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).

A significant expansion to the WOTC program was included. The WOTC program is to be modified to include a new target group, long-term unemployed, defined as an individual who has exhausted federal and state unemployment benefits. This target group would fall under similar tax credit wage guidelines as the majority of the other target groups. Employers would be eligible for a 40% credit on the first $6,000 of wages paid to such individual, for a maximum of $2,400 per eligible employee.

Other significant modifications were to R & D tax credit program for small businesses. The modified R & D Program provides that certain small businesses may utilize the tax credit against payroll withholding rather than income taxes only in addition to being permitted to offset Alternative Minimum Tax (AMT) liability.

The Ways and Means Committee Chairman Paul Ryan (R-WI) indicated that he intends to mark up a House extenders bill after the August recess.

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