WOTC in Proposed Legislation

July 12, 2017
Federal Tax Blogs , News and Insights

What Is WOTC?

The Work Opportunity Tax Credit (WOTC) program is a Federal tax incentive program that can provide a huge tax relief to employers who hire people from specific demographics that include veterans and welfare recipients. Since its inception in 1996, many changes have happened to the program. The most recent addition was for employees hired on or after January 1, 2016; a new-targeted group was added to include Qualified Long-Term Unemployment Recipients.

What Changes Can We Expect?

In April 2017, a bill H.R. 2209, Helping to Encourage Real Opportunities (HERO) for At-Risk Youth Act,  was brought before the House of Representatives and the Senate that would amend the Internal Revenue Code of 1986 to expand the WOTC for certain youth employees.

Creating an “At Risk Youth” Category

  • Young Adults Aged 16-24 year-olds
  • Did not regularly attend school for the prior 6 months preceding the hiring date
  • Were not regularly employed during the prior 6 month period
  • Lack the basic skills that would enable them in the workplace.

Creating a Foster Care Youth Category

The bill would also add a category  of youth employees ages 16 – 20 on the hiring date who were in foster care during the 12-month period ending on the hiring date.

Expanding the Summer Youth Program

  • Expand the summer youth program to be year round (September 16th and April 30th)
  • Students would have to be 16 or 17 years old
  • Work no more than 20 hours per week during any period between September 16th and April 30th

Extending the Empowerment Zones

The bill would also expand WOTC by extending the empowerment zones. The targeted group for empowerment zones expired as of January 1, 2017 and has not yet been reauthorized. This bill would extend the empowerment zones through December 31, 2019.

As of now, the bill is sitting with the House or Representatives and the Senate so it is difficult to predict when or if it will be passed. However, it is unlikely that the proposed WOTC legislation would not be accepted or would be drastically modified as currently written as this program supports numerous representatives’ initiatives to encourage job growth and reduce poverty levels in the United States.

Please contact Frank Fioretti, Senior Associate for PM Business Advisors for a complimentary consultation to discuss the benefits of the Work Opportunity Tax Credit and the NY Urban Youth Credit and its potential impact on your client’s tax returns and financial statements.  Frank can be reached at 212-835-2218  or at ffioretti@pmba.com.