With the Lame Duck Staring Over a Cliff – What Happens to WOTC renewal?
The core Work Opportunity Tax Credit (“WOTC”) program continues its hiatus, as it
has done since its expiration at the end of 2011.Furthermore,
the expansion of specific veterans provisions in the Vow to Hire a Hero Act will expire
at the end of 2012 if no congressional action is taken.When
the lame duck session of Congress reconvenes after the Thanksgiving break on December
1, they will be doing so with no clear direction on how they will address the expiring
personal income tax cuts, looming budgetary restrictions, Business Tax Extenders and
other critical issues.WOTC continues to be discussed inside
Washington as one of the more popular pieces of the Business Tax Extenders – in fact
when members of the House Ways and Means committee were asked to specifically choose
two Tax Extenders that they would consider essential, WOTC was ranked by several members
as high on their lists.In addition, a Tax Extender package
that includes WOTC has already been “built” by the Senate finance committee (earlier
coverage here).WOTC likely will either be renewed as part of the Business Tax Extenders included in Fiscal
Cliff negotiations in December, or as part of a separate Tax Extenders initiative
in January if we fall off the Fiscal Cliff.
As stated earlier on this blog, WOTC is one program that actually works to encourage
employers to hire those who need work the most.Indeed, there
is a direct relationship between an individual who is hired under the eligibility
criteria of the program, and now that individual not being dependent on public assistance.
The savings from removing individuals from public assistance by placing them in jobs
on private payrolls far outweigh the cost of the tax incentive .As
defined by the Department of Labor, key targeted groups benefit from this increased
opportunity for jobs – including unemployed or disabled veterans, SNAP (cash benefit)
recipients, and other individuals facing barriers to employment.Other
tax credit programs similar to WOTC, such as the Indian Employment Credit and Empowerment
Zone credits are also part of the Business Tax Extenders.There
is optimism in Washington that the Extenders will be addressed in the December/January
timeframe taking advantage of momentum started earlier in 2012.
In August, the Senate Finance Committee released a summary of a bi-partisan
bill titled “Family and Business Tax Cut Certainty Act of 2012.” This bill includes
a two year extension of the core Work Opportunity Tax Credit (one year retroactive
to cover 2012 and extending through 2013), as well as a one year extension of the
expanded WOTC provisions of the VOW to Hire a Hero Act.
Importantly, as previously reported here in September, over half of the Republican freshmen signed onto a letter to
the House leadership supporting the renewal of the Business Tax Extenders.Furthermore, co-sponsorship
of the Schock/Rangel WOTC bill, H.R. 2082 (WOTC improvements bill) has increased and
the total number of sponsors is now up to 28.
The hard work of employers to educate Congress on the importance of WOTC is paying
off as the momentum builds and optimism increases for a renewal in the near term.
This weblog is sponsored by TALX.