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Latest News on Payroll Tax Cut Extension and WOTC Renewal

Wednesday, February 15th, 2012

I thought you might appreciate the following excerpt from a recent email update I received from WOTC Coalition President Paul Suplizio.  Some of this has been reported in the news but Paul’s perspective adds something important.  I am re-publishing this with his permission.

In a statement [Monday], Speaker John Boehner and Majority Leader Eric Cantor said they will no longer require offsets for the $100 billion cost to extend the payroll tax cut to the end of the year, and are preparing a bill that will extend the payroll tax cut separately if the conference reaches no agreement, leaving the conference to continue working on unemployment insurance and Medicare doctors’ payments.

The conference committee is being notified of this new Republican position, which means $100 billion of the total $160 billion cost of the payroll bill would not have to be offset.

The conferees still have time to reach agreement on a total package, but if they don’t the Speaker is free to make the effort to pass a stand-alone bill extending the payroll tax only. This would remove payroll tax as a partisan issue, but the Speaker is likely to need Democratic support because of the roughly ninety Republicans who would not vote to increase the deficit.

Senator Reid is expected to make the extenders part of the bill he has said he will introduce if the conference bogs down. He will have the option to bring it to a vote or attach it to any stand-alone payroll bill that passes the House.

Unemployment compensation and doc fix remain “must do” issues, even if payroll tax is passed separately—thus we continue to work for the tax extenders to be added to HR 3630 in conference.

If $40 billion for tax extenders is added, the total requiring offset would be $100 billion for unemployment insurance, doctors’ fix, and the tax extenders. Democrats are arguing unemployment insurance should not be offset, and a good case can be made for not offsetting the tax extenders.

Comments: The Republican leadership’s concession on not requiring a budget offset to the “cost” of the payroll-tax-cut extension reduces the total amount of offsets needed to pass all of the priority items.  One of those priority items is the tax extenders, which will presumably include WOTC.

What this boils down to is that we are likely to at least see legislation soon with tax extenders attached.  Whether Congress can pass it, of course, is a separate question.  Nothing is certain and the political environment remains volatile.

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Senate Committee on Finance Holds Hearing on Tax Extenders (Including WOTC)

Monday, January 30th, 2012

Parallel to the House-Senate conference on extending the payroll tax cut, the Senate Committee on Finance is holding a special hearing on Tuesday to examine the 50 or more tax extenders that expired in December.  The hearing is titled: Extenders and Tax Reform: Seeking Long-Term Solutions.

According to a Monday article in Accounting Today,

At Tuesday’s hearing, Senate Finance Committee Chairman Max Baucus, D-Mont., ranking Republican member Orrin Hatch, R-Utah, and the witnesses will discuss how best to approach tax extenders in order to create certainty and allow businesses to invest confidently and create jobs.

Witnesses scheduled to testify include Rutgers University economics department chair Rosanne Altshuler, George Mason University senior research fellow Jason J. Fichtner, University of Texas law professor Calvin H. Johnson, and U.S Chamber of Commerce chief tax counsel Caroline L. Harris.

Many of these details can be had on the hearing’s page on Senate Committee on Finance’s website.  Click here.

Submit a Statement for the Record (We all should do this now)

You and your organization or business can submit a statement to the committee to get your views into the record.  It’s a simple process but there are a few details of protocol that must be observed.  The following is copied directly from the Senate website (emphasis added by underlining).

Any individual or organization wanting to present their views for inclusion in the hearing record should submit a typewritten, single-spaced statement, not exceeding 10 pages in length. Title and date of the hearing, and the full name and address of the individual or organization must appear on the first page of the statement. Statements must be received no later than two weeks following the conclusion of the hearing.

Statements should be mailed (not faxed) to:

Senate Committee on Finance
Attn. Editorial and Document Section
Rm. SD-219
Dirksen Senate Office Bldg.
Washington, DC 20510-6200b

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WOTC Call to Action – New Developments for WOTC and Tax Extenders

Friday, January 27th, 2012

There are new developments in the effort to include WOTC and other tax-extenders in the upcoming payroll tax cut bill. A Senate-House conference is currently negotiating to extend the payroll tax cut, which expires in February.

Paul Suplizio, President of the WOTC Coalition, reports that Ways and Means Chairman Dave Camp is “waving off in advance an expected offer from Senator Baucus” to include tax extenders in the bill. Max Baucus is Chairman of the Senate Finance Committee.

Mr. Suplizio goes on to explain, however, that while Chairman Camp’s statements should be taken seriously they do not halt the current tax-extenders discussion.

The Senate and President Obama both want the tax extenders in the bill. As a result, WOTC and other tax extenders have become a negotiating chip for Chairman Camp and the House Republicans who want to include other important but controversial provision in the bill.

For WOTC supporters, our job now is at least two-fold. (1) We must persuade Senate conferees to INSIST on including WOTC and the other extenders in the bill. And (2) we must persuade House Speaker Boehner that it will be in the House Republicans’ interest to agree on their inclusion.

Paul Suplizio said it well in a recent correspondence to members of the WOTC Coalition.

“We need to drive home to Speaker Boehner that not including the extenders is putting House Republicans on record as favoring a tax increase on businesses, farmers, communities, and workers—a tax increase they don’t need at this stage of the recovery.”

Is your fax machine and telephone working? Time is short. Time to roll.

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Senators Baucus and Reid — Tax Extenders Should Be Included In Payroll Tax Cut Deal

Tuesday, January 24th, 2012

Negotiations are on again to extend the 2011 payroll tax cut until the end of 2012.  The House-Senate Conference met on Tuesday — the first time this year — and the road to an agreement appears rocky.  Optimism is alive – but there are also some big disagreements to sort through.

Both sides of the discussion agree that a deal must be made before the end of February when the current 2-month extension expires.

Of great interest to us is the question of the other tax extenders. The House of Representative’s payroll tax cut proposal does not include the tax extenders or WOTC.  However, Senate Majority Leader Harry Reid and Senate Finance Committee Chairman Max Baucus are reported to have both suggested today that the Conference should examine the expired tax provisions at this time.  (See today’s article in The Hill, scroll down to end.)

Democrats are looking to possibly tuck other provisions into a payroll-tax deal. On Tuesday, Baucus and Reid both suggested that the conference committee examine tax provisions that expired at the end of 2011 — the so-called tax extenders.

On the other hand,

The [House] Ways and Means Committee chairman [Republican Dave Camp] also told reporters after the meeting that conferees should first try to resolve core issues — such as the payroll-tax cut, unemployment benefits and the Medicare “doc fix” — and leave other issues until the end of the negotiations.

 “I think initially we need to have a pretty strict scope of conference,” Camp said. “Let’s figure out what we have been tasked with doing.”

Representative Camp is well aware of WOTC and has been the focus of significant lobbying efforts.  We are keeping our fingers crossed.  Keep your phone and fax machine ready.  The conference members need to hear from you.

More from the New York Times.

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WOTC Extension Must Wait Until 2012

Friday, December 23rd, 2011

It’s been all over the news. The U. S. House and Senate agreed to pass a 2-month extension of the 2011 payroll tax reduction. Unfortunately, the tax extenders including WOTC, Research and Development and other important tax incentive programs were not included in this hotly contested legislation.

It is clear, however, that the White House and Senate leadership continue to support tax extenders, which are one of the Senate’s top priorities.

With the agreement to pass the 2-month extension of the payroll tax reduction, Senate and House leaders have also agreed to appoint conferees to hammer out a full 12-month extension. It is in this process that we have our next opportunity to see tax extenders, including WOTC, gain traction for 2012 renewals.

Paul Suplizio, President of the WOTC Coalition, has set the Coalition on course to begin a new campaign on January 2, 2012. The objective, of course, is to persuade House and Senate conference members to include the full-WOTC extension and other tax extenders in the final payroll bill.

Stay tuned . . . it won’t be long.

 

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Obama Jobs Proposal Includes Significant Hiring Based Tax Reductions

Friday, September 9th, 2011

As far as I know, no one has seen the nitty gritty of President Obama’s jobs proposal (as outlined in yesterdays speech), because legislation to implement the proposals has not yet been offered. According to articles published after the speech in the New York Times, Los Angeles Times, and San Francisco Chronicle, we do have estimates of the dollar amounts involved.

The plan in total is worth about $447 billion.  Tax cuts make up $245 billion of that, meaning actual spending proposed comes to about $200 billion.

Here’s a summary from the San Francisco Chronicle.

Employers: Payroll taxes would be cut in half for small employers in the next year and would be waived if employers create new jobs or raise their employees’ wages.

Workers: The 2 percent payroll tax cut for workers, approved in 2009, would be raised to 3.1 percent, cutting employee payroll taxes a total of 50 percent for an estimated 160 million American families.

Infrastructure: The federal government would spend more than $100 billion on infrastructure projects such as roads, bridges and high-speed rail.

Schools: The plan allocates $30 billion to upgrade 35,000 schools, plus $10 billion to establish an “infrastructure bank” to help finance local projects.

Jobless benefits: Long-term unemployment benefits would be extended and the program revamped to allow out-of-work Americans to earn pay for up to nine weeks of job training. 

Rehiring: States and local governments would receive $35 billion to rehire laid-off teachers and first responders. 

Hiring: Businesses would receive tax credits to hire long-term unemployed people

 Missing from this description is any mention of the Work Opportunity Tax Credit; however, if my memory serves me, President Obama’s speech did mention tax credits for hiring military veterans – a clear allusion to his previous touted Returning Heroes and Wounded Warrior Tax Credits. And that, of course, is an augmentation of existing credits offered through WOTC.

Given the current climate in Washington, I’m not certain if support from President Obama is helpful or harmful to the goal of extending hiring tax breaks like the WOTC program.

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President Obama Pushes WOTC Expansion to Help Wounded Warriors and Returning Heroes

Friday, August 5th, 2011

Poster from Department of Veterans Affairs

This morning during a speech at the Washington Navy Yard, President Obama took notice of high unemployment among US military veterans. Although he did not mention the Work Opportunity Tax Credit (or WOTC) by name, he described two new or expanded hiring tax credits obviously designed to fit into the WOTC rubric.

Rebecca Kaplan of the National Journal published an article describing the event this morning.   The White House also published a fact sheet yesterday describing the proposals in some detail.

Thankfully, the Obama Administration has given the proposed tax credits exciting new names!  From the White House’s fact sheet:

 ******************************

Returning Heroes and Wounded Warrior Tax Credits

Under the Recovery Act, employers who hired certain unemployed veterans were eligible for a tax credit of up to 40 percent of the first $6,000 of wages, for a maximum credit of $2,400. This credit expired at the end of 2010.

The President will call for two new tax credits:

The Returning Heroes Tax Credit is a new hiring tax credit that will provide an incentive for firms to hire unemployed veterans.

* Short-term unemployed: A new credit of 40 percent of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been unemployed at least 4 weeks.

* Long-term unemployed: A new credit of 40 percent of the first $12,000 of wages (up to $4,800) for employers who hire veterans who have been unemployed longer than 6 months.

The Wounded Warrior Tax Credit will double the existing tax credit for long-term unemployed veterans with service-connected disabilities.

* Maintain the existing Work Opportunity Tax Credit for veterans with service-connected disabilities (currently the maximum is $4,800).

* A new credit of 40 percent of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been unemployed longer than 6 months.

The paperwork process for claiming these credits will be simplified by streamlining the burdensome certification that firms had to undertake to claim previous credits.

 *******************************

As I reported previously, President Obama’s administration has expressed his support for extending the WOTC program at least through 2012.  

Interestingly, the last comment from the Fact Sheet about “streamlining the burdensome certification” process for these veteran categories appears to be an allusion to HR 2082 or the Work Opportunity Credit Improvements Act. 

Section 3 of HR 2082 is titled “Alternative Certification for Certain Targeted Groups.”  If enacted, Section 3 would sometimes allow employers to bypass the formal WOTC certification process although complete documentation of an employee’s eligibility would still be required.

HR 2082 does not (yet) include the new veteran categories offered by the White House; however, the obvious allusion to the existing bill’s streamlining provision suggests there may have been some coordination in the matter.   This should provide additional fuel for WOTC advocates supporting passage of HR 2082.

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WOTC Advocates in DC to Meet With Assistant Secretary of Labor

Thursday, August 4th, 2011

Assist. Sec of Labor Jane Oates

Supporters of the Work Opportunity Tax Credit program have successfully secured a meeting time with the US Department of Labor’s Assistant Secretary Jane Oats.   Ms. Oats is Assistant Secretary for the DOL’s Employment and Training Administration (“ETA).

In the wake of the Department of Labor’s recent OMB recommendation to terminate the program, WOTC advocates hope to persuade DOL officials to more actively support renewal and funding of the WOTC program with Congress.

WOTC is currently slated to expire on December 31, 2011. A bill to reauthorize and extend WOTC through 2014 was introduced on June 1st and subsequently referred to committee on June 24th.

HR 2082, or the Work Opportunity Credit Improvements Act, was sponsored by Representative Aaron Schock (Rep, IL) and currently has 6 cosponsors. These include:

* Charles Gonzalez Dem, TX

* John Lewis Dem, GA

* Ronald Paul Rep, TX

* Charles Rangel Dem, NY

* Edolphus Towns Dem, NY

* Allen West Rep, FL

The WOTC Coalition is calling on supporters to contact their own members of Congress and to urge them to become cosponsors of the bill.  See previous post.

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(Federal) Job Creation Tax Credit Act

Thursday, July 28th, 2011

Photo of Senator Sheldon Whitehouse from His Senate Website

If you haven’t already heard, US Senator Sheldon Whitehouse (Democrat of Rhode Island) introduce the Job Creation Tax Credit Act in June.  The bill would expand on the HIRE Act of 2010, providing tax incentives for the hiring of unemployed individuals.

Quoting the Senator from his website:

For each qualified hire made in 2011, the business would receive a tax credit equal to 15% of the wages paid to the new employee. If the new employee remains employed, or if the business hires additional employees in 2012, it would be eligible for a 10% tax credit equal to those employees’ wages next year.

Furthermore,

The tax credits would be refundable, meaning that businesses would benefit from them even if they are not currently profitable. The higher credit in 2011 would encourage employers to hire new workers as soon as possible, and the additional credit in 2012 would encourage employee retention and additional workforce expansion.

 A new hire qualifies in the same way one did under the 2010 HIRE Act — being unemployed for the 60 days prior to hire.

 According to the congressional legislation tracking website, as of today (July 28, 2011) there has been no additional action on this bill since it was introduced and referred to committee on June 23rd.

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The Rocky Road of WOTC

Wednesday, July 20th, 2011

No.  I am not thinking about ice cream.  Well, maybe I am.   But with all this talk about the Work Opportunity Tax Credit program, one wonders…. “Has the life of this program always been so volatile?”

“Why, yes,” you say, ”it has.”

WOTC is currently slated to expire on December 31, 2011. A quick review of WOTC’s legislative history, however, demonstrates that it has already expired and been renewed 8 times since it’s creation in 1996. The New Hampshire Employment Security Department has published a convenient history of the program’s history. I summarize the following from their document.

WOTC was:

* Created by the Small Business Job Protection Act of 1996, which authorized WOTC for a 12 month period

* Extended for 9 months by The Taxpayer Relief Act of 1997

* Reauthorized and extended for another 12 months by The Tax and Trade Relief Extension Act of 1998

* Extended for an additional 30 months (through December 21, 2001) by the Ticket to Work and Work Incentives Improvement Act of 1999

* Extended for 24 months by The Job Creation and Worker Assistance Act of 2002 (note this was not passed until March 2002, meaning the reauthorization was retroactive after the program expired on December 31, 2001)

* Retroactively reauthorized and extended for 24 months by The Working Families Relief Act of 2004. This act was passed in October 2004, when WOTC had already expired on December 31, 2003

* Retroactive reauthorized and extended for 24 months by The Tax Relief and Health Care Act of 2006. This act was not passed until December 2006 — almost 12 months after the program had expired on December 31, 2005.

* Further extended for another 44 months (through August 31, 2011), just 7 months later, by The Small Business and Work Opportunity Tax Act of 2007

* Extended 4 months, through December 31, 2011 by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

One might also wonder, what happened to the participating employers, benefiting workers, and the marvelous WOTC government bureaucracy during these periods between expiration and reauthorization? Did they go away for a while, take a vacation, a long nap?

I lived through a number of these periods. We continued business as usual for the most part . . . but with a finger continually crossed while the lobbyists and congress people everywhere worked to achieve an extension.

Employers continued hiring new workers and submitting WOTC employee applications to their state WOTC centers. The WOTC government bureaucracies continued to function, accumulating massive backlogs of pending certifications, since they were not authorized to evaluate and issue certifications under a non-existing program. When the next round of legislation was finally passed, the paperwork began to flow and eventually everyone caught up.

WOTC has been a well-loved success from many perspectives for the past 15 years. If legislation providing a program extension can not be achieved within the context of the very heated political discussion now taking place in Washington DC, then it is likely to be achieved in the following months of 2012.  My personal bet, however, is that an extension will be forthcoming soon.

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