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.
In addition, several other veteran target groups with varying credit amounts were incorporated into the program. These breakthrough enhancements were well-received by the employer community as it paved the way to being able to fully automate the process by allowing companies to integrate the WOTC screening into the employer’s applicant tracking and onboarding workflow. Consequently, the time spent having to administer WOTC manually and relying on the postal service to meet the 28-day deadline for the filing of Form 8850 suddenly became a thing of the past.
It goes without saying that over the last twenty-five years, WOTC has proven to be a valuable recruiting tool for employers. This brings us to how the government is looking to leverage a 3.0 version of the program to help solve the staffing crisis many employers are facing in today’s market. To that extent, the House of Representatives Ways and Means Committee approved tax provisions for the Build Back Better Act on September 15th. The approved provision proposes several changes to the tax code and includes significant enhancements to Work Opportunity Tax Credit (WOTC) effective from the date of enactment of the Build Back Better Act, through December 31st, 2022.
The following is a summary of the proposed changes:
- Credit Amount Increase — increases the credit per certified employee (for most target groups) from $2,400 credit to $10,000
- WOTC: A 2-Year Credit — $5,000 per certified employee for years 1 and 2, for a maximum credit of $10,000
- Re-hired Eligible — through a temporary waiver of the re-hire exemption
- No Change for Certified Summer Youth — these hires remain the same as in the current program
While these proposed changes are still far from becoming law, and may be temporary in nature, it could be the equivalent of putting WOTC on steroids. Next steps will involve intense negotiations with the Senate for the final bill.
As always, we will continue monitoring developments closely and will keep you informed of important developments in the coming days, so be sure sure to stay tuned.