8/7/2019 February 2011: The Work Opportuity Tax Credit (WOTC) and Senate Bill 146

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8/7/2019 February 2011: The Work Opportuity Tax Credit (WOTC) and Senate Bill 146

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FEBRUARY 2011

The Work Opportunity Tax Credit (WOTC) and Senate Bill 146

The WOTC is a ederal income tax credit program administered by the U.S. Department o Labor. It provides businesses with anincentive to hire and retain individuals rom groups that have a particularly high unemployment rate or other special employment

needs. The program reduces the ederal tax liability and helps job-seekers to move toward economic sel-sufciency.

Generally, businesses that hire rom selected groups o qualifed job-seekers can generate direct ederal tax savings ranging rom$1,200 to $9,000 per qualifed employee, which include summer youth hires, certain adult hires, such as residents o ederal

empowerment zones or renewal communities (among others), disabled veterans, and long-term Temporary Assistance or NeedyFamilies (TANF) recipients.

On January 26, 2011, Senate Finance Committee Chair Max Baucus and Ranking Member Chuck Grassley introduced Senate Bill146, the “Veterans Employment Transition Act” (“VETs”) This job bill will reward employers who hire veterans who had recently

completed their service in the military with a tax credit up to $2,400 per veteran. As discussed above, the WOTC had a similartargeted group or businesses that hired disabled veterans. However, that category expired December 31, 2010. Unlike the ormer

disabled veterans targeted group, the VETs job bill will allow servicemen and women to provide documentation directly rom the

Department o Deense to the potential employer without having to obtain WOTC certifcation. An eligible veteran under the VETsjob bill is an individual who has let active duty in the past fve years with 180 days o qualifed active duty, including individuals who

were on active duty in their respective state’s National Guard, or had a service-connected disability.

In general, employers seeking to beneft rom the WOTC program must complete IRS Form 8850 Pre-Screening Notice and Certifca-tion Request o the WOTC, as well as ETA Form 9061 Individual Characteristics Form, and mail the orms to the respective states’

State Workorce Agency’s (“SWA”) WOTC Coordinator, no later than 28 days rom the new hire employment start date. However, un-der S. 146, the 28 day requirement is waived. Under the VETs bill, job-seekers seeking employment under the expanded veteranstargeted group may provide Department o Deense documentation directly to the prospective employer, and as such, no additional

certifcation will be required.

Please contact our tax proessionals to discuss how the new change to the WOTC program can beneft your business.

As always, please call i you would like to discuss any o these items urther.

Your Tax Partners,

Mark G. Cook, Partner Richard A. Linder, Partner Jon Widdowson, Partner

Steven J. Cupingood, Partner David Neighbors, Partner Michael Wu, PartnerJohn A. Eckweiler, Partner Todd Northrup, Partner Don Leve, Partner

Dan B. Faulk, Partner Javier Ramirez, Partner

Andrew L. Gantman, Partner Thomas E. Wendler, Partner

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