On February 17th, Congress passed The Middle Class Tax Relief and Job Creation Act of 2012. President Obama has already indicated he will sign the bill.
Unfortunately, various tax extenders, including the general WOTC extension, were excluded from this legislation. All WOTC categories except for those favoring military veterans must now wait to be extended by a future tax bill.
This situation is not unusual for the Work Opportunity Tax Credit (WOTC) program. Of the eight times Congress has acted to renew or extend the WOTC program, three were passed retroactively months after the program’s legislative authority has expired.
- The first was in March 2002 after WOTC expired on December 31, 2001.
- The second was October 2004, about 10 months after WOTC expired on December 31, 2003.
- The worst example to date was in December 2006, when the program was reauthorized almost 12 months after its expiration.
In each of these events, the renewal was made effective retroactively back to the date of the expiration. In other words, employers were eligible to claim tax credits generated by properly certified employees hired between the expiration date and the date the WOTC program was renewed. If you do not process your new hires within 28 days of start, you will lose any credits for which you may have been eligible once the WOTC program is renewed.
We continue to anticipate a similar reauthorization in 2012. For this reason, TaxBreak encourages you continue to process and submit WOTC applications as usual under all employee-eligible categories–not just for veterans.
As employers consider their strategy for 2012, they should remember that even though a general extension has not yet been passed, eligibility categories for hiring military veterans are already authorized through 2012 by the VOW to Hire Heroes Act of 2011.
The amount of tax credit currently offered for hiring unemployed veterans goes as high as $9,600 per qualifying hire. This is an excellent opportunity to more affirmatively recruit veterans for your workforce.
We urge you to reach out to your congressman to express the importance of extending or renewing the WOTC program soon. Click HERE to access your local representative’s contact information.
We will keep you up to date with any changes to this situation, and please feel free to contact us at 1-800-992-0163 with any questions you may have.