Work Opportunity Tax Credits

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Legislative Update: WOTC program at risk of repeal

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On Thursday, November 2, 2017, the House Ways and Means Committee released a first draft of tax reform. The Tax Cuts and Jobs Act H.R. 1 includes many of the items listed in the tax reform framework released by the Republicans in September, as well as additional details. The bill proposes fewer tax brackets for individuals as well as higher deductions for middle-class families and lowers corporate tax rates to 20%. It is estimated that H.R. 1 will also curtail federal government revenues by approximately $1.5 trillion over ten years. As it turns out, the proposed legislation also calls for a repeal of the Work Opportunity Tax Credit (WOTC) by December 31, 2017, along with several other provisions.

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Update: Tax Reform and its Potential Impact on the Work Opportunity Tax Credit (WOTC)

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We are now eight months into 2017, and many employers are wondering what the status with tax reform is and how might impact the future of WOTC. As we mentioned in our last update, at the start of this year, House Speaker Paul Ryan proposed a plan to reform our tax code which was designed to be revenue-neutral. His plan proposed a Border Adjustment Tax (BAT) which would tax imports to the United States, but it would not tax exports.

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US Department of Labor Issues Funding to State Workforce Agencies

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State Workforce Agencies (SWAs) responsible for the administration of the Work Opportunity Tax Credit program (WOTC) are working diligently to process retroactive and current WOTC program certification requests. The US Department of Labor Employment and Training Administration is now issuing the balance of FY2016 funding in the amount of $14,856,655 to the SWAs for the

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PATH Act Affects Code Section 179

PATH Act Affects Code Section 179

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The PATH Act increased the expensing break for qualifying real-estate improvements. It also made it easier for improvements and expenses to qualify for bonus first-year depreciation, but the determinations of qualifying improvements and expenses are more complex. The detail of those new complications is lengthy. However, as summarized by Thomas Reuters in their Checkpoint New dated March 8, 2016, as a general rule, the cost of commercial real-estate improvements is recovered over a period of 39 years via straight-line depreciation only.

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WOTC Program Transitional Relief Announced

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Recently released IRS Notice 2016-22 provides for a transitional relief period for the Work Opportunity Tax Credit (WOTC) program. This provides business with the opportunity to retroactively capture the WOTC program for hires made prior to its reauthorization i.e., the “hiatus” or period of time in which the WOTC program was expired due to Congressional inaction on the tax extenders bill.B

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WOTC Five-Year Extension

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The senate voted 53-33 to pass H.R. 2029, the Omnibus appropriations and tax extenders bill and sent the bill to the President for his signature. The bill contains a five-year retroactive extension of WOTC and the VOW to Hire Heroes Act tax credits for hiring veterans. The President has said he will sign the bill. He has until midnight December 22 to do so because government funding runs out at that time.

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Tax Credit Extenders H.R. 2029 Amendment #2 Passes House

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The House has approved H.R. 2029 as amended with The Protecting Americans from Tax Hikes Act, which both renews and expands various tax credit programs. In particular, the Work Opportunity Tax Credit program (WOTC) will be renewed for a period of 5 years, with a retroactive start date of January 1, 2015 through December 31, 2019.

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Can the Same WOTC Tax Credits Cost 50% Less?

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For decades now, the Work Opportunity Tax Credit (WOTC) has brought big money back to companies. In the olden days, AKA 90’s, WOTC was frankly a pain to deal with. Paper forms, discrepancies between federal and local documentation requirements, the hassle of just identifying and certifying applicants meant that smart companies chose to completely outsource the entire process. Times have changed. Scrunchies, JNCO jeans, and painful WOTC practices are out. So why are you still using the same WOTC payment structure?

Can the Same WOTC Tax Credits Cost 50% Less? Read More »

Work Opportunity Tax Credit (WOTC) Subscription Service

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For years, vendor services for the Work Opportunity Tax Credit (WOTC) program has had very little innovation and a stagnant pricing approach. Clients typically pay either a contingency based or per certification fee for a vendor to manage its WOTC program.

However, Walton is offering something unique to the tax credit marketplace —  the WOTC program as a subscription service. This flexible offering, which allows employers the option of taking an entire WOTC program in-house (with up to a 50% reduction in fees) or pursuing a “hybrid” model, in which the client only handles a couple easy-to-use workflows in-house, are now options for our clients. While all businesses can benefit, companies who hire more than 10,000 people per year and who perform their WOTC screening online can see significant costs and savings benefits. This is a major change to the WOTC industry and something all employers should consider.

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