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White House Budget Proposes Permanent WOTC Tax Credit Program

Friday, April 12th, 2013

Last summer, the House Subcommittee on Select Revenue Measures held hearings to explore HOW to evaluate the numerous tax extenders coming before Congress each year.  Chairman of the Subcommittee, Congressman Pat Tiberi (R-OH) explained at the time:

“[We] need to consider carefully the principles that we should use to evaluate the merits of these policies. Having recently heard from our House colleagues about their views on many of these extenders, it is time for the Subcommittee Members to roll up their sleeves and see how the provisions stack up against what experts consider the principles of sound tax policy.”

Ultimately, some programs should be made permanent while those not worthy of permanence should be eliminated altogether.

A loose consensus has existed among observers that the Work Opportunity Tax Credit (WOTC) program would be a strong candidate for permanence.   The Obama Administrative this week has cast its vote on that issue.

On page 33 of the Fiscal Year 2014 Budget of the U.S. Government we find this little jewel.  (Thank you to Paul Suplizio, President of the WOTC Coalition, who pointed this out in a coalition email early this week.)

The Administration also continues its support of tax credits that will help employ veterans. The Returning Heroes Tax Credit, which provides up to $5,600 to employers, and the Wounded Warrior Tax Credit, which provides up to $9,600 to hire long-term unemployed veterans with service-connected disabilities, were recently extended for one more year in the American Taxpayer Relief Act of 2012. These credits are a part of the Work Opportunity Tax Credit (WOTC), which contains other categories targeted to hiring veterans. The Budget proposes to permanently extend the WOTC.

FYI, the WOTC program is not directly mentioned again anywhere within the 244 page budget document.

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Senate Passes Fiscal Cliff Bill – WOTC, Empowerment Zones and Indian Employment Credit Included

Tuesday, January 1st, 2013

US Senators worked late into the wee hours tonight. Sometime after 2:00 AM Eastern, they finally passed the Senate’s compromise bill to avert the fiscal cliff. They are calling it the “American Taxpayer Relief Act of 2012.”  Read about it on CNN Politics.

The bill now faces an uncertain response from the House of Representatives.

Now that my kids are in bed and the new years eve celebration is over, I took a few minutes to review the bill as passed by the Senate.

For starters, it does include very simple extensions of WOTC, Empowerment Zones, and the Indian Employment Credit.  By simple, I mean it simply replaces the expiration dates in the existing legislation — and thus extends the programs retroactively from January 1, 2012 through December 31, 2013.

The bill also includes a renewal of the research and development credit with some modifications.

What I did NOT find was any mention of the now expired VOW to Hire Heroes legislation.  Nor did I find any mention of disconnected youth. So, if my quick read of the legislation is accurate, these former elements of the Work Opportunity Tax Credit program will need to be address separately after the legislative smoke clears and some of the dust settles.  At least, we hope they will be addressed.

All eyes now turn to the House of Representatives.  Will the House deal with this bill in a timely manner?  And if it does, will House members actually pass it?

We are down to mere hours now before the current Congressional term ends. At that point, if the bill has not been passed by the House, it will come unglued and its parts will be passed over the wall to the next Congress.

Posted in Disconnected Youth, Veterans, Work Opportunity Tax Credit | 1 Response »
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Representative Ted Poe of Texas Introduces House Resolution 5845, to Extend WOTC for Veterans

Tuesday, May 22nd, 2012

House Resolution 5845 was introduced by Congressman Ted Poe of Texas and referred to the House Ways and Means Committee last Friday (on May 18th).  As of this afternoon, the actual text of the bill is not yet available. The title, however, is listed as

H.R.5845 – To amend the Internal Revenue Code of 1986 to extend the work opportunity tax credit for veterans and to allow an exemption from an employer’s employment taxes in an amount equivalent to the value of such credit.

As a bipartisan effort, HR 5845 has two co-sponsors to date. These include Republican Representative Ann Marie Buerkle of New York and Democrat Representative Russ Carnahan of Missouri.

We’ll keep an eye on this. As part of an overall effort to extend WOTC, this can only add a little momentum in the right direction. Right?

Posted in Veterans, Work Opportunity Tax Credit | No Responses »
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NEW WOTC Forms, Electronic & FAX Filing and Transition Relief

Wednesday, February 15th, 2012

Catching up with the VOW to Hire Heroes Act, which was signed by President Obama in November of last year, the Internal Revenue Service has issued an updated Form 8850 and some very important guidance.

Links for your convenience:  The new IRS Form 8850.  IRS 8850 Instructions.  IRS Notice 2012-13

Disconnected Youth: Although not unexpected, I should note that in preparing the updated IRS 8850 Pre-screening Notice, the IRS has removed the questions related to qualifying Disconnected Youth.  This category expired on December 31, 2010. 

We’ve been clinging to the hope that it would be added-back with the extension of WOTC.  I personally have not given up on that hope.  Also, if I am not mistaken, the Department of Labor’s current instructions to State Workforce Agencies still requires them to reserve disconnected youth applications on file pending future instructions.

Notice 2012-13: Notice 2012-13 provides guidance on a number of important issues and should not be overlooked.  I suggest a thorough reading.  Major topics covered include:

  • Background of the new veterans categories
  • Transition relief (a grace period extending the 28-day submission deadline for IRS 8850 for qualified veterans hired between November 22, 2011 and May 22, 2012)
  • The use of electronic signatures for IRS 8850
  • Signing or filing IRS 8850 by FAX transmission
  • Guidance for tax-exempt organizations claiming WOTC

Request for Comments: In addition to the guidance provided by the IRS on these topics, the IRS is also requesting comments about (1) alternative methods for certification of qualified veterans and (2)alternative methods of filing Form 8850.

In summary, with this notice the IRS has given us a lot to think about and a lot of work to do. 

Posted in Veterans, Work Opportunity Tax Credit | 2 Responses »
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DOL (Also) Issues New WOTC Instructions for Vow to Hire Heroes Act

Monday, December 12th, 2011

The following instructions are copied directly from the document recently published by the US Department of Labor.

Vow to Hire Heroes Act – Work Opportunity Tax Credit Provisions: Interim Instructions for State Workforce Agencies and Employers

On November 21, 2011, the President signed into law the “Vow to Hire Heroes Act”, which amends and expands the definition of Veteran target groups for the Work Opportunity Tax Credit (WOTC). These provisions became effective the day after the President signed the Act into law (November 22, 2011).

The Employment and Training Administration (ETA) is working to revise and issue ETA Forms 9061 and 9058, and update all other program-related materials, to reflect changes to the Veteran target groups. During this transition period until revised forms are issued, employers are instructed to continue to use the current ETA Form 9061.

When requesting certification for the Veteran target groups using ETA Form 9061, employers and consultants should do the following:

1) When using the hard copies of Form 9061, indicate in red at the top margin of the form the Veteran target group for which they are requesting certification.

2) When using an electronic form for the 9061 with those states that are fully automated, indicate in black at the top margin of the form the Veteran target group for which they are requesting certification.

Note: ETA will notify states with a date for the end of this transition period and the date when employers are to start using only the revised forms and program materials. State Workforce Agencies are to accept the current forms until additional guidance is provided by ETA.

3) Employers and consultants must continue to adhere to the “28-day timely filing” requirement.

4) Employers and consultants should follow any other instructions IRS may issue. States and Participating Agencies should continue to use the current ETA Form 9062 and follow its instructions, which already provide for the Veteran target groups.

State Workforce Agencies should continue to use ETA Form 9058, Report 1, until further ETA guidance.

 

Posted in Veterans, Work Opportunity Tax Credit | No Responses »
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Vow to Hire Heroes Act: DOL Publishes Summary of New WOTC Provisions

Monday, December 12th, 2011

Thank you to Rik Moore of the National Telecommuting Institute, Inc. for bringing this to my attention early last week.

The US Department of Labor has offered new guidance bringing into focus the WOTC provisions of the recently passed Vow to Hire Heroes Act of 2011.   A summary of WOTC-related provisions from the act has been published on the Department of Labor’s website.  The following is copied directly from that document.  Please download the entire document in order to see footnotes and introductory content not included here.

• Extends the current target group for Veterans receiving Supplemental Nutrition Assistance Program (SNAP) benefits with the same qualified wages cap ($6,000) and maximum tax credit ($2,400).

• Extends the current target group for Veterans with a service-connected disability with the same qualified wages cap ($12,000) and maximum tax credit ($4,800).

• Extends the current target group for Veterans with a service-connected disability unemployed for at least 6 months with the qualified wages cap increased to $24,000 and the maximum tax credit increased to $9,600.

• Establishes a new target group for unemployed Veterans, similar to the Recovery Act of 2009 unemployed Veteran group that expired on December 31, 2010:

o Veterans unemployed for at least 4 weeks with a qualified wages cap of $6,000 and maximum tax credit of $2,400.

o Veterans unemployed for at least 6 months with qualified wages cap of $14,000 and maximum tax credit of $5,600.

o State Workforce Agencies will certify veterans as meeting the required periods of unemployment based on receipt of unemployment insurance compensation.

Note: The 5-year period ending on the hiring day requirement that was part of the Recovery Act unemployed veteran group was rescinded.

• Qualified “tax-exempt” (i.e., 501(c)) organizations can now participate by hiring qualified veterans and are now eligible to claim the WOTC.

• These provisions became effective the day after the President signed the Vow to Hire Heroes Act into law, November 22, 2011, through December 31, 2012.

• The Vow to Hire Heroes Act does not extend any of the other (non-Veteran) WOTC target groups, which currently expire on December 31, 2011.

 

Posted in Veterans, Work Opportunity Tax Credit | No Responses »
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President Obama Signs Veterans’ Hiring Credit Bill

Monday, November 21st, 2011

The VOW to Hire Heroes Act was signed today by President Obama.  (see Business Week article from today.)  As previously mentioned, this bill expands the eligible-veterans categories under the Work Opportunity Tax Credit (WOTC) program and extends the new categories through December 31, 2012. Unless the legislative language was modified prior to final passage, my understanding is that the new WOTC categories will become effective immediately.

Employers now have a job to do – update their WOTC screening tools to identify and document new hires who are members of the newly-targeted veteran groups. Any immediate changes, however, should be made with the understanding that the Department of Labor and IRS will also be updating WOTC regulations, documentation standards, and official WOTC forms. The last time significant changes were made to the WOTC program, it took months and multiple attempts for the government to finalize these changes.

In this regard, I should note that the bill includes language granting some degree of discretion to the Department of Labor when it comes to defining the documentation  requirements for the new categories.  On its face, the bill looks to a veteran’s unemployment insurance compensation history to document the required level of unemployment.  We hope, however, that other approaches will also be approved since not every unemployed veteran will necessarily have been eligible for unemployment insurance compensation.

Now that this bill has been signed by the President, I feel good about digging into the details of its legislative language. Stay tuned for further exploration and explanations.

Posted in Veterans, Work Opportunity Tax Credit | 2 Responses »
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VOW to Hire Heroes Act – Passed By House, Goes to President Obama for Signature

Wednesday, November 16th, 2011

The good news is in. The US House of Representatives has passed the VOW to Hire Heroes Act, which is now on its way to a signature by President Obama. This bill breaks new ground for WOTC in that it not only expands the qualifying categories and tax credit amounts for hiring veterans, it extends WOTC benefits to non-profits.

Stay tuned for more details on how this will work.

Posted in Veterans, Work Opportunity Tax Credit | No Responses »
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Urgent WOTC Call to Action – Unique Opportunity Limited to This Morning

Wednesday, November 16th, 2011

I received late arriving news on Tuesday from Paul Suplizio of the WOTC Coalition that Congressman Aaron Schock will be making the case for WOTC renewal at the House Republican luncheon today. The luncheon will be from noon until 1:00 PM (eastern), on Wednesday November 16th.

The immediate goal THIS MORNING is to give other Republican House members an advance notice that Congressman Schock will be speaking on this subject and to ask them to support him.

If you’ve been lobbying a Republican House member in this effort, this morning is a crucial opportunity. Call your member and speak to their Legislative Director, Appointment Secretary or other staff members and give them the information and request.

Here is the message, as suggested by Mr. Suplizio:

“At the House Republican luncheon today, Congressman Aaron Schock will call for action on a bill to extend the work opportunity tax credit and several other important tax provisions. Please get word to Congressman _______________that Congressman Schock will be asking for action on WOTC and several other important provisions of the tax code which will expire on December 31st . Tell Congressman_____________ it will be very helpful if he or she would support Congressman Schock in this matter.”

Please note, the recent VOW to Hire Heroes Act has already passed the Senate and is being shepherded through the House. It is expected to become law and will expand and extend the WOTC program’s military veteran categories. Congressman Schock’s address will be making the case for extending the rest of the WOTC program.

 

Posted in Uncategorized, Veterans, Work Opportunity Tax Credit | No Responses »
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VOW to Hire Heroes Act of 2011 – Does Not Include Extension of Non-Veteran Target Groups

Wednesday, November 9th, 2011

Legislative language for the VOW to Hire Heroes Act of 2011 is now available. The bill will extend WOTC categories for eligible veterans through December 31, 2012 but retains the current expiration date for all other categories. In other words, if a general extension of WOTC is not eventually included in a tax extender bill (or in some other legislation) the WOTC program will look very different in 2012.

A Senate Fact Sheet is available now with a summary of key provisions.

According to Paul Suplizio of the WOTC Coalition, this is not an unexpected development. (In fact, Paul as much as predicted this in a private correspondence to me on Tuesday afternoon — a day before the bill’s details became available.)

In the simplest terms, this veteran’s legislation involves more than the WOTC program and is written by veterans committees in Congress. Other tax issues, including an extension of the current WOTC program, must be dealt with by the tax-writing committees.

Lobbying efforts on multiple fronts continue to seek a general extension of WOTC.  The anticipated passage of this bill can only add momentum to that effort.

Posted in Veterans, Work Opportunity Tax Credit | No Responses »
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