Tax Credits Blog

California Plans Big Changes!

More News from the WOTC Planet!


California Governor Jerry Brown released his May budget revise today, revealing additional intentions for the State’s enterprise-zone program.

From page 68:

“The [enterprise zone] hiring credit will be refocused to specificareas with high unemployment and poverty rates. This credit will be available for the hiring of long-term unemployed workers, unemployed veterans, and people receiving public assistance. The Enterprise Zone sales tax program will be expanded to a statewide, upfront sales tax exemption for manufacturing or biotech research and development equipment purchases.”

This budget document does not specify how these changes might be accomplished. It is clear to me, however, that new legislation would be required because this vision of the program varies substantially from that outlined in current law.

In his 2011-2012 budget proposals, Governor Brown proposed the outright elimination of the enterprise zone program.  He was unsuccessful, however, at overcoming legislators’ opposition to  the program’s death.  Since that time, the California’s legislature has experience a significant change in its membership. Perhaps this time, Governor Brown will be more successful at effectuating these serious although less drastic changes.

Not mentioned in the budget revise are the other enterprise zone tax benefits such as the net operating loss carryover, net-interest deduction for lenders, the business expense deduction and preference points for bidders on certain kinds of state procurement contracts.

UPDATE:  After listening to the California State Assembly Budget Subcommittee  May 22nd hearing on the Governor’s Enterprise Zone proposal, it is crystal clear to all that the Governor intends to replace the Enterprise Zone hiring credit program.


As for the President's push to make the WOTC permanent, stay tuned. No info yet, but we hope soon!


Good News on the Horizon!

President Obama has included the permanent extensions of the Work Opportunity Tax Credits (WOTC) in his current budget.

He wants to add the veteran's category that he signed into law in November 2011 to the IRS Tax Code and, by default, add the other categories as well.

It appears to have a good chance of passing.

Keep your fingers crossed.


Ken Brice



There may be a pony in 2012 credits!

The IRS has issued a bulletin which allows companies to extend the 28 day window requirement to the end of April 2013. Which means that if you had someone who qualified under most of the categories (Veteran's is the exception) and you didn't make the 28 day window, you can still send it in.

What we're hoping is that this ruling will allow companies who did not have their employees fill out the 8850 to retroactively go back and have them fill out the forms and send them in by the end of April.

Not sure how that will all shake out but we're keeping our fingers crossed!


Ken Brice




New York will take a year to catch up

Talked to Bonnie Lance today, WOTC coordinator, and she indicated that it will take the better part of this year to catch up on 2012 and 2013 certifications. She commented that they had over 100,000 applications to process, they didn't have the manpower (nor budget) to move any faster. Companies are going to have to file their 2012 returns without the lion's share of the credits if they are a NY company.


Other states have almost already caught up - Pennsylvania, Maine, Virginia are three of the best.


We continue our quest to make permanent changes in the tax code to accomodate these credits but its an uphill battle with all the positioning in Congress, the Senate and the White House.


Ken Brice



Forms are starting to come in

Its been a long year without any processing of applications that have been sent in. Some states are getting current quickly (Virgina) while some states are struggling with their new software (Pennsylvania) and others are just slow (New York has over 100,000 applications to deal with).

It's unlikely that all states will process all 2012 forms by 3/15 (for corporations) or even 4/15 (for LLCs, S-Corps) so companies have a choice. Choice 1 is to file an extension - pay the tax you owe (or claim the refund) without credits - then on extension day (9/15 or 10/15) file with the credits and get money back. The other option is to file on time and take what credits are in then take the rest when you file the 2013 returns. The best advise I can give you is to check with your tax professional to see what his advise is.

At EmployerIncentives.com we're phasing in the credits as we get them so those companies who want to file by the tax deadline and not use the extension will get their up to the minute credits.

We really need to try to make this part of a permanent tax credit so we don't need to go through this every time the programs expire.


Ken Brice