Development Tax Credit
  • New Markets Tax Credit
  • Empowerment Zones
  • Renewal Communities
  • District of Columbia Enterprise Zone
  • Indian employment credit
  • Extension of the TANF program
  • Extension of tax incentives for the New York Liberty Zone
  • Extend Work Opportunity Tax Credit (WOTC) for Hurricane Katrina Employees

See previous post.

Work Opportunity Tax Credit for Hurricane Katrina Employees

Recently, I’ve received inquiries about Congressional efforts to extend the expired Hurricane Katrina provision of the Work Opportunity Tax Credit Program.   Here’s the latest as I understand it.

The Hurricane Katrina WOTC provision has NOT yet been extended. But it is part of the currently idle Baucus Job Creation and Tax Cuts Act — also known as the Baucus Tax Extenders bill. 

The WOTC Coalition is at this very moment engaged in an effort to get this extenders bill attached to Congress’ Continuing Resolution to fund the government.  The Continuing Resolution will probably be the last critical bill passed by Congress before recessing for the elections.

According Paul Suplizio, President of the WOTC Coalition, Senate staff are currently saying that the Continuing Resolution bill will be “clean”  — meaning that non-appropriations measures like the Baucus bill will not be considered.  The Baucus Tax Extenders bill, however, does includes significant programs that both political parties are in favor of extending. 

The WOTC Coalition is urging Senator Baucus to introduce the text of his Tax Extenders bill as an amendment to the Continuing Resolution AND urging Senator Harry Reid to allow the amendment to be attached.  We’ll keep our fingers crossed.

Here’s a short list of some other programs of interest that would be extended by the Baucus Tax Extenders bill.  Please see the bill’s summary from the Senate Finance Committee’s legislation page.   There is a lot more to this bill that I am not mentioning here.

  • Research & Development Tax Credit
  • New Markets Tax Credit
  • Empowerment Zones
  • Renewal Communities
  • District of Columbia Enterprise Zone
  • Indian employment credit
  • Extension of the TANF program
  • Extension of tax incentives for the New York Liberty Zone
  • Extend Work Opportunity Tax Credit (WOTC) for Hurricane Katrina Employees

Please feel welcome to contact me with questions about the WOTC program or any of the other tax incentive programs mentioned.  If I don’t know the answer, I’ll do my best to find out. 

I am Vaughn Hromiko.  (800) 655-5281, ext 101.