CMS WOTC FEDERAL TAX CREDITS

Transcription

1 CMS WOTC FEDERAL TAX CREDITS

2 Agenda

3 About CMS

4 WOTC Objective & Benefits WOTC Work Opportunity Tax Credit Joins other workforce programs that help provide incentives for workplace diversity and improve access to good jobs for American workers The main objective of the program is to enable individuals to: Become employed Earn a steady income Become contributing taxpayers also Your business lowers their federal tax liabilities by hiring workers from one of the targeted groups. You gain a valuable new employee.

5 WOTC Objective & Benefits Polling Question # 1

6 History of Employment Tax Credits Targeted Jobs Tax Credit (TJTC), Economical Disadvantage 1981 Regan Administration - The Economic Recovery Act 1983 Regan 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. It provides needed financial assistance to men and women suffering from the hardship of prolonged joblessness, and provides Federal funds for a cooperative effort by industry, labor, and local officials in assisting displaced workers 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.

7 Unique Characterizes of WOTC Under IRS Legislation but Administered by the DOL & Empowerment & Rural Renewal zones managed by the HUD Legislation. - Renewed 2/9/2018 under Bipartisan Budget Act

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

9 WOTC Objective & Benefits Polling Question # 2

10 Introduction to WOTC & Legislation Current Legislation: President Obama Signed the Omnibus Spending Bill H.R and the PATH Act (Protecting American from Tax Hikes Act of 2015) into law December 18, 2015, extending the Work Opportunity Tax Credit (WOTC) Program for another five years. Business will now be able to take advantage of WOTC through 12/31/19. Re-approved Tax Cuts & Jobs Act of The Work Opportunity Tax Credit (WOTC) is a federal income tax benefit administered by the U.S. Department of Labor (DOL) for employers who hire individuals from a specified target populations. Employers claim about $3 billion tax credits each year 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

11 Introduction to WOTC & Legislation Current & Proposed Legislation: Current - PATH Act - 28 Day Rule Proposed - The farm bill of 2018 impact on WOTC The $867 billion package renews the safety net for farmers across the country, but also includes tougher work requirements for recipients of the Supplemental Nutrition Program or SNAP, formerly known as food stamps. The farm bill is also a nutrition bill. It funds the Supplemental Nutrition Assistance Program(SNAP), our country s major program that helps lowincome individuals and families afford a healthy diet. In 2016 SNAP served more than 44 million Americans. First, there will be an effort to impose work requirements for able-bodied adults without dependents. Today, those individuals are required to be in school or working a minimum of 20 hours a week, or their benefits are limited to three months every 36 months.

12 Proposed Legislation Farm Bill 2018 The Congressional Budget Office (CBO) projected that the total cost of the new Farm Bill would be $489 billion over 5 years ( ). Nutrition programs account for about 80 percent of this total, with projected outlays for crop insurance, conservation, and commodities representing another 19 percent.

13 Proposed Legislation Hurricane Employee Retention Tax Credit - Hurricane Relief for Michael?? Last Year - President Trump signed H.R on Sept. 29, which includes tax relief for those impacted by Hurricanes Harvey, Irma and Maria. Disaster Tax Relief and Airport and Airway Extension Act of 2017 (H.R.3832) President signs legislation providing additional hurricane relief. Includes employment credit, enhanced charitable contribution provision. Employee retention credit: Employers with a trade or business that was rendered inoperable by one of the storms can claim a tax credit equal to 40% of the wages paid to an employee (up to $6,000 of wages) whose principal place of employment was in a disaster area. The credit applies to wages paid during the period the business remains inoperable, ending no later than Jan. 1, 2018, and would apply regardless of whether the employee provides any services, provides services at an alternate location or provides services at the principal place of employment before substantial business operations are resumed.

14 Proposed Calculation of Tax Credit How to calculate tax credit: QUALIFIED WAGES. The term qualified wages means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee. Tax Credit is equal to 40% of gross wages paid while business is inoperable up to the 1 st $6,000 of wages. A tax credit value of $2,400.00

15 Proposed Calculation of Tax Credit Hurricane Relief for Michael?? Employee Last 4 of SSN Wages Paid Tax Credit Clint Black , $2, % Lynn Collins , $1, % Sean Patrick Flanery , $2, % Tom Ford $ % Randy Quaid , $2, % Edwin Neal , $1, % Ty Cummings , $2, % Kyle Postma , $5, % Billy Cosh , $ % Javin Webb , $1, % Total Credits $20,145.35

16 Work Opportunity Tax Credit Polling Question # 3

17 Overview of Targeted Groups: 1. Supplemental Nutrition Assistance Program (SNAP) (Age 18-39) 2. Qualified Temporary Assistance for Needy Families (TANF) Short-Term & Long-Term 3. Qualified Veteran- see next slide 4. Qualified Ex-Felon 5. Designated Community Resident (Age 18-39) 6. Federal Empowerment Zones & Rural Renewal Counties 7. Vocational Rehabilitation Referral 8. Summer Youth Employee (Age / DCR / 5/1-9/15) 9. Supplemental Security Income (SSI) Recipient

18

19 SNAP Recipients SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM ( Data as of August 4, 2017 ) Fiscal PARTICIPATION BENEFIT AVERAGE MONTHLY BENEFIT Year Persons Households COSTS Per Person Per Household ANNUAL SUMMARY FY ,489,495 21,001,853 42,447,086, FY ,219,363 21,777,938 66,539,351, FY ,766,672 22,522,261 69,645,138, FY ,663,872 22,744,054 69,998,835, There Are 42,489,495 Million People In The United States Receiving Supplemental Nutrition Assistance Benefits. That is 1 in 7 people nationwide. Source:

20 New Target Group: New - Long-Term Unemployment Recipient Between 12.5 million people are still unemployed, and a record 88.4 million people are considered "not in the labor force," according to the BLS.

21 New Targeted Groups: New - Long-Term Unemployment Recipient Among the unemployed, the number of long-term unemployed (those jobless for 27 weeks or more) was at 1.8 million in July 2017 and accounted for 25.9% percent of the unemployed. Source:

22 Overview of Targeted Groups: 28 Day Rule

23 Work Opportunity Tax Credit Polling Question # 4

24 Screen New Hires on IRS Form 8850

25 Screen New Hires on DOL Form 9061 PG.1

26 Screen New Hires on DOL Form 9061 PG Questions Questions Total - 18

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

28 Compute the Tax Credit?

29 What Is Your Company s Savings? Number of Employees % of New Hires Qualify Number of New Hires/Per Year 200 Qualifying Ratio 15% Qualifying New Hires 30 Average Tax Credit 2, Employers Savings $72,000.00

30 Work Opportunity Tax Credit Polling Question # 5

31 Why Use a 3 rd Party Service? It s a bit complex, it requires Accounting, HR & Payroll to all be involved. The IRS 8850 ask some very sensitive questions many companies do not want to ask. I.E. Are you receiving SNAP? Legislation has been uncertain stops & starts make it confusion. The administrative process is a burden.

32 CMS Technology Enter data easily via: Phone Tablet Web Browser

33 CMS Screening Options As Easy As 1, 2, Call center CMS WOTC Web Portal Paper-based ( , fax, or mail) or Combination of above - our centralized system combines all methods into 1 tracking system Note: The IRS accepts electronic signatures for the WOTC forms!! This means no forms need to be mailed in, so using the WOTC web portal & call center is easier & faster.

34 Call Center Approach # with Minimal burden placed on hiring staff Give employee three minutes of privacy Our Call Center is also bi-lingual Impartial conversation Staff congratulates new hire, informs that screening is conducted per government requirements Confirmation number is provided to return to hiring manager Ensure we screen all new employees If qualified, form 8850 is generated and e-signed by employee Virtually no forms to submit!

35 CMS WOTC Web Portal

36 CMS WOTC Web Portal 10 simple questions that map the 18 IRS questions on the 8850 & Yes/No responses. Electronic Signature.

37 CMS WOTC Web Portal Reduce Barriers with Select Language tool Languages

38 CMS WOTC Web Portal Most Supporting Documents NOT Required!

39 CMS WOTC Administration

40 CMS WOTC Dashboard

41 Claim your Tax Credits

42 Work Opportunity Tax Credit Polling Question # 6

43 Questions? How to get started: Legal Name, Address & EIN List of addresses for each location Main contact(s) name and /phone Signed Client Agreement & POA (s) Schedule Kick Off Meeting Sean Kelly Remember 28 Day Rule So act Now!