Will the WOTC law become permanent?

We are routinely asked by those with an interest about the future of the WOTC law given the vagaries of the current Congress.  You can rest assured that we keep a close watch on that and are heavily-invested in the legislative process.  You may be aware that the current WOTC law is set to expire at the end of 2013 and its continuation is subject to Congressional action.  A WOTC Solutions representative spent a number of days in Washington, D.C. recently to “take the pulse” of where things stand, including personal meetings with a number of key Congressional offices with more to come later in the summer.  The “bottom line” is that the leadership of the Republican-controlled U.S. House has decided that there will be no revenue bills passed and sent to the Senate until they consider the political timing to be right.  Under the Constitution all revenue bills must emanate in the House to be passed over to the Senate for amendments and conference. 

Eventually the House will be forced to pass tax/revenue legislation which will then be sent to the Senate for consideration and to compromise agreement on differences with the House version before it is then sent to the White House for the president’s signature. On the Senate side the Finance Committee is Chaired by Senator Max Bauchus (D, MT) who is a firm supporter of the WOTC and unlikely to approve any tax/revenue law that does not include extending or making the WOTC permanent.  And, in its summary of its own proposed budget the White House (for the first time in history) included the permanent extension of the WOTC to provide employers with much-needed stability so the law works as intended.  We are told on the House side that there is not likely to be much resistance to this compromise since the WOTC is a proven and effective law using market principles to incentivize employers help the “hard to hire” find work.

So, things appear to be positive for improved stabilization but we must all remain vigilant and continue communicating with our Congressional representatives to see this good law continued.  We will continue to keep you posted as the process continues. If you have specific questions or would like to contribute your own efforts, please send us an email and we will get you pointed in the right direction!

From the desk of Kay Thomason...

Questions I get asked all the time:

How much does an employer typically get from WOTC?
How much your business gets depends on how long the qualifying employee works for you. As long as the employee reaches 120 hours worked, you will get a tax credit. If the employee reaches 400 hours worked and $6000 in wages earned, you get the maximum amount of tax credit, which is $2400.

Do I only need one certificate for my business or do I need one for each employee?
The certification is for an individual employee, but the tax credit will be applied to your business. A different application must be submitted for every employee that falls under one of the Work Opportunity Tax Credit target groups.

I have a certificate, but I did not get it in time for this years taxes. Have I lost my tax credit?
Absolutely not! An unused WOTC credit can be saved for up to 20 years, or it can be carried back a year. That way you can use it when you need it most.

How much paperwork is involved in applying for the Work Opportunity Tax Credit?
There are two main forms (IRS Form 8850 & 9061) that need to be submitted within 28 days of hiring the WOTC-eligible employee. Any mistakes in the forms could result in a denial. Then there is the verification process, which is different for every target group. Verifying the employee is hardest and longest step in the WOTC process.

How can I know if my employees are WOTC eligible?
Here at WOTC Solutions, we will screen your incoming workforce for free. By attaching to forms to your hiring packet, we can make sure this tax credit doesn't slip through the cracks.

Who qualifies for the WOTC certificate?
You can find a detailed description of the WOTC target groups here at our website. However, the employee will not qualify if they are a family member or have worked for your business before.


I hired someone a few months ago, but I just found out about the Work Opportunity Tax Credit. Can I still apply?
Unfortunately, no. One of the biggest barriers to receiving WOTC certification is the 28 day deadline. All application forms must be completed, signed, and postmarked within 28 days of hiring a WOTC-eligible employee. The state WOTC offices will not process any submissions outside of this deadline.

How does WOTC reduce the cost of doing business?

This is a question we answer every day and  it's really simple. One of the biggest expenses for employers is the cost of hiring. When you add up time spent, cost of training, turnover, cost of screening and interviewing potential employees hiring becomes a major expense, and the bigger your company is, the bigger the bill.

The Work Opportunity Tax Credit can increase your bottom line significantly. Obtaining this credit can actually turn your hourly rate of pay from $15.00 an hour into $10.50 an hour. Here's how:

If you hire one new WOTC eligible employee at a rate of $15.00 per hour and that employee works 400 hours and is paid gross wages of $6000.00 you will then earn the maximum value of your credit at $2400.00. Including the service fees for collecting the credit, at a standard rate of 25% of your credit's value, you have just saved $1800.00 reducing the hourly cost of that employee by $4.50 to $10.50.

If you're saving an average of $4.50 an hour by hiring WOTC eligible employees, you could save enough to hire 4 new employees instead of 3,  increasing your company's productivity while reducing the cost of doing business. That  is what this truly valuable hiring incentive is intended for, rewarding employers who are hiring and creating jobs in their communities.

From the desk of Kay Thomason...

Have you tried calling the IRS toll free number lately to ask a simple question? You may have noticed the wait on the IRS hotline has gotten longer and longer. This is because there are fewer people on the other end. In response to the federal sequester, many government departments are downsizing to cut down on costs. This has quadrupled the already long wait to talk to someone at the IRS, and these are only the first round of furloughs. You can read about more about the cuts here.

Instead of waiting on hold for 2 hours, get in touch with a representative immediately at WOTC Solutions. We have the experience and the knowledge to answer your WOTC related question no matter how simple, no matter how in depth it may be. We can help you with the particulars of filing for the certificate, who qualifies, what your deadlines are, and what steps to take once your certificate is in your hand, and you can be certain  there won't be a two hour wait on the phone. We know you have better things to do with your time, quite frankly, so do we.

Screen your new employees to lower your company's liability

2013 WOTC applications are being processed very quickly and WOTC certificates are being released in the states of Alabama and Ohio. Many WOTC offices across the country are updating their application process to an online system that expedites the eligibility verification process significantly. This is great news for any employers adding to their workforce in 2013. Although 2012 Certificates are trickling out and unfortunately being put in line to be verified behind 2013 applications, at least employers can feel more assurance that they will be able to get their hands on this valuable hiring incentive for this year. Remember, the WOTC eligibility come in the form of your new employees, so make sure you are screening for that eligibility.

It makes even more sense now to get a WOTC process in place (prior to hiring new employees) that goes hand in hand with your business's hiring process so that you never miss out on this $2400.00 credit per employee again. You can save them up all year and practically eliminate your federal tax liability. It's like having a tax credit savings account!

From the desk of our WOTC Certification Manager, and resident WOTC expert, Kay Thomason.

Under the VOW To Hire Heroes Act of 2011, the WOTC was expanded to allow tax exempt organizations to gain the WOTC tax credit for hiring veterans. The tax credit for non-profit organizations is up to $6,420 per veteran, depending on the length of the veteran's unemployment before hire, the number of hours worked and the veteran's first year wages. This addition applies to all veteran categories. 

The certification process is the same for non-profits, including the 28 day deadline for the Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit. Since the credit is processed separately from the company's tax return, the IRS will refund the amount of the tax credit. The credit can be used against the employer's share of social security tax. A non-profit organization should not reduce the amount of their tax return in anticipation of the tax credit.

If you are a tax exempt organization looking for eligible workers, contact your local Veteran Affairs office or call us and we will answer any questions you might have on this subject.