Tax Credits Blog

Tax Extenders Bill introduced to Congress

November 27, 2018


Chairman Brady introduced his tax extenders and technical corrections bill last night, and the Rules Committee has scheduled the bill for a House vote this week.

The bill extends most expired provisions—including Empowerment Zones Employment Credit and Indian Employment Credit—to the end of 2018.

Brady’s playing his hand means we can give our full attention to the Senate Finance Committee to get a better bill.

A copy of the bill is attached. 


Provisions related to WOTC:

  • Section 138 extends Indian Employment Tax Credit for 2018.
  • Section 143 extends Empowerment Zone Employment Credit for 2018.
  • Section 203 authorizes an employee retention credit for disaster areas, including Hurricanes Florence and Michael, designated wildfires, and Hawaii/Pacific territories.  Check the bill for disaster areas and dates for which the credit is allowed.

The bill contains matters other than extenders and technical corrections, such as retirement funds and electronic filing with IRS.  There’s an up-front index you can check for matters of interest.


Should you have any questions, write or call 703-587-4566.

Elections Improve WOTC Position in Congress

Democrats’ taking control of the House increases the odds of winning permanent WOTC in the new Congress that’s seated in January.


Current Ways and Means Chairman Kevin Brady will become the ranking member of Ways and Means, and Congressman Richard E Neal (D-MA), the present ranking member, will take the chair.


Contrasted to Congressman Brady’s declared aim to end WOTC, Chairman Neal and committee Democrats rallied around Congressman Ron Kind’s amendment to make WOTC permanent during markup of tax reform last year.


Now Democrats will form the majority of Ways and Means in the 116th Congress and Chairman Brady may be leading the minority without two strong allies, Dave Reichert (R-WA) who is retiring, and Peter Roskam (R-IL) who is in a race too close to call.


Overall, we can expect a favorable attitude toward WOTC by Ways and Means Democrats provided we continue to stress its effectiveness and stick to evidence-based statements when communicating with members and staff.


We don’t know who’ll form the leadership of the House next year—there may be a challenge to Minority Leader Pelosi.  However, we can be confident the Ways and Means tradition, of advancing by seniority, means that Congressman Neal will succeed to the chair and currently-serving Democrats will retain their seats.


In sum, the odds have improved significantly for winning permanent WOTC when 116th Congress takes up an extender measure next year, when several tax provisions including WOTC expire. 


This doesn’t mean our job will be easy.  Democrats who voted against the tax cuts of TCJA made hay during the election by denouncing the resulting budget deficits; they’ll make deficit reduction a top priority when they take charge of the House.  In that situation, Congress chose in the past to extend WOTC a few years at a time, impairing its effectiveness over the years.


Congress returns on November 13th to take up a “technical corrections and extenders” bill to deal with expired tax provisions, including  Empowerment Zone employment credit and Indian employment tax credit.  Members should also continue pressing the case for applying WOTC to the recent hurricane disaster areas, to the new Opportunity Zones, and to repeal the BEAT tax or remove its impact on WOTC.

Do the Right Thing

****Make November the Hire Veterans Month.

With Veteran’s day on November 11th, let’s be proactive and hire a veteran for an open position in your company.  Not only is it the right thing to do considering all they gave for our freedom, but the Work Opportunity Tax Credit program will help pay for the hiring/training of the vet by giving the company a federal income tax credit as per the below schedule.

For-profit companies can get the following tax credit when they hire an unemployed veteran:

A.     If unemployed for at least 4 weeks but less than 6 months, with no service connected disability, the company will earn a tax credit equal to 40% of the first $6,000 paid to the vet - $2,400.

B.     If unemployed for more than 6 months with no service connected disability, the company will earn a tax credit equal to 40% of the first $14,000 paid to the vet – $5,600

C.      If the vet has a service connected disability and is hired within 1 year of separation from active duty, the credit is 40% of the first $12,000 - $4,800

D.     If the vet has a service connected disability and has been unemployed for more than6 months, the credit is 40% of the first $24,000 - $9,600

* unemployed periods are within the year prior to being hired and do not need to be consecutive.  Employees must work a minimum of 120 hours to qualify

Non-profit companies can also take advantage of this incentive as a reduction in the employer’s portion of Social Security (FICA) taxes.  Refer to the categories above:

A.     26% of the first $6,000 in FICA Earnings or $1,560

B.     26% of the first $14,000 in FICA earnings or $3,640

C.      26% of the first $12,000 in FICA earnings or $3,120

D.     26% of the first $24,000 in FICA earnings or $6,240

* unemployed periods are within the year prior to being hired and do not need to be consecutive.  Employees must work a minimum of 120 hours to qualify.

There are many organizations that can help you hire the right veteran including the Veteran organizations in your city or town, online organizations like www.Veterans2Work.com and others.

Veterans bring discipline, teamwork, mission focus and the ability to learn quickly.  Hiring a vet is just good business.  We want to make sure you also get the icing on the cake – all the credits you’re entitled to. If you need help in qualifying a veteran for the Work Opportunity Tax Credit program, please let me know.


Ken Brice, President


US Navy, Vietnam Vet

Latest News from WOTC Coalition's Paul Suplizio

September 16, 2018 Last Thursday, House Ways and Means approved the cornerstone of Tax Reform 2.0, the “Protecting Families and Small Business Tax Cuts Act,” (H.R. 6760) without action by either Republicans or Democrats to include business tax extenders. Senate Finance Committee members now hold the key to whether business tax extenders will be enacted before the end of the month or deferred until after the election. Our goals remain: • Establishment of new WOTC target groups for Dependents of Active Duty Military Personnel and Transitioning Foster Youth; • Reauthorization of Empowerment Zone tax credits and the Indian Employment Tax Credit; • Repeal including WOTC and other Section 38 tax credits in the Base Erosion Anti-Abuse Tax (BEAT); • Expand the Food Stamp Recipient target group to cover recipients above the age of 40; • Authorize WOTC for all recipients of cash Social Security Disability Insurance payments (not just those referred by a State Vocational Rehabilitation Agency or Employment Network under the Social Security Act); • Raise the wage base for people in the WOTC disability target groups from $6,000 to $12,000 to increase the low rate of workforce participation by people with disabilities by enhancing the incentive for employers to reach out to and hire these workers; • Allow WOTC to be claimed against FICA tax by employers with insufficient taxable income to allow their credits to be fully claimed (with Treasury reimbursing the Social Security trust funds). • Allow private non-profit employers to participate in WOTC to expand opportunity in good healthcare and education jobs to veterans, long-term unemployment recipients, people with disabilities, ex-felons, and others. The above goals have strong evidence-based support, as provided in our detailed statements to Congress. Our tasks for the critical week ahead, then, are to renew contacts with Senator Hatch and other members of the Finance Committee and instill a sense of urgency that time is running out, allowing the business tax extenders listed by the Joint Committee on Taxation in JCX-5-18 to remain expired is wasteful of private sector investments in these programs, harmful to the trust required to continue cooperating with the government, and a blow to the goals and beneficiaries of these programs. The bottom line is, “Please act soon to report a bill extending the expired tax provisions and work for passage, if at all possible, before Congress adjourns for elections. When the Finance Committee meets, please consider important improvements recommended by the Work Opportunity Tax Credit Coalition in correspondence with the Committee.” Please call us, 703-587-4566, or reply to this message, if you have any questions or need assistance with your lobbying. PAUL E SUPLIZIO President, WOTC Coalition


IRS has finally issued the rules for the Family and Medical Leave Tax Credit.


If you have a written, defined policy on family/medical leave where you'll pay your employees at least 50% of what they're paid while on leave, this will apply to you.  You can save up to 25% of what you pay your employees while on leave in the form of a tax credit.


Check it out at https://www.irs.gov/newsroom/how-the-employer-credit-for-family-and-medical-leave-benefits-employers


If you would like our help to collect this credit, please call Ken Brice @ 908-239-5497.  Free Money is Free Money