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WOTC 3.0 coming soon sign along the road

WOTC 3.0 — Coming Soon?

Could WOTC 3.0 be on the horizon?

Since the inception of WOTC back in 1996, the program has gone through several modifications; all geared toward promoting the hiring of individuals that face barriers to secure employment. For instance, what we refer to as the 2.0 version of the program went into effect several years ago. At the time, the most significant enhancement to the program was the long-awaited acceptance of an electronic signature for the time-sensitive Form 8850. Continue reading “WOTC 3.0 — Coming Soon?”

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Legislative Update – July 29, 2020

Legislative Update – July 29,2020

New Stimulus Bill in the Works

Senate Republicans just unveiled the initial draft of a trillion dollar stimulus bill. While the bill will require negotiation with Senate Democrats and is expected to undergo significant modification, there are several components that are positive, particularly for employers. Therefore, we want to share what we know about the bill so far and give you an idea of where things seem to be headed.

New WOTC Target Group

The bill includes a newly created WOTC target group: 2020 Covid-19 Unemployment Recipients. This is defined as someone who was receiving unemployment insurance in the week they were hired or in the previous week. The time period for eligibility is from the enactment date of the bill until January 1, 2021. The credit amount is up to $5,000 per qualified individual (50% of the first $10,000 in wages paid). If approved in the final bill, this additional tax credit would be significant. As of June 18th, there were 20 million people, or about 15% of all wages paid in the US, in this group.

An All New Safe and Healthy Workplace Credit

The proposal bill also calls for the creation of a new tax credit called “The Safe and Healthy Workplace Credit.” The bill creates a temporary tax incentive through the end of 2020 to help businesses defray costs for testing, personal protective equipment (PPE), and reconfiguring workplaces. This would apply to every type of business; from storefront to manufacturing plants; offices to health-care facilities.

This program is designed to promote and enable our employers to take the federal and state recommended steps to prevent the spread of Covid-19 in their workplaces. This helps businesses afford these costs so they can bring back their employees quickly while alleviating the fears of spreading the virus. The refundable tax credit against payroll taxes is for costs incurred by the business for Covid-19 safety costs, such as testing, PPE, reconfiguring, and technology. The credit is limited to $1,000 per employee for the first 500 employees, $750 per employee for the next 500 employees, and $500 for each employee thereafter.

For example, a retail store with 40 workers seeks to resume providing jobs and services to its community — the challenge is how to do so safely…

In order to reconfigure their store to help maintain social distancing, provide adequate sanitation stations, and implement other protocols to ensure their workers are safe at work, they spend $60,000. These dollars go toward PPE, screening/testing, disinfecting, and plexiglass shields. That company would receive a $30,000 tax credit against its federal payroll taxes. If that credit exceeds their payroll tax obligations, the company receives a refund from the Internal Revenue Service (IRS).

New Workplace Safety Screening Solution – coming soon!

We are delighted to inform you that the Walton team is collaborating with some of our partners to develop and launch new products geared to help businesses reopen safely and reduce the risks associated with exposure to the Coronavirus. Our solution will monitor temperatures and screen all employees daily prior to entry and deliver detailed contact-tracing intelligence to help companies track and minimize potential exposure risks. Stay tuned for more info…

What’s Next?

Negotiations will begin and continue through the first week of August, so we can expect to see a vote in the Senate by middle of August. As your trusted advisor, we will continue to keep you abreast of critical developments and changes as things progress.

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Legislative Update October 28, 2020

Will WOTC get renewed?

As we enter the elections and remaining part of Q4, many companies are wondering about the status of the Work Opportunity Tax Credit (WOTC) and its renewal. For those who may not know, the current WOTC program is set to expire on December 31, 2020, and unless congress passes legislation, the program will enter into a state of hiatus. Hiatuses are not uncommon for WOTC. In fact, since WOTC was created in 1996, it has had its share of hiatuses, which generally means that employers continue to screen and file the time-sensitive Form 8850 as usual, but certifications for employees hired after the program expired are not issued until the program in renewed. This leaves us with the question that most employers are wondering about: Will WOTC get renewed?

Possible New Target Group for WOTC

As is generally the case in an election year, legislation becomes more and more difficult as we approach the election. As we have seen, this proved to be true with the hopes for an additional stimulus bill. Everyone has been hopeful that a new economic stimulus bill would pass since there is a good chance the bill would include a new target group for WOTC centered around unemployment driven by the pandemic. With unemployment running very high, this could prove to be a significant group. There is also the possibility of expansion of other credits as well. However, as it turns out, the hope of a new stimulus bill appear to be stalled until after the election, at which point a great deal will depend on what happens in the election results.

Republicans have disagreed among themselves as to what should happen with the next round of stimulus. Senate Republicans wanted no more than $500B in additional aid. They felt there is no need for any additional stimulus. The administration, while somewhat inconsistent in their position, has argued for a much larger package, around $1.8 trillion. If they were successful in negotiating that package, which would probably have been the case with the administration package. Hence, the reason Senate Majority Leader Mitch McConnell (R-KY) was suggesting to the administration to postpone the stimulus bill until after the election.

3 Major Areas of Disagreement

Additionally, there have been disagreements between the administration and the Democrats. There are three major areas of disagreement.

  1. First is the size of the stimulus, with the Democrats wanting a much larger amount.
  2. Second is the issue of state and local aid because it might be perceived as bailing out poorly run cities.
  3. And the third issue relates to liability protections for businesses, with the Democrats opposed to such protections.

While the election will have a significant impact on what will happen with the stimulus bill, there are bills which will need to be passed in a lame-duck session. For instance, the current continuing resolution funding the government expires in early December; therefore, another CR of funding bill will need to be passed soon. As such, we continue to push and lobby for these bills to contain an extension of the expiring tax provisions, including WOTC.

Next Steps

In conclusion, the next steps on the stimulus bill are contingent on the election results.

  1. The first question is who wins the election. If Joe Biden wins, there will likely be pressure to avoid negotiating with the administration in a lame-duck session and just wait until the new administration assumes power. Hence, they would delay the stimulus until February. However, House Speaker Nancy Pelosi (D-CA) has expressed she would prefer not to wait; however, it is unclear if the bill could pass the senate.
  2. The second question is whether the Republicans maintain control of the senate. If the senate shifts to Democratic control, they will be able to control what bills will be brought to the floor. Therefore, there will likely be pressure to wait for February to enact more stimulus. Regardless of the outcome, we remain optimistic there will be an extension of the expiring provisions, including WOTC, and believe there is also a good chance the program will be expanded. Exactly how all that will unfold will depend on what happens November 3rd.

We hope you find this update useful. As your trusted advisor, Walton remains committed to driving lobbying efforts and keeping you abreast of important updates. As always, should you have any questions, please don’t hesitate to contact us.

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tax reform stamp

Update on Tax Reform and its potential effect on WOTC

On September 27, the Republicans revealed the framework of what they hope to accomplish with tax reform. Herein is a general overview of their plan and the impact we believe it can have on the Work Opportunity Tax Credit (WOTC). Considering the proposed reduction in the corporate tax rate from 35% to 20%, deductions and credits are not necessary to the same degree that they were in the past. Under the Republicans’ framework, two popular credits are explicitly referenced to be continued:

  • Research and Development credit
  • Low-Income Housing credit

The remaining credits, including WOTC, and other deductions are subject to review by the tax-writing committees, leaving their fate unclear at the present time. Continue reading “Update on Tax Reform and its potential effect on WOTC”

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28 day WOTC deadline with IRS form 8850

IRS Extends WOTC Form Filing Deadline

IRS Issues Notice to Extend WOTC Form Filing Deadline

On April 9, IRS issued Notice 2020-23 to provide relief relating to certain deadlines for taxpayers in response to the COVID-19 national emergency, declared in March of this year. Under the notice, a “time-sensitive act” due to be performed on or after April 1, 2020 and before July 15,2020 can be performed by July 15, 2020.

While WOTC and Form 8850 were not explicitly mentioned in the notice, the Notice explicitly includes as an “Affected Taxpayer” a person performing any of the time-sensitive acts identified in Revenue Procedure 2018-58, which provides an updated list of time-sensitive acts that may be postponed in the event of a federally-declared disaster, under Section 7508A. The list includes employers pursuing Work Opportunity Tax Credit (WOTC), which requires the filing of Form 8850 with a State Workforce Agency no later than 28 days from the employee’s start date. As a result, the filing deadline for 8850s due between April 1 and July 15 has been extended to July 15, 2020.

This is great news for employers that may have missed 8850 filings during this time period. This also demonstrates the overall strong support of the WOTC program. In the coming days, Walton’s team will work with employers impacted by this notice to take advantage of this great opportunity. In the meantime, if you have any questions, don’t hesitate to contact us.

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man walking through dark tunnel

Walton’s Response to COVID-19 Crisis

As we navigate through this unprecedented environment, I felt it is important to take a moment to express our hope for you and your employee’s good and continuing health during this difficult time and to inform you of Walton’s plans to continue to deliver services and support for our clients. Walton has operational and technical services that are centralized to deliver support to our clients and distributed for technical operations. To ensure the safety and well-being of our employees, Walton is employing additional safety measures that will allow us to continue to operate in a safe environment. Continue reading “Walton’s Response to COVID-19 Crisis”

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time running out in hourglass

Senate passes H.R. 1865

We are almost at the finish line! As expected, this afternoon, the Senate passed H.R. 1865, Further Consolidated Appropriations, 2020, which contains a one-year extension of WOTC and a retroactive extension of Federal Empowerment Zone as well as Indian Employment Credit through December 31, 2020. The President is expected to sign the bill into law by tomorrow. Extenders’ provisions will become effective on the signing date, and official text of the new public law will be published in coming days. We will let you know once it’s signed into law!

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time running out in hourglass

Breaking News: House Passes H.R. 1865

Important developments are happening very rapidly. As expected, yesterday afternoon, the House voted 297-120 to approve H.R. 1865, Further Consolidated Appropriations Act, 2020, with a one-year extension of WOTC, including VOW to Hire Heroes Act and retroactive extensions for Federal Empowerment Zones (FEZ) and the Indian Employment Credit (IEC).

Continue reading “Breaking News: House Passes H.R. 1865”

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business discussions in legislature

WOTC Legislative Update — November 18, 2019

As you may know, the current version of the Work Opportunity Tax Credit (WOTC) program is set to expire on December 31, 2019 unless congress passes legislation that extends the program, as done previously, since its inception in 1996.

Here are the latest developments:

The week of November 4, Senate Finance Chairman Chuck Grassley (R-IA) and House Ways and Means Chairman Richard Neal (D-MA) contended openly over the so-called “tax extenders.” Tax extenders are several dozen non-permanent tax provisions of the U.S. tax code, which include WOTC among the many. Essentially, there were two key points of disagreement:

  1. House Representative Neal and Democrats could grant the extenders two years through 2021, provided programs like the Earned Income Tax Credit, Child Tax Credit, and Child and Dependent Care credit expansions are in the deal.
  2. On the Senate side, Senator Grassley and Ways and Means Ranking Member Kevin Brady (R-TX) oppose the new provisions which add an estimated $300 billion to the deficit. They feel House Democrats are holding the extenders hostage to get their add-ons. Instead, Senator Grassley wants a permanent extension for as many extenders as possible. House Democrats oppose permanent extensions because it adds to the deficit. Instead, they favor temporary extensions which do not add to the deficit under budget scoring rules.

Continue reading “WOTC Legislative Update — November 18, 2019”

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