Imagine changing your company’s payroll provider and deciding, while you’re at it, to replace your accountant, insurance agent, and employment attorney. After all, they all deal with employees and money, right?

Sounds ridiculous. Yet something remarkably similar sometimes happens with the Work Opportunity Tax Credit (WOTC). A company switches its payroll provider and, as part of the package, moves its WOTC services too. It seems convenient. One vendor, fewer relationships, everything under one roof.

There’s just one problem: WOTC isn’t a payroll function.

WOTC begins in the recruiting and hiring process, before an employee ever receives a paycheck. Federal law requires WOTC prescreening to be completed on or before the day a job offer is made.

Payroll, of course, comes later. By the time an employee is entered into the payroll system, the opportunity for timely WOTC prescreening has ordinarily passed.

Payroll data does have a role, but the traditional payroll process does not. After an employee’s WOTC eligibility has been established and certified, their wage and hours information determine the amount of tax credit the employer can claim. But that’s a downstream accounting function that often occurs annually in preparation for an employer’s federal income tax return.

WOTC is a professional specialty requiring its own expertise, workflows, and information management.

WOTC specialists spend their days navigating eligibility rules, government certifications, documentation requirements, and state agency procedures. They manage a myriad of relationships between the employers they serve and the numerous government agencies responsible for verifying and certifying their qualifying employees.

So, when changing payroll providers, ask a simple question: Should we replace a successful WOTC program just because we’re changing who prints the paychecks?

Certainly, payroll companies can provide excellent WOTC services, and some have developed sophisticated WOTC programs. But WOTC expertise isn’t an inherent feature of payroll processing. WOTC and payroll are fundamentally different functions that should be evaluated independently.

WOTC Planet does not provide tax, accounting, or legal advice. This content is for informational purposes only.