Whats Up With WOTC

1
Whats Up With WOTC?

• Guest Bret Anderson
• Hosted by Vaune Shelbourn

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Legislative Background
The Work Opportunity Tax Credit (WOTC) Program -
created by the Small Business Job Protection Act
of 1996.

• A tax credit incentive created in 1996 to
• Encourage private sector employers - to create
  jobs and training opportunities for disadvantaged
  individuals from 12 target groups with
  significant barriers to employment

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The Consolidated WOTC Program
What is the WOTC Program? ? WOTC focuses
on basic entry-level skills training,
long-term employment, and retention.
Who Qualifies for the WOTC Program? ?
Newly hired employers who must not have worked
for the employer in the past.
Who Does Not Qualify for WOTC? ?
Relatives, dependants of the employer
? The majority owner of the business
The WOTC Program will be available for targeted
job groups of job seekers who first start work on
or before Aug. 31, 2011
4
Current Legislative Changes

• American Recovery and Reinvestment Act (ARRA)
  of 2009 (Recovery Act) signed into law (P. L.
  111-5) on February 17, 2009. Section 1221 amends
  Section 51 of the IRC by adding a new target
  group
• Unemployed Veterans
• Note. Members of this groups can begin work for
  an employer during 2009 and 2010
• IRS Notice 2009-28 provided for a Transition
  Rule Period. Currently, under IRS Notice
  2009-69
• Any employer who hired a member of the new group
  after December 31, 2008 before September 1,
  2009, will have meet the timely filing
  requirement, if the employer submitted IRS Form
  8850 ( ETA 9061) to their State Workforce Agency
  (SWA) not later than October 17, 2009.

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WOTC Veterans Targeted Groups

• 1. Qualified Veterans meet the Wagner-Peyser Act
  definition AND belong to a family that, for 3 of
  prior 15 months, received Food Stamps
• 2. Disabled Veterans have a compensable
  disability, AND
• Were discharged within the prior 12 months,
• - OR -
• Were unemployed at least 6 of the prior 12 months.

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What a Difference a Year Makes!

• March 2008
• Unemployment Rate for Veterans 4.2
• Number of Veterans Unemployed 525,000

• March 2009
• Unemployment Rate for Veterans 8.6
• Number of Veterans Unemployed 1,050,000

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WOTC Veterans Targeted Groups

• 3. Unemployed Veteran
• All individuals who were certified by a State
  Workforce Agency (SWA) as
• having been discharged or released from active
  duty at any time during the 5-year period ending
  on the hiring date and
• having received UI benefits for not less than 4
  weeks during the 1-year period ending on the
  hiring date.

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American Recovery Reinvestment Act of 2009

• Who is considered a "veteran" for WOTC
  purposes?
• Section 51 of the Internal Revenue Code defines a
  Veteran as an individual who
• Served on active duty for a period of more than
  180 days, or
• Was discharged or released from active duty for a
  service connected disability.

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American Recovery Reinvestment Act of 2009
(cont.)

• Documentation and/or collateral contacts required
  for the new target groups eligibility
  determination by the SWAs.
• Unemployed Veterans. Criteria and documentation
  required from employers/consultants and new
  hires
• To determine that the individual satisfies the
  definition of a Veteran (i.e., having served on
  active duty for a period of more than 180 days,
  or having been discharged or released from active
  duty for a service-connected disability a veteran
  must produce
• DD-214. and
• FL 21-802 (Issued ONLY by the Department of
  Veterans Affairs (VA)), which certifies a
  veterans service-connected disability, or
• Valid Military Discharge papers

10
American Recovery Reinvestment Act of 2009
(cont.)

• Documentation and/or collateral contacts
  required for the new target groups eligibility
  determination (Continued)
• Unemployed Veterans. Criteria and documentation
  required from employers/consultants and new
  hires
• To determine that the veteran was discharged or
  released from active duty in the Armed Forces at
  any time during the 5-year period ending on the
  hiring date a veteran must produce
• DD-214, or
• Valid Military Discharge papers

11
American Recovery Reinvestment Act of 2009
(cont.)

• Documentation and/or collateral contacts required
  for the new target groups eligibility
  determination (Continued).
• Unemployed Veterans. Criteria and documentation
  required from employers/consultants and/or new
  hires
• To determine if a veteran has received
  Unemployment Insurance (UI) benefits for the
  required period a veteran must produce
• Valid UI Claims Records

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Tax Credit Benefits

• Claiming the WOTC is subject to
  employers meeting
• the Minimum Employment or Retention
  Period as
• follows
• TIER 1
• ? WOTC is equal to 25 of
  qualified first (1st) -years wages
• if the new hire worked at least 120 hours.
• TIER 2
• ? WOTC is equal to 40,
  qualified 1st -year. wages, if the
• new hire worked at least 400
  hours or more.

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How to Figure the WOTC?
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How Do Employers Apply?

• There are two forms employers must complete for
  each new hire
• IRS Form 8850 Pre-Screening Notice and
  Certification Request
• Must be submitted with ORIGINAL signatures and
  dates (no exceptions)
• Employment and Training Administration (ETA) Form
  9061 Individual Characteristics Form

Note An ETA Form 9062 can be sent if the new
hire was pre-certified. However, these forms
can ONLY be issued by a State Workforce
Agency or a Participating Agency (PA).
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What Does Timely Filing Mean?

• To be considered timely, the IRS Form 8850, along
  with the ETA 9061 or ETA 9062, must be submitted
  to the employers SWA not later than the 28th
  calendar day following the new employees
  employment-start date.

Note When the last day of the 28th calendar
day period ends on a Saturday, Sunday or holiday,
the next succeeding business day will be treated
as the last day of the period (the 28th day).
For a copy of the Directory of WOTC State
Coordinators with the address of your state to
mail the certification request, visit the WOTC
Program website at http//www.doleta.gov/business
/Incentives/opptax