Rangel Makes Improvements To Work Opportunity Tax Credit

WASHINGTON, D.C. - Today Congressman Charles Rangel [D-NY] and Congressman Aaron Schock [R-IL] introduced the Work Opportunity Tax Credit Improvements Act of 2011 (WOTC). The legislation, aside from renewing the WOTC Act of 1996, would assist in helping discharged veterans and high-risk youth gain employment. Congressman Rangel first sponsored the WOTC in 1977 as the Targeted Jobs Tax Credit.

"In a time of rising economic distress, our disadvantaged youth and discharged veterans have difficulty finding employment," Rangel said. "The Work Opportunity Tax Credit has helped nearly six million people, including over 200,000 New Yorkers gain employment. By renewing and simplifying the program we're sending a message to our youth and our heroic veterans that they are not on their own."

Under the WOTC Improvements Act, tax credits to spur employment for high-risk youth and discharged veterans would be reintroduced after those provisions were not renewed at the end of 2010. Also several hiring tax incentives -- which include an Indian hiring credit, DC hiring incentive, and two credits for Empowerment Zone residents -- would be consolidated and placed under the core WOTC program.

Since 1996, more than 5,800,000 people have left public assistance programs and have gained employment through the Work Opportunity Tax Credit. Out of the 575,000 people hired in 2010, 145,000 people were certified in the Disconnected Youth category. The Disconnected Youth/High Risk Youth face unemployment rates in excess of 25 percent. Unemployment among returning veterans younger than 24 years of age was 14.1 percent in 2008, outpacing the general population's rate of 11.6 percent for the same age group.

"America's veterans and young people are important resources that we have," Rangel stated. "Re-authorizing the Work Opportunity Credit and investing in our returning soldiers and high-risk youth and will strengthen our great nation as they work hard and stay in the labor force, return to school, and live productive lives. They'll contribute to our communities, our country, and help America win the future."

WORK OPPORTUNTIY TAX CREDIT (WOTC) NEEDS TO BE RENEWED AND SIMPLIFIED BY 12/31/11

The Work Opportunity Tax Credit (WOTC) expires on December 31, 2011. This program has helped over 5,800,000 individuals coming off of public assistance programs to secure jobs, become productive members of society, and has provided economic stability for millions of families.

Targeted hiring tax incentives have been part of the tax code since the early 1970s. Congress has always recognized that certain categories of individuals have significant barriers to entering the job market since employers are reluctant to hire them because the costs of putting the structurally unemployed on their payroll and training often exceed their return on investment in such workers.

WOTC is a key element of welfare reform because it provides a bridge from welfare dependence to work. The program encourages employers to hire public assistance recipients and other needy individuals with few job skills and little or no work experience. Having a job is an essential component to keeping families together.

Employers in the retail, health care, hotel, financial services, and food industries have incorporated these programs into their hiring practices.

In 2001, the GAO issued a report indicating that employers have significantly changed their hiring practices as a result of WOTC which was enacted in 1996. Specifically, GAO indicated employers have provided job mentors, lengthened training periods, engaged in recruiting, outreach, and listed jobs or requested referrals from public agencies or partnerships. WOTC has become a true public-private partnership between private sector employers and federal and state agencies.

WOTC provides a 40% credit on the first $6,000 of wages for those working at least 400 hours, or a partial credit of 25% for those working 120-399 hours.

WOTC is both a hiring incentive, helping to offset the higher costs of recruiting, hiring, and retaining public assistance recipients and other low-skilled individuals, and a retention incentive, providing a higher reward for those who stay longer on the job. Because this program has a positive impact and is considered good economic and social policy both Republicans and Democratic Presidents have called for extensions of the program in their Budget submissions to Congress.

SIMPLIFICATION, MODERNIZATION AND MAKING HIRING TAX INCENTIVES MORE EMPLOYER FRIENDLY

EXTENSION AND REAUTHORIZATION:

Tax Code Simplification:

1. Make all hiring tax incentives categories under core WOTC program: Empowerment Zones/Renewal Communities, DC Hiring Tax Incentive, Indian Employment Tax Credit

2. Alternative Certification

3. Reauthorize Disconnected Youth (High Risk Youth) and Unemployed Veterans Categories

MAKING HIRING TAX INCENTIVES SIMPLE AND MORE EMPLOYER ACCESSIBLE

• Currently, there are several hiring tax incentives which include an Indian hiring credit, DC hiring incentive, and two credits for Empowerment Zone residents. These should all be consolidated and placed under the core WOTC program.

• Many states are from six months to upwards to two years behind in the processing of employer WOTC “requests for certification” – the State Workforce Agency (SWA) certifies applicant eligibility.

• Reauthorization of the Disconnected Youth (now High Risk Youth) and Unemployed Veteran Categories
  

To read the full story please click here: http://rangel.house.gov

CMS Processing Services

Under the WOTC program our clients are averaging $2,400.00 per qualified tax credit and we work with your companies HR department to streamline the filing process & maximize the savings

Call CMS' Brian Kelly today at 1-860-678-4401 to find out if it makes sense for your company.

Congressmen Call For Tax Credit Extension

CMS fully supports Congressman Aaron Schock (R-IL) along with New York City Congressman Charles Rangel in their efforts to extend and expand the employment tax credits to support businesses nationwide to grow jobs. CMS helps business take advantage for these federal initiatives.

Under the WOTC program our clients are averaging $2,400.00 per qualified tax credit and we work with your companies HR department to streamline the filing process & maximize the savings.

Call CMS' Brian Kelly today at 1-860-678-4401 to find out if it makes sense for your company.

Schock and Rangel Seek Extension to Vital Welfare to Work Program

Congressman Aaron Schock (R-IL) along with New York City Congressman Charles Rangel has introduced bipartisan legislation to extend the Work Opportunity Tax Credit that is set to expire at the end of this year. The Work Opportunity Tax Credit (WOTC), a federal tax credit authorized by Congress, has played a vital role in providing assistance for individuals who are looking for work, but also receive public assistance from the government. The program assists individuals who fall within one of twelve categories who have historically faced significant barriers to employment and continues to serve as a principle part of the country’s welfare to work efforts since its introduction in the mid 1990’s.

As the economy continues to recover and jobs remain scarce, the WOTC has served as a critical link for job seekers who, in many cases to no fault of their own, are forced to seek government assistance once laid off, or are entering the job market for the first time, which is the case for many veterans. In April, the national unemployment rate stood at 9.0 percent, and in Illinois the state unemployment rate was at 8.7 percent.

“Unemployment across Illinois, and nationally, remains far too high. This extra tool will continue to assist and incentivize small businesses with hiring new employees,” said Schock. “This program is designed to help individuals who have fallen on bad luck or face other obstacles to employment and offers a way forward where there might not be another avenue.”

The Small Business Job Protection Act of 1996 first created the Work Opportunity Tax Credit program. The program has since been reauthorized and amended numerous times. Since 1996, more than 5.8 million people have left public assistance programs and have gained employment through the WOTC program. In 2010, there were 575,000 individuals hired through the program.

The WOTC is designed to move individuals from a position of public assistance to self-sufficiency as they seek employment to become more financially stable; which will ultimately benefit the individual as well as their family. Many WOTC jobs include work in the retail and hospitality industries. In return the employers who participate in the program are compensated by being able to reduce their federal income tax liability. Currently, participating employers can receive up to $2,400 for each new adult hire, the largest participating group are hires of members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program.

The tax credit is set to expire at the end of this year, but many believe that while unemployment remains at record high levels across the country extending this tax credit serves as a critical lifeline for individuals who may not be able to find work otherwise and are forced to seek additional government assistance. Schock’s legislation would extend the tax credit for three more years and in the process would expand the program to reach more unemployed veterans, many whom have faced a very difficult transition as they return to civilian life after their time in the military. Unemployment among returning veterans younger than 24 years of age was 14.1 percent in 2008, outpacing the general population’s rate of 11.6 percent for the same age group. The extension would also focus more attention on high risk youth and would speed up the time from when an employer hires a WOTC employee to when the tax credit is received. All this, Schock hopes, will put more people on a path to a steady income, a more stable family life and will reduce the amount spent on welfare to work programs.

The groups that WOTC assist include: Long-term TANF recipients, other TANF recipients, Veterans, 18-39 year old SNAP (food stamp) recipients, 18-39 year old designated community residents, 16-17 year-old summer youth, vocational rehabilitation referral, ex-felon’s, SSI recipients, Hurricane Katrina employee, Unemployed Veteran, and High Risk Youth.

Schock argues that extending this credit is a better solution to help individuals and families who currently receive TANF benefits and other assistance from government programs, but continue to find it difficult to find a better source of income that will allow them to become more self-sustaining. “I don’t believe we should be relying on the federal government to be the national job creator, but there are things the government can do to help incentivize businesses during the hiring process,” said Schock. “Extending the Work Opportunity Tax Credit is the responsible thing to do especially with unemployment remaining at unacceptably high levels. This credit can be the difference between someone who has lost hope in finding a job and getting them back on their feet again. At the end of the day, no one wins when we have people who are willing and capable of working hard, but are unable to find a job.”

Read the full story here: http://schock.house.gov or http://rangel.house.gov