WOTC Work Opportunities Tax Credit

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WOTC Work Opportunities Tax Credit What it is, W
hat it isnt How to Make It Work for Your
Business Partners Craig Respess
Updated
2008 Business Services Director
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What it is.Some years ago, federal legislation
allowed for Targeted Jobs Tax Credit (TJTC) which
provided for possible tax credits for employers
hiring people with disabilities. Unfortunately,
TJTC authorization was time-limited, at times not
re-authorized or in other situations was allowed
to lapse. In 1996, Work Opportunities Tax Credit
(WOTC), authorized by the Small Business Job
Protection Act of 1996, replaced TJTC.
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What it is.There was no tax credit legislation
in 2006, however the reauthorization of WOTC in
the Tax Relief and Health Care Act of 2006,
(signed in December 2006) made WOTC retroactive
to January 1, 2006, and continued authorization
until December 31, 2007.
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2008

• In May, 2007, Congress passed the Small Business
  and Work Opportunity Tax Act of 2007, extending
  the WOTC program through August 31, 2011.

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WOTC provides tax credit for employers hiring
individuals from certain targeted groups

• low income individuals
• former AFDC recipients (TANF)
• veterans
• ex-felons
• food stamp recipients
• summer youth employees

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• Supplemental Security Income recipients (SSI)
• VOCATIONAL REHABILITATION REFERRALS

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Dollar and ene

• For VR covered new hires, employers may take up
  to 40 of the first 6,000 in first-year wages
  (12 months) per qualified employee (2,400) for
  employees who work at least 400 hours during the
  tax year.
• Employers can claim a partial credit of 25 of
  wages paid for qualified employees who work at
  least 120 hours but less than 400 hours during a
  one-year period

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What it isnt .
While WOTC is often viewed as an incentive to
encourage employers to hire people with
disabilities .
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Schmidt-Davis Hayward, RSA Longitudinal Study,
RTI International, 2003
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Accordingly, WOTC should not be viewed as a
primary marketing tool in employer development,
job development and consumer placement, but
2,400 worth of icing on the cake for employer
partners.
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How to Make it Work for Our Employer Partners
First, the Official Process 1. Employer determin
es likely eligibility by including the WOTC
Pre-Screening Notice as part of the application
process 2. On or before the day employment if off
ered, the Notice must be signed by the employer
and employee. The Notice is mailed to the State
Employment Security Agency (SESA) within 28-days
after work begins 3. Based on information from th
e employee, the employer documents eligibility
and submits documentation to the SESA
4. The SESA certifies that the individual is
eligible for the WOTC and notifies the employer
in writing for purposes of filing the tax credit
VR and a Better Way
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How to Make it Work (cont.)
a better waySkip the first 3 steps!
While the SESA is the certifying authority for
the tax credit, VR (and only VR) can
conditionally certify any individual it refers
for employment. This conditional certification
will guarantee certification by the SESA as long
as the appropriate documentation is dated on the
first working day and the documents are mailed
within the 28 days (up from 21 days prior to
2007).
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VR Staff The appropriate staff member can comple
te the Conditional Certification (ETA 9062) and
the top portion of the Pre-screening Notice
(IRS-8850) in advance. The staff member can
provide these to the employer or give them to the
consumer if the consumer is conducting his or her
own job search or interviewing process. The
employer must have these at the hire date. These
need to be original copies The Employer The empl
oyer only has to complete the IRS 8850 and send
it, with the provided ETA 9062, to the SESA
within 28 (up from 31 days prior to 2007) days of
hire.
A little easier for the employer !
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Where to get the Forms
LOCATIONS OF DOCUMENTS AND FORMS (January 2007)
ETA-9062 http//www.doleta.gov/OMBCN/WOTC/NewET
A-9062Final205-11-513-051Rev6-24.doc
ETA-9061 http//www.edd.ca.gov/eta9061.pdf IRS 8
850 http//www.irs.gov/pub/irs-pdf/f8850.pdf
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Other Business Tax Credits
Small Business Tax Credits IRS Code, Section 190
, Expenditures to Remove Architectural Barriers
and Transportation Barriers to the Handicapped
and Elderly, enables small businesses to take an
annual tax credit for accessibility
accommodations.
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IRS Code Section 190 What is a small business?
In the year for which the tax credit is claimed,
the business earned 1 million or less in gross
receipts or had 30 or fewer full-time employees.
What expenses are covered? Sign language interpr
eters or readers for employees or customers with
hearing or visual impairments, purchase of
adaptive/modification equipment, publishing costs
of materials in alternative formats, removal of
architectural barriers, or other supports
services (employer paid job coach or use of a
coworker to provide support to employee with
disability)
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IRS Code, Section 190 Dollars ene Business
can claim credit for 50 of expenditures over
250, not to exceed 10,250 on IRS Form 8826.
The tax credit does not apply to new construction
costs or building modifications being if the
building was placed into service after November
6, 1990.
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Architectural Transportation Tax Deduction

• IRS Code, Section 44, Expenditures to Provide
  Access to Disabled Individuals, (Disabled Access
  Tax Credit), provides for tax deductions for
  accessibility related costs regardless of the
  size of the business. Some covered expenditures
  include
• providing accessible parking places, ramps, curb
  cuts
  
• making telephones, water fountains restrooms
  accessible
  
• making walkways at least 24 inches wide
• providing accessible entrances to buildings

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IRS CODE, SECTION 44 Dollars ene The IRS a
llows a deduction of up to 15,000 per year for
architectural and transportation barrier removal
expenses.
Deductions cannot be used for new construction,
completion of renovations being made to a
facility or public transportation vehicle or for
normal replacement of depreciable property
Business cannot take a deduction (under code 44)
and a credit (under code 190) for the same
expenditure)
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Craig H. Respess, M.S. Employment Services Dire
ctor NC Division of Services for the Blind 309 A
she Avenue 2601 Mail Service Center Raleigh, Nor
th Carolina 27699-2601 [phone] craig.res
pess_at_ncmail.net