Since its inception in 1996, the Work Opportunity Tax Credit program has served as a highly effective way to reduce involuntary unemployment for this nation’s citizens. By incentivizing employers to hire people who are struggling to find work, these tax credits directly reduce the need for public assistance and help communities and businesses thrive. Because of this long track record for success, Congressmen Mike Thompson and Tom Reid recently issued a joint letter urging legislators to extend the Work Opportunity Tax Credit permanently.
Like many successful programs, the WOTC has already been extended a number of times. The most recent extension is part of the PATH Act in 2015, which continues the WOTC until the end of 2019. Rather than letting the WOTC expire or simply be renewed for another limited term, Thompson and Reid recommend a longer-term solution. “We urge you to cosponsor H.R. 2213 to permanently extend the Work Opportunity Tax Credit, which helps people move from public assistance to sustainable employment.”
Who Wants This Bill to Pass?
Not surprisingly, this bill is receiving widespread support from professional organizations like SHRM and the American Staffing Association. Veteran-focused organizations also have a vested interest in removing obstacles to employment, especially for disabled vets. Finally, the U.S. Chamber of Commerce and other economic development NGOs are on board with the recommendation since it helps businesses and the economy as a whole.
Benefits for Job Seekers: Since 1996, more than 24 million disadvantaged and stigmatized people have been able to gain access to the workforce and get off welfare as part of this important program. Millions more can expect to benefit from the continued availability of these tax credits.
Benefits for Government: The WOTC program pays for itself many times over. For example, over the past 10 years, federal and state assistance programs are estimated to have saved more than $200 billion dollars in SNAP, TANF, Medicaid and subsidized housing payments.
Benefits for Businesses: For-profit companies can reduce their federal tax liability by up to $9600 per new hire under the WOTC, including seasonal and part time workers, with no limit on the number of eligible hires from any target group. Non-profits also qualify for these tax credits when hiring from the veteran target groups. For larger organizations, the total savings could easily add up to six figures per year. For smaller businesses, the impact of hiring even a few candidates who qualify under the WOTC could make a big impact on the bottom line.
What Might Happen Next?
Hopefully, the legislature will agree with this recommendation and give the WOTC the support it deserves. Of course, specifics like the dollar amount for various credits and the qualifying target groups would likely still change over time. But enshrining this proven incentive as an enduring part of the IRS code would help employers make the WOTC a permanent part of their hiring programs.
Whether or not the bill passes, the WOTC is available now and will likely be extended—even if only for a few more years. This means businesses have the opportunity to capture thousands in credits if they take the time to fill out the right forms. Or, they can simply bring in an experienced partner to handle the process and ensure they don’t miss a single qualifying new hire.
To learn more about how our team can take WOTC off your hands while putting money back into your business, click here.