Tag: Epsilon Systems

WOTC’s 2026 reauthorization cycle and current legislative pause naturally raise an important question for employers:

Should we continue screening new hires for WOTC while Congress is navigating the program’s reauthorization cycle?

When a tax credit’s legislation enters a reauthorization cycle, it’s reasonable to pause and evaluate. This article provides context based on the program’s long history and how WOTC has been administered during past reauthorization cycles.

While only Congress can authorize or reauthorize the program, the consistent best practice (based on decades of precedent and agency guidance) is to continue screening and submitting applications. Continue reading to understand why.

A Pattern That Has Repeated Over Decades

During its 30-year history, the Work Opportunity Tax Credit (WOTC) has been renewed thirteen times as part of the federal “tax extenders” process. In more than half of those occasions, Congress allowed the program to enter a temporary hiatus while new legislation was being crafted and approved. Every time, the pause was followed by a full retroactive reinstatement.

In other words, Congress reauthorized WOTC, and patient employers (who continued screening new hires and filing their applications) were rewarded with the full tax credit amount.

From a legislative standpoint, the current reauthorization cycle follows a familiar pattern.

What Happened During Previous Cycles?

During prior reauthorization cycles, the U.S. Department of Labor instructed State Workforce Agencies (SWAs) to continue receiving WOTC applications within the required filing timeframes. Employers were expected to continue timely screening. While certifications could not be issued until reauthorization legislation was approved, state agencies continued to receive applications and then issued the certifications after Congress acted.

State agencies are communicating similar expectations today. For example, the California Employment Development Department’s WOTC web page currently states:

Employers should continue submitting WOTC applications within [the] required timeframes. Applications with start dates of January 1, 2026, and after will be accepted and retained pending federal reauthorization.

See EDD CA WOTC

What Does This Mean to Employers Today?

Historically, employers who continued screening and submitting applications during reauthorization cycles were positioned to receive tax credits once the program was reinstated. By contrast, if screening is paused, WOTC-eligibility information is not collected, and applications can not be filed. When the program is later reauthorized, most, if not all, of the potential credits can be lost.

While only Congress can authorize or reauthorize the program, the consistent best practice (based on decades of precedent and agency guidance) is to continue screening and submitting WOTC applications.

For more information, Work Opportunity Tax Credit (WOTC) Reauthorization Update: What Employers Should Know.

WOTC Planet does not provide tax, accounting, or legal advice. This content is for informational purposes only. Employers should consult their tax and legal advisors when evaluating changes to HR or PII handling policies.

An employer submits a WOTC application, along with supporting documents, for a newly hired employee. Everything appears to be in order except that key details on the supporting documents, such as portions of the employee’s Social Security Number, date of birth, or address, have been redacted.

A few weeks later, the response comes back. The WOTC agency is unable to verify the employee’s eligibility based on the information provided. The application is delayed, and additional follow-up is required. In some cases like this one, the credit is ultimately lost.

The issue wasn’t eligibility. It was redaction.

WOTC Requires Personally Identifiable Information

In business situations, protecting personally identifiable information (PII) is essential. Redacting details such as Social Security Numbers, addresses, and other personal data is standard practice—and an important one.

However, certain documentation requirements under the Work Opportunity Tax Credit (WOTC) program often require an exception to the redaction rule.

To support a WOTC certification, employers are often required to provide documentation such as W-4 forms, government-issued identification, or veteran-related records. These documents frequently contain sensitive information, including Social Security Numbers, addresses, dates of birth, and, in some cases, disability-related details.

For WOTC purposes, State Workforce Agencies use these documents to verify key elements of eligibility like age, residence, or disabled veteran status. The personal information on the document also serves to confirm that the document corresponds to the individual who is the subject of the WOTC application. If any of that information is redacted, the agency may be unable to complete that verification.

In many cases, the PII on the document is the very information being verified—so redacting it defeats the purpose of the document itself.

In practice, redactions can lead to delays, follow-up requests, or even denial of the tax credit if documentation cannot be properly validated. In some states, agencies may reject the document outright if it shows signs of redaction, requiring a complete, unaltered version before processing can continue.

The Right Approach for WOTC

WOTC always requires protecting sensitive information. But employers must also meet compliance requirements when documenting the facts of their employee’s WOTC case. Don’t file information beyond what is necessary for verification, but be aware that in some cases, if you redact information, the document might be rejected and tax credits potentially lost.

Contact your state workforce agency to discuss its policies regarding WOTC-supporting documentation and assurances of information security. The U.S. Department of Labor publishes a handy directory that lists the name and contact information for each State WOTC Coordinator. I have found State Coordinators to be friendly and helpful when I reach out to them with questions.

Click here: WOTC State Coordinators

WOTC Planet does not provide tax, accounting, or legal advice. This content is for informational purposes only. Employers should consult their tax and legal advisors when evaluating changes to HR or PII handling policies.

WOTC’s 2026 reauthorization cycle and current legislative pause naturally raise an important question for employers:

Should we continue screening new hires for WOTC while Congress is navigating the program’s reauthorization cycle?

When a tax credit’s legislation enters a reauthorization cycle, it’s reasonable to pause and evaluate. This article provides context based on the program’s long history and how WOTC has been administered during past reauthorization cycles.

While only Congress can authorize or reauthorize the program, the consistent best practice (based on decades of precedent and agency guidance) is to continue screening and submitting applications. Continue reading to understand why.

A Pattern That Has Repeated Over Decades

During its 30-year history, the Work Opportunity Tax Credit (WOTC) has been renewed thirteen times as part of the federal “tax extenders” process. In more than half of those occasions, Congress allowed the program to enter a temporary hiatus while new legislation was being crafted and approved. Every time, the pause was followed by a full retroactive reinstatement.

In other words, Congress reauthorized WOTC, and patient employers (who continued screening new hires and filing their applications) were rewarded with the full tax credit amount.

From a legislative standpoint, the current reauthorization cycle follows a familiar pattern.

What Happened During Previous Cycles?

During prior reauthorization cycles, the U.S. Department of Labor instructed State Workforce Agencies (SWAs) to continue receiving WOTC applications within the required filing timeframes. Employers were expected to continue timely screening. While certifications could not be issued until reauthorization legislation was approved, state agencies continued to receive applications and then issued the certifications after Congress acted.

State agencies are communicating similar expectations today. For example, the California Employment Development Department’s WOTC web page currently states:

Employers should continue submitting WOTC applications within [the] required timeframes. Applications with start dates of January 1, 2026, and after will be accepted and retained pending federal reauthorization.

See EDD CA WOTC

What Does This Mean to Employers Today?

Historically, employers who continued screening and submitting applications during reauthorization cycles were positioned to receive tax credits once the program was reinstated. By contrast, if screening is paused, WOTC-eligibility information is not collected, and applications can not be filed. When the program is later reauthorized, most, if not all, of the potential credits can be lost.

While only Congress can authorize or reauthorize the program, the consistent best practice (based on decades of precedent and agency guidance) is to continue screening and submitting WOTC applications.

For more information, Work Opportunity Tax Credit (WOTC) Reauthorization Update: What Employers Should Know.

Congress is currently considering legislation related to the reauthorization of the federal Work Opportunity Tax Credit (WOTC). As employers may have questions about the timing and implications of this process, it is important to provide clear context and practical guidance.

While Congress has not yet completed its 2026 reauthorization, the WOTC program has historically been renewed following temporary lapses. During these periods, employers are advised to continue normal screening and filing practices.

History and Why Reauthorization Happens

The WOTC program was intentionally designed by Congress to require a periodic reauthorization. Since its creation thirty years ago (1996), the program has been reauthorized thirteen times. In more than half of those occasions, Congress allowed the program to pause temporarily while new legislation was being crafted and approved.

Periods have ranged from about 2 to 12 months — each occasion followed by full retroactive reinstatement by Congress. In other words, despite temporary legislative holdups, there have been no gaps in the availability of the tax credit since 1996. These historical pauses occurred in the following years.

• 1999 (6 months)
• 2002 (2 months)
• 2004 (9 months)
• 2006 (12 months)
• 2013 (12 months)
• 2014 (12 months)
• 2015 (12 months)

These reauthorization cycle pauses are a known feature of the program’s legislative history and do not require employers to alter their participation.

What Employers Should Do Right Now

During temporary reauthorization gaps, state workforce agencies instruct employers to continue screening applicants and to submit WOTC applications on time, just as they would under any other circumstances. This ensures that eligible hires remain fully documented and properly positioned for certification once reauthorization is finalized.

There is no recommendation to pause or modify WOTC screening or filing activity.

WOTC Planet continues to operate as usual and is closely monitoring legislative developments. Employers will be informed as new information becomes available.

Reauthorization — Frequently Asked Questions

1. What does “reauthorization” mean for the WOTC program?
   The Work Opportunity Tax Credit is a federal program that Congress periodically renews through legislation. This structure has been part of the program since its creation in 1996 and is intentional. Reauthorization allows Congress to extend the program for additional years.
   .
2. Has WOTC ever lapsed or been temporarily delayed before?
   Yes. Since 1996, WOTC has been renewed 13 times. Seven of those renewals occurred after temporary gaps caused by broader legislative negotiations unrelated to WOTC itself. These legislative delays are the rule, not the exception.
   .
3. What is the current status of WOTC reauthorization?
   Congress has not yet completed its 2026 reauthorization. Historically, the WOTC program has been renewed following temporary lapses, and employers are advised to continue normal screening and filing practices during this period.
   .
4. Should employers stop screening new hires for WOTC during this period?
   No. During temporary reauthorization gaps, state workforce agencies instruct employers to continue screening applicants and to timely submit WOTC applications, just as they would under other circumstances.
   .
5. Will WOTC applications submitted during the hiatus still be valid?
   Yes. Continuing to screen and submit applications ensures that eligible hires are fully documented and properly positioned for certification once reauthorization is finalized.
   .
6. Does this affect previously certified or claimed WOTC credits?
   No. Credits that have already been certified or claimed are not affected by the reauthorization timing.
   .
7. What should employers do right now?
   No changes to standard WOTC procedures are recommended at this time.
   Employers should:
   • Continue screening applicants
   • Continue submitting WOTC applications within required timeframes
   • Maintain normal documentation practices
     .
8. How will employers be updated as Congress moves forward?
   WOTC Planet is monitoring legislative developments closely and will provide updates as new information becomes available.
   .
9. Will WOTC Planet continue operating and supporting employers as usual during this period?
   Yes! WOTC Planet will continue normal operations without interruption. All screening, application processing, monitoring, and employer support services will proceed as usual. There are no changes to workflows, service levels, or employer responsibilities during the reauthorization period.

What’s the outlook?

State WOTC agencies encourage employers to continue their WOTC participation without interruption. Temporary reauthorization gaps are a known and recurring aspect of the program’s legislative history. By continuing to screen applicants and submit applications on time, employers preserve eligibility, ensuring qualifying credits are not missed once reauthorization is finalized.

WOTC Planet will continue operating as usual and remains actively engaged in monitoring developments and supporting employers throughout this process.

I am happy to repeat some good news for employers whose hiring checklist includes the Work Opportunity Tax Credit (WOTC). The International Franchise Association was recently in Washington, DC, for its 2024 annual advocacy summit. More than 300 members attended the event, during which advocates met with members of Congress to push the organization’s tax agenda.

WOTC was one of three key tax cuts the association promoted.

Click here to read more about the IFA’s summit in a recent article by Mary Vinnedge published by Franchise Wire.