Tax Credits Blog

WOTC well positioned for upcoming budget talks

From Vaughn Hromiko of wotcplanet.com:

Although not new news, it’s important to reiterate.  The Work Opportunity Tax Credit (or WOTC) has the stated support of the White House and the majority-party leadership in the U.S. Senate.  In fact, the President’s budget proposes to make WOTC a permanent feature of the tax code.

With the stage now being set for budget talks, the WOTC Coalition is ready to press this issue.  WOTC will be on the table for discussion.  By no measure, however, is an extension a sure thing. We are approaching a key moment when WOTC proponents must intensify their lobbying efforts.

Paul Suplizio of the WOTC Coalition addressed the issue this morning.

Passing a bill to fund the government through December 15th is essential before budget talks on spending and taxes between Congress and the White House can get underway. Those talks will be up against a December 15th deadline for completion, and a looming sequester on January 15th will be a further incentive to deal.

The question of extending WOTC and other expiring tax provisions will be on the table during these talks; thus, the period from October 1st to December 15th will be vital to WOTC’s future and demand an all-out effort by our Coalition.

The following is published here with permission.


Subject: Senate Republicans Agree To Move Immediately To Government Funding Bill
From: Paul Suplizio
Date: Mon, September 23, 2013 2:57 am

September 23, 2013

Passing a bill to fund the government through December 15th is essential before budget talks on spending and taxes between Congress and the White House can get underway. Those talks will be up against a December 15th deadline for completion, and a looming sequester on January 15th will be a further incentive to deal.

The question of extending WOTC and other expiring tax provisions will be on the table during these talks; thus, the period from October 1st to December 15th will be vital to WOTC’s future and demand an all-out effort by our Coalition. Our thanks for the outpouring of support we’ve been getting.

We enter those talks with support of the President—the result of your Coalition’s efforts over four years to persuade key White House staff in the National Economic Council and OMB to include permanent WOTC in the President’s budget. This occurred for the first time in the fiscal 2014 budget issued in April.

By extension, we will have the support of the Democratic majority of the Senate as well as three experienced negotiators in the House—Minority Leader Nancy Pelosi, Assistant Leader James Clyburn, and Minority Whip Steny Hoyer. Congressman Charles Rangel, Emeritus Chairman of Ways and Means and lead supporter of WOTC among House Democrats, will be guarding the ramparts.

If the parties reach agreement, our aim is to win permanent authority for WOTC in the bill Congress passes to implement the deal—likely a further Continuing Resolution. If a debt ceiling bill is agreed sooner and negotiations on tax extenders are far along, we will work for WOTC passage on debt ceiling.

If the Parties fail to reach agreement, our aim is persuade House and Senate leaders to pass a tax extenders bill before Congress adjourns for the holidays in December.

Under the Constitution, revenue measures must originate in the House. The House has done its duty to fund the government, passing H.J. Res. 59, “Continuing Appropriations 2014” last Friday.

The Senate is poised to take the first vote Tuesday on a motion by the Majority Leader to end debate (known as “cloture”) and take up the bill. The motion will pass easily, as Republicans say they will join Democrats and Independents in voting to bring up the bill.

The Senate will then be in post-cloture debate—a 30-hour period in which amendments may be offered. Senator Reid, for the majority, will propose an amendment removing the House’s provision defunding Obamacare. Using a longstanding Rule of the Senate, Senator Reid will amend his own amendment, thus blocking any further amendments, and debate will proceed on the H.J. Res. 59 as amended by the Majority Leader.

Nevertheless, Republicans leading the charge for defunding Obamacare may try to tie up the Senate to gain leverage via points of order or delaying tactics.

By Thursday or Friday, Senator Reid should be able to move to end debate and vote on final passage, which will require 60 votes. Senator Cruz and others plan to filibuster this motion and persuade their colleagues to stand together, which will deny Democrats the 60 senators needed to vote on final passage.

When and how this impasse will be resolved is uncertain, but with time running out for returning the bill to the House for passage before midnight September 30th, Senator Reid’s plan is to hold further cloture votes until he wins 60. If he’s successful, the bill will pass.

Democrats are in revolt against the House’s funding levels for 2014, and are railing at the President’s promise to accept them. Senator Reid hasn’t made a decision on amending the House bill to increase funding levels and try to avert sequester—he’s under heavy pressure by his caucus, but knows he’s courting a shutdown if the House returns the bill to the Senate, as time will run out.

President, WOTC Coalition


Now's the time!

With the goverment wrestling for positioning on the budget now is the time to ask your legislator to support the permanent extension of the Work Opportunity Tax Credits. A simple letter explaining how important these tax credits are to your business should get their attention. In most states, you can send an email directly to your Congressman or Senator or both simply by going online and typing in the person's name. Even though it is my opinion that this part of Obama's budget will survive whatever political wars happen over the next week, additional support can never hurt. Ken Brice .

There's nothing that says you can't

Many companies are wrestling with how to match credits with income since the credits for 2012 hires are still not determined by many states.  Can you book them in 2013 or do you loose them if you don't file an amended return for 2012 when they all sort themselves out.

I talked to one of the authors of IRS Notice 2013-14 which is the authority to eliminate the 28 day filing requirement and the requirement that the forms be signed on or before their hire date for all hires in 2012 and the first quarter of 2013.  She stated the standard IRS policy which said you must match the credits to the earnings. When I challenged her on the fact that the IRS notice allowed companies to go back to 2012 hires and file the paperwork with the state agencies up to and including 4/29/13, a time when most corporations should have filed their returns her reply was to file an amended return to capture those credits.  When I told her that companies don't want to file amended returns her reply was "there is nothing writen that says companies cannot report the 2012 credits in 2013".

I've also heard that ADP is telling its clients that there is a ruling to the effect that the IRS has allowed a company to file their 2012 credits in 2013 - I'd love to get a copy of that ruling - if anyone has one, please email it to me at This email address is being protected from spambots. You need JavaScript enabled to view it.


New 9600 Forms Are Coming!

In our perpetual and persistent quest for Tax Credits for our clients, we have found that some of the target groups are more difficult to get certified than others. The more information we can extract from each employee at the time they sign the forms, the faster they will be certified. Not to mention that trying to get target group proof from a recently (or long) terminated employee can be an awkward process, one that I’m sure their employer would rather not undertake especially if the termination wasn’t pleasant. This is a great way to increase your certification rate, as some state agencies will deny people if the supporting docs don’t come in on time.

To this end, we are in the process of submitting a new form 9600 for approval. This new 9600 will be more detailed, and will prompt the employer to submit supporting documentation if the employee checks off certain target groups. This way we can submit the docs to the State Workforce Agencies sooner and head them off at the pass, sort of speak.

But, with this new form everyone must realize that the 28 day window still applies. Ask the employee for the supporting docs, but you still have to mail us the 8850 and 9600 with enough time for us to process and file them. If the employee doesn’t get you the docs in time, that’s ok. We can submit them later, as long as the original forms are there in time.

So, be on the lookout for a new form in your inbox, and be sure to replace the current 9600 you are using. Increase your certification rate, increase your credits, increase your free money, and lower your bottom line.


Behind the Scenes at Employer Incentives

Tax Credits are a tricky business. Lots of paperwork, record keeping and following up.  Here’s a look at what we do behind the scenes at Employer Incentives.

From when your new hires sign the forms, the clock starts ticking. We have 28 days to receive the forms, do all our in-house processing, and file them with the individual States. WOTC and the VOW To Hire Heroes Act are federally mandated programs and tax credits, but the states control the processes. When we receive the 8850 and 9600, our staff goes through each form and searches several federal and state government databases on each applicant. Once we feel we have researched each applicant to the fullest, we then file the applications with the state within the 28 day window. After this, we play the waiting game.

Some states are faster than others, some are lenient, and some are very strict with the rules. This is why some states have a higher certification rate than others. We are in constant contact with all the SWA’s (State Workforce Agencies) making sure that they are doing all they can do to get your employees certified.

The states will then send us one of 3 letters for each individual: Certified, Denied, or Needs more Info.  When we receive a denied letter, there really isn’t anything we can do. The state has decided that this person isn’t eligible for whatever reason. When we get a needs letter, we go to work exhausting every resource possible to get the supporting documentation to the state in order to certify this employee. We have contacts at the National Records Center and Social Security Administration for verifying veterans and disability records. We will sometimes contact our clients for the supporting documentation. The documentation can be as simple as a copy of the employee’s records (Driver’s License, W4 or I9), or something more difficult to obtain such as Proof of Veteran Status, disability income, conviction/release dates, or vocational rehab services (these are job programs run by the government and Veteran’s Administration). To get the most employees certified, if an employee checks off any of these hard to prove target groups PLEASE ask them for documentation and send us a copy. In fact, it would really help us help you get all the credits you can.

When we get Certification letters in, the other side of our service kicks in. We will start sending you a monthly Excel Spreadsheet with the names of the certified employees and some blank cells asking for payroll data. In order to calculate the correct amount of credits, we need the hours worked and gross pay for the employees over certain specific time periods. The time periods are important on this worksheet, as WOTC has different levels of tax credits for each target group and hours worked. Some are even credits you can take again during the employee’s second year with you. We also use these monthly worksheets to keep track of the credits already earned in prior months, so you can be assured you are getting the correct credits as well as the maximum possible.

At the end of the tax year, you will get a report that details your credit activity for the year, a copy of the certification letters for your records, and a filled out IRS Form 5884 that you include with your tax return. Give that to your accountant (or file it yourself), and Voila! You have just put money, FREE MONEY, back in your pocket! (And who doesn’t want free money????)