CMS MS WOTC Federal l Tax Credits Agenda What is WOTC ? - PowerPoint PPT Presentation

CMS MS WOTC Federal l Tax Credits

Agenda  What is WOTC ?  Common Objections to WOTC  WOTC Objectives and Benefits  Which Companies are Eligible?  How Is WOTC Valuable to Your Company?  Mel Kleiman: Quality of Hire  How to Maximize your return on WOTC 2

About CMS  CMS has provided WOTC administration services since 1997.  20+ years of experience in Employment Tax Credits and HR and Payroll Technology.  Developed a secure online WOTC portal in 2015 to help Brian Kelly customers automate WOTC processing and data collection. @cmsBrian  Innovator in online technology to automate the complete hiring process with WOTC portal, web based recruiting and electronic onboarding products iRecruit and iConnect.  Believes in a customer-centric approach to maximize your Mel Kleiman Employee return on investment. Retention Expert & Speaker 3

Common Questions 1. Can we get an Update on the new rules? 2. Can it work with our current system? 3. We want to know what Tax Credits are available? 4. How do we calculate the credit? 5. We don’t want to do all the follow -up to get paperwork i.e. DD-214, Drivers Licenses, Release Records? 6. Not sure if we can use the tax credits? Over 100 Companies joining today with over 1000 EE’s in Size Totaling more than 96,000 EE’s being represented 4

Introduction to WOTC  WOTC - Work Opportunity Tax Credit A Federal tax credit program that helps provide incentives for workplace diversity and improve access to good jobs for American workers.  Employers claimed $5.3 billion in tax credits in 2018 under the WOTC program. 5

History of Employment Tax Credits  1978 - Targeted Jobs Tax Credit (TJTC), Economical Disadvantage  1981 – Reagan Administration - The Economic Recovery Act  1983 – Reagan Administration expanded program “The Employment Act of 1983” a balanced and realistic approach to addressing our economy's structural unemployment problem. It provides appropriate incentives for employers to hire the long-term unemployed.  1994 - The Joint Committee on Taxation estimates that in 1994 the TJTC program will cost taxpayers nearly $300 million. It is intended the program will entice businesses to hiring members of hard-to-employ target groups--predominantly the economically disadvantaged--in exchange for Federal tax credits. 6

Current WOTC & Legislation Current Legislation:  After the WOTC tax credit expiring 12/31/2019, President Trump Signed the Omnibus Spending Bill H.R. 1865, Further Consolidated Appropriations Act , 2020 into law December 20, 2019, extending the Work Opportunity Tax Credit (WOTC) Program for another year. Business will now be able to take advantage of WOTC through 12/31/2020.  Federal Empowerment Zones (FEZ) from 2017  Indian Employment Credit (IEC) from 2017  Work Opportunity Tax Credit - Renewed through 12/31/2020 Employers claimed about $5.3 billion tax credits in 2018 under the WOTC program. There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit. “28 Day Rule” 7

Enterprise Zones, RR Counties Map 8

Empowerment Zones 9

Legislation on the Table Proposed Legislation: H.R.2213 - To amend the Internal Revenue Code of 1986 to make the work opportunity credit permanent. House - Ways and Means House - 04/10/2019 Referred to the House Committee on Ways and Means. US Department of Agriculture - The new requirement, set to go into effect in April 2020 The Able Bodied Adult Without Dependents (ABAWD) Work Requirement SNAP has two sets of work requirements. If you are age 16 – 59 and able to work, you will probably need to meet the general work requirements to get SNAP benefits. The general work requirements include registering for work, participating in SNAP Employment and Training (E&T) or workfare if assigned by your state SNAP agency, taking a suitable job if offered, and not voluntarily quitting a job or reducing your work hours below 30 a week without a good reason. 10

28 Day Rule  The WOTC – 28 Day requirement is that the job applicant needs to complete the IRS Screening Forms on or before the day a job offer is made. Job Offer & Hire Date can be the same.  All forms & documentation must be submitted to the State Workforce Agency within 28 Days of the new hire’s start date. There is no wiggle room on the 28-Day Rule. 11

Unique Characteristics of WOTC  Under IRS Legislation but  Administered by the DOL - SWA &  Empowerment & Rural Renewal zones managed by the HUD Legislation. - Renewed 12/20/2019. 12

Which Companies are Eligible? Companies:  C Corps  S Corps  LLC’s  Non Profit 501c’s who hire veterans under the Vow to Hire Heroes Act. 13

Overview of Targeted Groups Employers can hire eligible employees from the following ten target groups for WOTC: 1. Qualified IV-A Recipient 2. Qualified Veteran 3. Ex-Felon 4. Empowerment Zones & Designated Community Resident (DCR) 5. Vocational Rehabilitation Referral 6. Summer Youth Employee – 16-18 Living in Empowerment Zone 7. Supplemental Nutrition Assistance Program (SNAP) Recipient 8. Supplemental Security Income (SSI) Recipient 9. Long-Term Family Assistance Recipient 10. Qualified Long-Term Unemployment Recipient 14

Overview of Targeted Groups 1. Qualified IV-A Recipient An individual who is a member of a family receiving assistance under a state plan approved under part A of title IV of the Social Security Act relating to Temporary Assistance for Needy Families (TANF). The assistance must be received for any 9-month period during the 18-month period ending on the hiring date. 15

Vow to Hire Heroes Program 16

Overview of Targeted Groups 3. Ex-Felon A “qualified ex - felon” is a person hired within a year of:  Being convicted of a felony or  Being released from prison from the felony  First Step Act – December 18 th , 2018 17

Overview of Targeted Groups 4. Designated Community Resident  A DCR is an individual who, on the date of hiring:  Is at least 18 years old and under 40  Resides within one of the following:  Federal Empowerment Zone  Renewal community 18

Overview of Targeted Groups 7. Supplemental Nutrition Assistance Program (SNAP) Recipient  A “qualified SNAP benefits recipient” is an individual who on the date of hire is:  At least 18 years old and under 40, AND  A member of a family that received SNAP benefits for:  the previous 6 months OR  at least 3 of the previous 5 months. 19

Overview of Targeted Groups 9. Long Term Family Assistance Recipient  A “long term family recipient” is an individual who at the time of hiring is a member of a family that meet one of the following conditions:  Received assistance under an IV-A program for a minimum of the prior 18 consecutive months; OR  Received assistance for 18 months beginning after 8/5/1997 and it has not been more than 2 years since the end of the earliest of such 18-month period; OR  Ceased to be eligible for such assistance because a Federal or State law limited the maximum time those payments could be made, and it has been not more than 2 years since the cessation. 20

Overview of Target Groups Veteran Target Group Max. Tax Credit Target Group Max. Tax Credit 21

SNAP Recipients SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (Data as of January 03, 2020) PARTICIPATION AVERAGE MONTHLY BENEFIT Fiscal BENEFIT Year Persons Households COSTS Per Person Per Household ANNUAL SUMMARY FY 2020 36,406,681 18,513,002 4,462,331,879 122.57 241.04 FY 2019 34,474,188 17,374,002 53,761,253,656 129.96 257.86 FY 2018 39,431,244 19,566,114 58,996,500,061 124.68 251.27 FY 2017 42,228,118 20,900,823 63,711,051,076 125.73 254.02  There Are 36,406,681 Million People In The United States Receiving Supplemental Nutrition Assistance Benefits.  That is 1 in 9 people nationwide. 22 Source: https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap

WOTC Statistics from 2018 WOTC Target Group Total Credits % 3% 0% 0% SNAP 1,458,420 66% 9% TANF 201,353 9% 2% Veteran Group 198,145 9% 4% EZ - RRC 87,230 4% Ex-Felon 85,796 4% 4% Long Term Unemployment 62,459 3% SSI 54,856 2% 9% Vocational Rehabilitation 48,300 3% 66% Ticket To Work 4,832 0.50% Summer Youth 630 0.20% 3% There were 2,202,021 WOTC Certifications issued in 2018. EZ - RRC Ex-Felon TANF Long Term Unemployment SNAP SSI Summer Youth Ticket To Work Veteran Group Vocational Rehabilitation 23 www.cmswotc.com

Work Opportunity Tax Credit The tax credits can range from a couple hundred up to $9,600 per qualified new hire and depending on the eligibility category of each new hire. 10-15% of New Hires These values of the credit is determined by Qualify the target group the employee qualifies under, the number of hours worked, and the wages earned in the period of employment. 24