Work Opportunity Tax Credit

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What’s New?

Friday, June 30th, 2017

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

Tuesday, April 18th, 2017

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

Wednesday, April 12th, 2017

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.

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

Wednesday, February 1st, 2017

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

Thursday, December 15th, 2016
dennisross_florida-republican

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

Friday, September 9th, 2016
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?

Thursday, August 25th, 2016

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.

IRS Notice 2016-40 – Extends WOTC Transition Relief 3 Additional Months

Friday, June 17th, 2016

Today, the IRS formally recognized that employers (and state workforce agencies) need more time to adjust to the WOTC-program changes initiated by the Protecting Americans from Tax Hikes Act of 2015.

This morning, the IRS issued Notice 2016-40, which extends transition relief for another three months. At about the same time, the Department of Labor also issued Training and Employment Guidance Letter Number 25-15, dealing with the same issues.

Background:

Back in March, the IRS issued Notice 2016-22, which temporarily modified the normal 28-day application deadline for WOTC applications.  That notice established June 29th as the grand-deadline to submit applications for all employees hired from January 1, 2015 through May 31, 2016.

Built into that schedule, however, was anticipation that the Department of Labor would issue updated WOTC forms in a timely manner.  Employers and state workforce agencies would need time to adjust their procedures and technology to handle all the changes.

This morning, however, we found ourselves just 12 days away from that original deadline, still waiting for the updated forms.  Happily, the new ETA forms are referenced in this mornings Guidance Letter. So I anticipate having them soon — probably later today.

Nevertheless, 12 days is not enough time to make this work.  We now collectively have been granted until September 28th to get our systems into working order and to submit all outstanding applications.

This deadline extension applies to employees hired January 1, 2015 through August 31, 2016.  Other than extending the time frames of transition relief, the recent notice does not otherwise modify the terms of the original IRS Notice 2016-22.

 

 

Deadlines Looming, WOTC Coalition Asks Treasury Department to Extend Transition Relief for 90 More Days

Thursday, April 21st, 2016

Paul Suplizio, President of the the Work Opportunity Tax Credit Coalition has authored an official letter to the Department of Treasury urging the Department to extend the time period granted for WOTC applications under Transition Relief.

IRS Notice 2016-22 provides Transition Relief for employers needing more time to process WOTC applications for employees hired in 2015 and early 2016.  This relief was necessary because of Congress’ long delay in reauthorizing the WOTC program after it expired on December 31, 2014.

Congress passed legislation on December 18, 2015 to reauthorize WOTC for 5 years, including retroactively 1 year to cover 2015.

Under the regular rules, employers face a 28-day deadline to submit a WOTC application for an employee who qualified at their time of hire. Transition Relief, as currently offered by the IRS, extends the application deadline to June 29, 2016 for all eligible employees hired from January 1, 2015 through May 31, 2016.  The WOTC Coalition is asking the Treasury Department to extend the June 29 deadline by another 90 days.

Why? WOTC employers still face a major problem.  The Department of Labor has not yet issued the revised application forms and the official guidance employers need in order to comply with the newest provision of the WOTC tax code.

State workforce agencies that receive the applications and issue certificates for qualifying employers also face challenges. Until the new forms and guidance are issued, they can not update the software systems and online webforms that support the application and certification process.  Agencies in many states are asking employers to delay submitting their applications until the updates and revisions can be made.

Even if the Department of Labor issued the anticipated forms and guidance today, many state workforce agencies would be hard pressed to complete their internal system updates in time for employers to submit all their WOTC applications before the June 29 deadline.

 

Investing in Older Workers Act of 2016 Would Increase WOTC Tax Credit Earned for Hiring Older Workers Suffering Long Term Unemployment

Thursday, April 7th, 2016

Representative Bonnie Watson Coleman of New Jersey has sponsored a bill to increase the amount of Work Opportunity Tax Credit generated by wages paid to older Long Term Unemployment Recipients.

BonnieWatsonColemanPIC

This bill, known as the Investing in Older Workers Act, would increase the maximum qualifying wage from the current $6,000 to $14,000 for qualifying Long Term Unemployment Recipients who are age 55 or older.  As a result, the maximum tax credit amount that could be generated by hiring an an older long-term unemployment recipient would increase from $2,400 to $5,600.

The current law does not distinguish long-term unemployment recipients based on the age of the worker.  Under this proposal, however, the wage basis and tax credit amount generated would not change for long-term unemployment recipients who are younger than age 55.

The Investing in Older Workers Act also proposes an annual adjustment for inflation that would increase the $14,000 wage basis by increments of $50 as inflation raises the cost of living.