WOTC Work Opportunities Tax Credit

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WOTCWork Opportunities Tax Credit

• What it is, What it Isnt and How to Make it Work
  for Your Employer Partners

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Craig H. Respess, M.S. Employment Services
Director North Carolina Division of Services for
the Blind
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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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WOTC provides tax credit for employers hiring
individuals from certain targeted groups

• low income individuals
• former AFDC recipients
• 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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Total amount of WOTC taken on corporate income
tax returns by business and industry in 1996
totaled almost 7 million. There were 370,000
certifications issued in FFY 2000.
Statistics of Income Report, IRS, 1996 (pub. 1999)
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Dollar and ene

• With the Credit, employers may take up to 40 of
  the first 6,000 in first-year wages 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
determines likely eligibility by including the
WOTC Pre-Screening Notice as part of the
application process 2. On or before the day
employment if offered, the Notice must be signed
by the employer and employee. The Notice is
mailed to the State Employment Security Agency
(SESA) within 21-days after work begins 3. Based
on information from the 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.)
Skip 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 21 days.
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VR Staff The appropriate staff member can
complete 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
employer only has to complete the IRS 8850 and
send it, with the provided ETA 9062, to the SESA
within 21 days of hire.
A little easier for the employer !
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Where to get the Forms
The RSA Region V CRP-RCEP has posted links on its
teleconference website for all forms needed to
access WOTC for employers at
http//www.ed.uiuc.edu/illinoisrcep/activities/tel
econf.htm
Those web addresses follow
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Where to get the Forms

• IRS Form 8850 can be located at

http//www.irs.gov/pub/irs-pdf/f8850.pdf
For staff convenience, a fill in form is located
at
http//www.irs.gov/pub/irs-fill/f8850.pdf
Instructions for completion are located at
http//www.irs.gov/pub/irs-pdf/i8850.pdf
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Where to Get Forms
Form ETA-9062 is more difficult to locate
http//www.uses.doleta.gov/pdf/Appendix_II/Appendi
x_II__2_ETA_9062.pdf
Should an employer request certification without
the involvement of VR, he cannot use ETA-9062
(condition certification) but must request
certification from the SESA on ETA-9061, located
at
http//www.uses.doleta.gov/pdf/Appendix_II/Appendi
x_II__1_ETA_9061.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 interpreters 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
allows 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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(No Transcript)
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Craig H. Respess, M.S. Employment Services
Director NC Division of Services for the
Blind 309 Ashe Avenue 2601 Mail Service
Center Raleigh, North Carolina 27699-2601 (919)
733-9822 craig.respess_at_ncmail.net