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Tax Credits Blog

WOTC STILL ON HIATUS

The WOTC program ended 12/31/13 but, as has happened in the past, is expected to be renewed.  Congress is addressing the program as we speak and our best hope is that it becomes part of the permanent tax code, a proposal included in the President’s budget.  States have asked us to proceed as “business as usual” meaning we’re supposed to continue sending our client’s applications in within the 28 day rule.  Other indicators that this program will be authorized is that states are continuing to buy online services with Alabama the most recent state to go online.  Other indicators are that large employers like Wal-Mart and Home Depot and the like would take a serious profit and cash flow hit if suddenly they didn’t get their millions of dollars of tax credits and we know how powerful their lobby is.

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WRAPPING UP 2013 CREDITS.

As most of you are aware, states are still behind in processing 2013 credits and in some cases 2012 credits.  These credits are for employees hired in 2013 which technically should be taken on your 2013 tax return.  As is our policy every year, we want to hold off as long as we can before we wrap up the year.  As most companies have a 12/31/13 tax year end which needs to be filed either 3/15/14 or 4/15/14, depending on the structure of the company, we plan on holding off wrapping up the year until 3/1/14.  At that time we will run all the year end reports for you and get them to you by 3/7/14 at the latest.
 
If you have a different tax year or are planning on filing an extension, please let us know so we can accommodate your tax reporting needs.
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Still Waiting

We sit and wait for the Congress to get around to renewing the WOTC program which expired on 12/31/13.  States are continuing to allow us to send them forms although they won't act on them until the program is re-authorized.  The two main criterium of signing the 8850 on or before hire date and the 28 day mailing window is still in place.  Do you think Walmark, Home Depot, and other large employers can take the earnings hit of no tax credits?  Just for fun, using our company averages, Walmart has 2.1 million employees.  Assuming 25% turnover (probably higher) they're going to hire 525,000 people a year.  Using a conservative 12% eligibles, that's 63,000 eligible people.  Using an average credit of $1,500 each (I know its higher since Walmart has targeted veterans who can be as high as $9,600 in creits) thats $94,500,000 in lost profits if the programs are not extended.  Not even Walmart can absorb that kind of loss.

 

Ken

 

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Happy Holidays

"Best wishes for a healthy, happy and prosperous New Year".

 

Please keep checking back to see when WOTC is extended plus any other credits that you can use.

 

Sincerely,

 

Ken Brice

 

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Tax Credit Extenders Predicted!

From the Eastern Iowa Gazette:

Republican Senator Predicts Extensions on Tax Credits

Tax credits critical to wind energy development, college students and veterans seeking to re-enter the workforce likely will be extended, but not before the end of the year, according to Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee.

That’s despite a call from Iowa 1st District Democratic Rep. Bruce Braley for Congress to approve the Student Tuition Tax Deduction, the Work Opportunity Tax Credit for Returning Heroes and Wounded Warriors, and the Wind Energy Production Tax Credit before adjourning for the Christmas holiday.

“Congress should be working every day to create jobs and grow the economy, not hurt it, Braley said Dec. 11. “Congress should act immediately to renew these tax cuts before they expire.”

There won’t be any extension before Christmas, Grassley predicted, but not because of political opposition to the credits. Based on past performance, he said Wednesday, Congress will come back after the New Year and approve four dozen or more tax credits.

“There are a lot of economic interests” represented in the tax credits, he explained. Those interest groups collectively “put a lot of pressure on Congress to re-institute the credits.”

The delay, Grassley said, can be attributed to the ongoing discussion about “massive tax reform.”

If congressional leaders – in this case Finance Committee Chairman Max Baucus, a Montana Democrat, starts talking about extending the credits “it looks like you’ve given up on tax reform,” Grassley said, adding “which isn’t going to happen before Christmas.”

“They don’t want to poison tax reform next year,” he said

In making the case for extending tax credits, Braley said last year more than 18,700 Iowans claimed the tuition relief tax deduction.

The veteran work opportunity tax credits provide anywhere between $2,400 and $9,600 to businesses who hire veterans, he added.

Braley said MidAmerican Energy’s $1.9 billion investment in wind energy announced earlier this year probably would not have happened without the wind energy production tax credit. That investment will create jobs, generate $3 million a year in landowner payments as well as $360 million in additional property tax revenues over the next 30 years in those counties where wind turbines will be built, a company spokesperson said.

Also this week, 2nd District Democratic Rep. Dave Loebsack called on Congress to remain in session to pass a farm bill.

“I don’t want to be accused of being the Grinch who wants to steal Christmas, but passing a farm bill is too important for the House to pack up and go home early for the holidays,” Loebsack said.

However, House leaders said Tuesday that Congress won’t vote on a final deal this year. The soonest action will come will be mid-January when Congress returns from a holiday recess.

Democratic Sen. Tom Harkin, a member of the conference committee negotiating a farm bill compromise, said h continues to “hold hope.”

“There is no final agreement yet, though conferees are making good progress,” he said.

- See more at: http://thegazette.com/2013/12/11/sen-grassley-predicts-tax-credit-extensions-in-congress-but-not-until-2014/#sthash.MIJo9QUV.dpuf

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