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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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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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WOTC makes it to the final Tax Reform bill

On Friday, December 15, Congress released the final draft of the tax-reform bill. We are happy to report that the conference committee deferred to the Senate position, which left WOTC as is. Therefore, WOTC has survived tax reform and will remain in place through its current expiration date of December 31, 2019. A vote is expected to take place by Wednesday, December 2017, to decide the fate of the tax-reform bill.

We continue to monitor the situation closely and will keep you up to date on the developments as we learn of them.

WOTC Extension Bill Passes Senate Finance Committee

The Senate Finance Committee overwhelmingly approved a tax extenders bill with a vote of 23-3. In order to enhance passage, only a few amendments were allowed. None affected a number of significant changes to certain tax credit programs in the original bill.

The bill reauthorizes the Work Opportunity Tax Credit (WOTC) program for a 2 year period: retroactively from January 1, 2015 through December 31, 2016. The VOW to Hire Heroes Act tax credits for hiring post 9/11 disabled and other veterans also were extended for the same period as were the Empowerment Zone designations, EZ tax credits, and Employment Tax Credit (EITC). Continue reading “WOTC Extension Bill Passes Senate Finance Committee”

Tax Extenders Stall in Senate

The tax extenders bill H.R. 3474, Hire More Heroes Act, has stalled for the moment in the Senate due to a disagreement regarding amendments. The impasse occurred when Senator Harry Reid (D-NV) moved to consider a cloture motion on Amendment No. 3060 to H.R. 3474. The primary issue at this point is not the support for this tax extenders themselves, 93 senators voted to take up H.R. 3474, but rather whether additional amendments should be allowed, and if so, whether those amendments must be germane to the tax provisions in the bill.

H.R. The Hire More Heroes Act of 2014 amends the Internal Revenue Code to permit an employer, for purposes of determining whether such employer is an applicable large employer ad thus required to provide health care coverage to its employees under the Patient Protection and Affordable Care Act, to exclude employees who have coverage under a health care program administered by the Department of Defense (DOD), including TRICARE, the Department of Veterans Affairs (VA). H.R. 3474 was passed by the House on March 11, placed on the Senate calendar on March 24, and on May 14, Amendment SA 3060 was proposed by Senator Reid for Senator Wyden in the nature of a substitute, thereby striking out the entire text of the bill and replace it with a different text that provides the extension of the various expired tax credit provisions. The debate came to an impasse when additional amendments were proposed, including adding provisions that would eliminate the Wind Production Act and repeal the Obamacare medical device tax.

On May 15, a cloture motion on the measure was withdrawn by unanimous consent in the Senate. Clotures is a procedure by which the Senate can put an end to debate without actually voting a matter down. By rule, no debate is allowed on a cloture motion. A vote in favor of cloture is a vote to end debate on the original matter and go to a vote, while a vote against it is a vote to keep debating. Withdrawing the cloture motion enables the measure to come up for debate in the future. At this point, while we remain hopeful and continue to encourage the Senate to bring the matter up for discussion as soon as possible, it appears the debate will not continue after elections.

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