The federal Work Opportunity Tax Credit (WOTC) offers tax breaks to businesses that hire workers determined by the Department of Labor (DOL) to have specific barriers to employment, such as: veterans, people with disabilities, ex-felons, teenagers seeking summer jobs, and others. The WOTC program has multiple benefits:
- Workers – WOTC helps remove barriers and offers additional opportunities for employment.
- Employers – Organizations can reduce their tax liabilities, impacting their bottom line and allowing them to invest further resources in their company and employees. Employers also gain access to great employees who are proven to perform as well as their peers.
- Community – WOTC boosts the economy by reducing unemployment rate and reducing individuals’ dependency on government assistance programs funded by taxpayers.
As you may be aware, the program has been on hiatus since Jan. 1, 2014. But last December, legislation was enacted to extend the WOTC program through Dec. 31, 2014. While some staffing firms may have anticipated this renewal and screened applicants and submitted 8850s for certification during that time period, many did not to continue to invest the time and resources into a program that did not have a guarantee of being renewed. But there’s still time.
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For all staffing firms that chose not to screen for WOTC between Jan. 1, 2014, and Dec. 31, 2014, IRS Notice 2015-13 allows for “transition relief” that gives firms an opportunity to retroactively screen applicants during this time period, foregoing the normal 28-day filing deadline. This will allow companies to capture any missing tax credits that may have gone unclaimed during the period of uncertainty with the WOTC program, as long as the employer submits the application for 8850 certification by April 30, 2015. This represents a significant revenue generating opportunity for staffing firms by either addressing a gap in their WOTC screening program or implementing a WOTC screening program for the first time. As of Jan. 1, 2015, WOTC is back on hiatus. During hiatus all WOTC form filing rules and guidelines are in force and employers are encouraged to continue screening and remitting WOTC documents in a timely manner.
Staffing firms’ hiring and onboarding processes are full of challenges that stem from a rapidly changing contingent workforce environment, high turnover and hiring rates, and operational inefficiencies; which ultimately impact the bottom line. With this in mind, staffing organizations are a prime candidate to benefit from a WOTC screening platform that helps to identify, qualify and gather the necessary requirements for claiming WOTC-eligible candidates to the benefit of their clients. An established WOTC program can also help staffing organizations increase revenues, lead to larger and more diverse labor pool, enhance client satisfaction and improve regulatory compliance; not to mention the multiple benefits to both candidates and society as a whole. With the proper program in place, staffing firms can experience a significant ROI that improves their bottom line, and allows for reinvestment into their clients’ talent programs.
It may be worth investing time and resources into reviewing the current state of your WOTC screening program, with the purpose of identifying the potential revenue opportunities and steps that you can take to deliver a positive impact on your bottom line. To capture those opportunities for 2014, the time to act is now, with the April 30 deadline just around the corner.
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