What Is WOTC
The Work Opportunity Tax Credit (“WOTC”) is a Federal Tax Incentive Program to encourage employers to hire and retain employees from specific target groups such as veterans, qualified youth, and social assistance recipients. Although these tax credits range in value depending on the category of employee and length of employment, your company can receive a tax credit of up to $9,600 per new hire.
How the WOTC Program Works
The WOTC Program requires the completion of several forms by the employee at the time they are hired. These forms need to be received by the correct state agency within 28 days of hire.
Top 3 WOTC Pit Falls- Reasons Qualified Candidates Don’t Get Approved
1. Time
The WOTC is an initiative that requires employers to take swift action in order to take full advantage of the credit. Too often, a lapse in record-keeping can cause a qualified applicant to not be considered for the credit. The federal government requires that the application be processed within 28 days from the applicant’s hire date. Interview date, date of 8850 signature, and start date are not considered in determining the deadline date for the application.
2. Misunderstanding the Target Group Criteria
In many instances, qualified candidates are denied due to a misunderstanding of the time frame that is needed in order to be considered qualified for a target group. Applicants that would qualify for the target group “The Beneficiary or Family Member of a SNAP or TANF Recipient” often only verify that someone in their family received either SNAP or TANF benefits but fail to correctly specify the time frame in which the benefits were received. The window in which the benefits were received is very short, and often applicants received the benefits in a period that dates much further back than the allotted time allowed.
SNAP Applicants
- Received the benefits for at least the previous six months before they were hired;
- Or received the benefits for at least three months within the last five months before they were hired.
TANF Applicants
- Received TANF payments for at least the past 18 months;
- A member of a family that received TANF assistance for any nine (9) months during the 18-month period before they were hired;
- A member of a family that received TANF payments for any 18 months beginning after August 5, 1997, and the earliest 18-month period beginning after August 5, 1997, ended during the past two years; or
- A member of a family that stopped being eligible for TANF payments during the past two years because federal or state law limited the maximum time those payments could be made.
3. Lack of Supporting Documentation
In most cases, states that process WOTC applications have databases that can confirm whether a person received SNAP or TANF benefits, lives in an empowerment zone, or received long-term unemployment compensation. However, in some instances, these states either make a mistake or cannot confirm whether the information given is factual. In these circumstances, it is necessary to provide supporting documents to verify the applicant is qualified.
- Veterans will need a copy of their DD214 and any other discharge papers;
- Applicants applying for zones will need proof of address in the form of state license, ID card, and, in some states, a Form I9;
- Applicants who were convicted may need to provide release papers;
- Applicants who received unemployment may provide a Form 9175.
Trying to appeal a state decision without this information will cause an applicant that may have been qualified to remain denied.
Having a prepared team that focuses on avoiding these three major pitfalls can help the state expedite the process of certifying your applications, increase your approval percentages, and save you time appealing applications.
