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Tax Credits Blog

WOTC Outlook for 2020

There appear to be a number of challenges ahead of getting WOTC permanently added to the tax code.  The below is from Paul Suplizio, President of the WOTC Coalition.

 

January 28, 2020

 

Renewing WOTC will be hyper-challenging this election year, not only because we’ll be lobbying candidates face-to-face at every opportunity (congresspersons and senators are more accessible during an election campaign), but also because we’ll have to confront the issue of the Federal government’s running trillion dollar annual deficits now.

 

The deficit will be the major factor in every bill that costs money, which means encountering more arguments to retrench, and more questions about the $19 billion ten-year cost of WOTC.

 

The candidate that holds the power to wreck our plans is the nation’s deficit-cutter-in-chief, President Trump, and more specifically the president’s men on the hill, Treasury Secretary Steven Mnuchin and White House Legislative Director Eric Ueland.  The more tight-fisted they are, the tougher our job.

 

In a few days, the President will issue his budget for FY 2021.  It’ll be a balanced budget based on around 3 percent economic growth, continued improvement in the workforce participation rate, and deep funding cuts for civilian agencies and social programs—a similar package as earlier years.

 

The President will also propose a trillion dollar infrastructure program and a tax cut for the middle class, with costs covered in part by revenue attributable to the tax cut, plus private sector participation in infrastructure development.

 

Hardly any tax extenders have been included in a Trump budget—not funding them is the same as calling for their cancellation.  Certain conservative organizations—Heritage Foundation, AEI, Committee for a Responsible Federal Budget, the Koch organization, and others—are supporting this policy.  We’re always alert to counter their statements.

 

The fact that the President’s budget will be dead-on-arrival on Capitol Hill doesn’t help us because, when House and Senate negotiate on any bill, the White House is a party to the talks since the President has the veto—Secretary Mnuchin or Mr. Ueland show up on the Hill with facts and figures crunched by OMB to make their case.

 

A month ago, we prevailed over Mnuchin/Ueland through good work mobilizing bi-partisan support in both houses, especially in the tax-writing committees.  But the White House has staying power, and with trillion dollar deficits we’ll have to keep our support in Congress from eroding.

 

Our goals remain the same—make WOTC permanent or enact a six-year extension, with specific improvements.  We’ll pick up where we left the talks last year, urging Ways and Means Chairman Neal and Finance Committee Chairman Grassley to agree on a tax measure making some extenders permanent, while compromising on Democrats’ repeated demands for expansion of the Earned Income Tax Credit and Child Tax Credit.

 

The White House and both Parties in Congress have placed high priority on an infrastructure bill this year.  The bill will may include revenue provisions as well as appropriations, so it could be a vehicle for passing WOTC and other tax extenders.  The Ways and Means Committee will hold a hearing, “Paving the Way for Funding and Financing Infrastructure Investments,” at 10:00 AM January 29th to lay the foundation for a larger measure to be developed with the Transportation and Infrastructure Committee.

 

Should the infrastructure bill falter and no stand-alone tax bill emerge, we’ll work to pass a long-term extenders bill on one of the FY 2021 appropriations measures due by September 30th.  September 30 may stretch to December 20th if the Appropriations Committees fall behind writing their bills, as in past years.  But if the Senate can finalize impeachment this week, appropriators will have a huge head start because, due to partisan differences, a joint (House and Senate) congressional budget is impracticable, thus each house will write its own budget.  Budget committees can start now because the top-line spending ceilings for FY 2021 have already been agreed—they were specified in law last summer.

 

By launching our campaign when the impeachment distraction ends, we may be looking at the prospect of permanent WOTC, Empowerment Zones, and Indian Employment Credit, or a long-term extension of these, as early as September 30 if the tax committees cooperate and the White House doesn’t threaten a veto.

 

A final note: over the break we’ve been examining several BLS metrics and studies indicating that the bottom half of the workforce isn’t faring well.  We’ll be able to give you more ammunition to show that WOTC boosts employment of lower-skilled workers, curbs growing homelessness, and stimulates economic development of poverty areas.  This is important because you may encounter the view of some people that because of a low unemployment rate WOTC isn’t needed.

 

Questions or comments are always welcome, by return e-mail or 703-587-4566.

 

PAUL E SUPLIZIO

President, WOTC Coalition 

Reauthorization of WOTC, EZ and Indian Tax Credits

President Trump signed the bill reauthorizing the Federal Income Tax Credits for WOTC and EZ
 
First of all, Happy Holidays to all.
 
President Trump gave us all a nice holiday gift when he signed the bill that reauthorizes the WOTC credits through 12/31/2020 It's only a 1year extension but I'm sure the WOTC Coalition will be hard at work next year to continue their efforts to make the credit part of the permanent tax law.
 
In addition, he authorized the Federal Empowerment Zone*** and Indian Employment Tax Credit programs RETROACTIVELY to 1/1/18. Any companies located within a federal zone can recapture lost credits for 2018 and 2019.
 
***If you think your place of business may be in a Federal Empowerment Zone, contact us and we'll check for you.
 
 
Sincerely,
 
Ken Brice, President
EmployerIncentives.com
908-262-7120

October in National Disability Awareness Month

October is national hire someone with a disability month. Click on the below link to go to the National Disability Awareness website.
 
 
 
EmployerIncentives.com encourages companies to do the right thing and hire individuals with disabilities. We have partnered with numerous non-profit companies that train and place individuals with barriers to employment to encourage the hiring of these individuals and would love to make an introduction. In many cases, these individuals are most likely a member of a targeted group that qualify for the Work Opportunity Tax Credit as well which could subsidize the cost of hiring and training. 
 
Our current reach with companies supported by non-profits are the Northeast, Virginia, Maine, Massachusetts, Rhode Island and Texas. All states have non-profits that can help you find the right hire.
 
Email me at This email address is being protected from spambots. You need JavaScript enabled to view it. if you would like more information on how to make the better hire.
 
 
 
Thank you for doing the right thing.
 
Sincerely,
 
Ken Brice
President
CFO Resources, Employer Incentives Tax Credits
888-236-7339
This email address is being protected from spambots. You need JavaScript enabled to view it.

How Much Did you Overpay Your Taxes Last Year?

How much did you overpay your taxes last year?
The answer is a simple calculation

If you didn’t take advantage of the Work Opportunity Tax Credit (“WOTC”), the answer is $180 times the number of hires you had in 2018.

 

The program rewards companies for hiring from 10 targeted groups, mostly individuals who have been on public assistance in the recent past. Categories include long-term unemployed, unemployed veterans, ex-felons, people who live in a rural county or whose family has been on welfare or food stamps (over 300,000 people go on food stamps each year according to the Dept of Labor statistics). Businesses are required to have their new hires fill out two additional forms prior to hire date, and then send in the forms of those who qualify. It is then up to the individual States to confirm or deny the person’s eligibility for tax credits, which can be as little as $200 (someone who worked the 120-hour minimum and were paid minimum wage) but up to $9600 for an unemployed vet with a service-connected disability.

 

The WOTC program has been around for over 20 years, but not many companies take advantage of it because of certain misconceptions (and a few truths) about the program that make business owners unwilling to go through the effort. The feedback we receive on a consistent basis is that the program is labor intensive and difficult to manage. Dealing with the state agencies that are responsible for the program can be time consuming. Many business owners decide that the program is not worth the effort because keeping track of every employees’ eligibility, responding to State government RFIs, and following up with terminated employees is a lot of work. If the volume of hiring is very high, administering the program is enough work for a full-time employee, but hiring someone to be responsible for it dilutes the benefit. The reason EmployerIncentives.com has a business in the first place is because business owners want the benefit of WOTC without all the hassle.

 

We discovered these credits back in 1996 and went “all in” on helping companies administer this federal income tax credit and today, we save our clients over $5,000,000 in taxes each year. The best companies to make the most of these credits in any for-profit business where there is a decent amount of turnover with entry level workers. On average, 12-15% of new hires will qualify for the program and the average credit that we secure per new hire is $1,500. Some industries have a 25% eligibility rate meaning one of every 4 new hires would qualify for the credit. In this case, the overpayment is number of hires last year times $375.00.

 

This is truly found money as tax credits remain in the owner’s bank account, improving profitability, cash flow and stakeholders’ equity. The program is difficult to administer but the reward is worth it. To find out more about this program, visit our website at www.EmployerIncentives.com.

Workforce, FInancial Challenges Prompt Hospitals to Outsource Home Health Care

Hello everyone, thanks for checking in.  This week, we're reproducing an article from Home Health Care News by Bailey Bryant.  Trends point to more and more hires in the Home Health Care industry, and as such it makes sense to make sure that your hires are being vetted for tax credits.  

 

As more types of care move into residential settings, an increasing number of hospitals and health systems are turning to outside home health agencies to either replace, reinforce or manage their own operations. Workforce challenges and financial struggles are often the catalysts behind their decisions to outsource home health offerings, M&A experts say.

“It’s a definite trend,” Mark Kulik, managing director at mergers-and-acquisitions advisory firm The Braff Group, told Home Health Care News. “The theme is [that] it’s hard to be great at everything. Your core competency as a hospital is acute care. Home care is very different.”

From 2016 to 2018, 177 hospitals or health systems acquired home health agencies, according to proprietary data from The Braff Group. Additionally, during the same period, there were at least 25 joint venture announcements between home health companies and hospitals or health systems.

When the deal is finalized, Lafayette, Louisiana-based LHC Group will take majority ownership and management responsibility of Pennsylvania-based Geisinger’s home health and hospice services, as well as Geisinger affiliate AtlantiCare’s New Jersey locations.

LHC Group also teamed up with Searcy, Arkansas-based Unity Health for a JV in January.

LHC Group will take over both of the health system’s home health locations, which employ about 50 full-time workers who care for nearly 300 patients.

While many hospitals and health systems have chosen to augment their home health businesses by acquiring or partnering with home health agencies, several others have also opted to sell their businesses to up-and-coming providers outright.

On Jan. 1, Beaumont Health — one of Michigan’s largest health systems — teamed up with Kettering, Ohio-based Alternate Solutions Health Network to form a new JV to take over its home health and hospice offerings. Alternate Solutions Health Network is a national provider of post-acute solutions.

With a net revenue of about $4.5 billion, Southfield, Michigan-based Beaumont had more than 175,600 inpatient discharges in 2017. Alternate Solutions, which will manage the JV’s daily operations, has more than 20 JVs under its belt in Florida, Ohio, Virginia, West Virginia and — now — Michigan.

The goal of the joint venture is to deliver care at a reduced cost to roughly 16,000 patients in southeast Michigan, John Kerndl, executive vice president & CFO of Beaumont, told HHCN in January.

“Working with a specialized provider with home health and hospice expertise improves our ability to serve current and future patients,” Kerndl said, noting that Michigan has a “challenging commercial reimbursement market.”

One way the JV will presumably tackle those challenges is by cutting payroll costs. Under the new model, employee compensation will be structured “more like a home health company” than a health system, Kerndl said.

While most hospitals pay employees hourly, home health agencies commonly compensate workers based on visits per day, with varying compensation rates for travel and mileage, Kulik said.

“[Home health agencies] have engineered the economics differently to accommodate reimbursement so that they can stay in business,” he said. “A lot of the hospitals have kept the symmetry inside and outside the hospital the same, and that makes for a very difficult time trying to keep your head above water.”

Financial struggles also contributed to Oregon-based Samaritan Health Services’ decision to outsource its home health offerings earlier this year, according to President and CEO Doug Boysen.

In February, the nonprofit healthcare system — which operates five hospitals throughout Oregon — sold its home health division, which served patients in the state’s Benton, Lincoln and Linn counties.

Wilsonville, Oregon-based Signature Healthcare at Home — which provides home health, hospice, personal home care, palliative care and rehabilitation therapy to patients in the Pacific Northwest — took over March 1.  

Ultimately, workforce challenges made Samaritan’s business model difficult to sustain, Boysen said when the news was announced.

“It is a challenge to recruit and retain the specialized workforce needed,” Boysen said. “In addition, the size and scope of our three-county service area requires significant staff travel time and prevents us from leveraging economies of scale. The result of all these factors is annual financial losses over multiple years, with no indication that the situation will improve.”

Meanwhile, home health agencies build their around businesses around those economies.

Outsourcing from the start

University of Maryland St. Joseph’s Medical Center (UMSJMC) was an early adopter of the home-based care outsourcing trend.

Rather than attempt to tackle workforce and reimbursement challenges alone, UMSJMC chose to outsource its home-based services from the start four years ago.  

The decision came after the state of Maryland created a readmission reduction incentive program in an attempt to lower the state’s historically high readmission rates and, in turn, cut Medicare costs.

UMSJMC turned to Maryland-based Maxim Healthcare Services — a nationwide provider of home health, medical staffing and other services — for help.

As part of the partnership, Maxim pairs recently discharged high-risk patients with community health workers who provide personal care and help clients tackle social determinants of health.

“For us to have done this initially on our own with no experience with regard to what’s really going on in the home, we wouldn’t have anticipated the workforce challenges — how to go about creating the workforce, the issues with licensing in the home, the rules and regulations around that [or] the healthcare needs of patients in their homes,” Dr. Gail Cunningham, chief medical officer at the UMSJMC, told HHCN. “This allowed us to pretty quickly stand up a program that provided immediate benefit to a lot of patients.”

So far, the program has cut high-risk patient readmissions in half and reduced hospital spending for the same group by 35%.

As the health care system shifts toward value and the home-based care landscape becomes more complicated due to the caregiver shortage persisting and reimbursement models changing, the outsourcing trend will likely continue, Kulik predicts.

“Don’t be surprised if you see more announcements coming this year,” Kulik said. “I think you’ll see those [hospital and health system] CEOs more and more seeking partnerships or at least evaluating the benefits of those partnerships today in 2019 and 2020.”