FMS & HR Tax Screening Services. An FMS Best Practice Tax Credit and Incentive Service

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1 FMS & HR Tax Screening Services An FMS Best Practice Tax Credit and Incentive Service 1

2 What is a Tax Credit? A tax credit is simply a dollar-for-dollar reduction of taxes owed. Tax credits can be used by all for-profit companies including C corporations, S corporations and Limited Liability Corporations (LLC). Many tax credit programs allows companies to carry credits up to 20 years forward. The Work Opportunity Tax Credit can offset the Alternative Minimum Tax! 2

3 Tax Credit Impact- S Corporations and LLCs Flow Through-The tax credit would flow through directly to the shareholder who may take the credit off his/her personal taxes. Net Operating Loss (NOL)- S corporations and LLCs with a net operating loss (NOL) may still take advantage of the credit since the credit is taken off of personal taxes. 3

4 Tax Credit Impact- C Corporations Corporate Tax- In a C corporation, the tax credit must offset tax liability at the corporate level. Net Operating Loss (NOL)- In the event of a net operating loss (NOL), C corporations usually may not use the federal credits since there will be no tax liability to offset. 4

5 Getting Started We make it as simple as possible for you! We handle all of the paperwork and research on your behalf. We search all employment based programs on the federal, state and local levels. No upfront fees. We only charge you a percentage of the bottom line tax credits or incentives that we secure. 5

6 Our Strategy To begin we start all of our clients in a program known as the Work Opportunity Tax Credit (WOTC) where all companies may participate. Our goal is to use the data collected from your potential new hires in this program to secure credits from other programs on the Federal, State and Local levels We ll find the credits and cut through the red tape for you! 6

7 Work Opportunity Tax Credit (WOTC) Currently comprised of 12 groups. Your company would receive a credit by hiring someone from one of the groups. This program is for new hires. Does not count for current employees or re-hires. Government forms from the IRS and Department of Labor must be completed on or before the day a job offer is made HR Screening Services offers a paper based system that is incorporated into the hiring process! 7

8 WOTC Groups 1. Qualified Recipients of Temporary Assistance to Needy Families (TANF) 2. Qualified Veterans receiving Disability or Food Stamps 3. Economically disadvantaged ex- Felons 4. Residents under the age of 40 who reside in an Empowerment Zone, Enterprise Community, or Rural Renewal County 5. Vocational Rehabilitation referrals 6. Summer Youth employees aged working a summer job who reside in an Empowerment Zone or Renewal Community 7. Qualified Food Stamp recipients under the age of Supplemental Security Income (SSI) recipients 9. Long Term family Assistance Recipients (formerly Welfare to Work) 10. Qualified Hurricane Katrina Employee 11. Unemployed Veteran 12. Disconnected Youth-Individuals under the age of 25 who have not attended school or been regularly employed over a 6 month period 8

9 Facts and Figures 408 counties covering 32 States qualify as Rural Renewal Counties (RRC). 80 urban and rural areas qualify as Empowerment zones (EZ) or Renewal Communities (RC). According to the New York Times, one in eight Americans or 12.5% of the population receives food stamps. 13% of Americans live beneath the poverty line. The current income for a family of four would be $22,050 per year. There are 239 counties where at least 25% of the population receives food stamps. 9

10 Primary WOTC Incentive The following incentives apply to all WOTC qualified members except disabled veterans and long term family assistance members: Hours worked Amount of credit Maximum Time frame % of first $6,000 in earnings $ Rolling year % of first $6,000 in earnings $ Rolling year 10

11 Secondary WOTC Incentive The credit for disabled veterans and long-term family assistance members is as follows: Group Hours worked Amount of credit Maximum Time Frame Disabled veterans % of first $12,000 in earnings $3,000 1 Rolling year Disabled veterans % of first $12,000 in earnings $4,800 1 Rolling year Long Term Family assistance % of first $10,000 in earnings $4,000 1 st rolling year Long Term Family assistance % of first $10,000 in earnings $5,000 2 nd rolling year 11

12 Paper Based Tax Credit System HR Screening will provide your company with ample quantities of the two necessary government forms customized with your company s corporate name and tax ID number. Have every new hire complete the forms on or before the day a job offer is made. Mail the original forms along with a copy of the new hire s driver license to HR Screening Services as soon as possible. All paperwork must be submitted within 28 days of hire. HR Screening Services will contact the hiring manager if any additional information is needed. 12

13 Sample Form

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15 Sample Form

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17 Researching All Programs! WOTC is only the first step! Once we maximize your WOTC incentive, we now turn to finding any other incentives available on the federal, state or local level. Our goal is to find as many incentives as possible for your company. As we are checking each new hire for Work Opportunity Tax Credit eligibility, we thoroughly research each person and address to determine if they would qualify for any additional programs. 17

18 Other Federal Programs Following are just a few examples of federal tax credit programs that we use each day: Empowerment Zones-Up to $3,000 (20% of first 15,000) per employee per year Renewal Communities-Up to $1500 (15% of first $10,000) per employee per year Indian Tax Credit-Up to $4,000 per employee per year Disaster and Hurricane credits and more! 18

19 State Tax Credit Programs This is just a small sample of the programs that we work with each day: Alabama-Enterprise Zone Credit Arizona-TANF Recipients Credit California-Enterprise Zone Credit Colorado-Public Assistance Credit DC-Disadvantaged Employee credit Florida- Enterprise Zone Credit Illinois-Veterans Job Credit Indiana-Enterprise Zone Credit Kansas-Military Credit Kentucky- Unemployment Credit New Jersey- Disabled Credit New York-WETC Credit Pennsylvania- Keystone Opp Zone South Carolina- AFDC Credit Tennessee- Disabled Employee Credit Texas- TANF Credit Virginia- General Assistance Credit West Virginia- Military Credit 19

20 How Much Can My Company Make? It is possible for one new employee to qualify your company for over $20,000 in incentives! A good rule of thumb is that we will qualify about 10% of your applicants for some type of credit on the federal, state or local levels. Our average credit amount is usually around $1800 per certification. This means that $18,000 per 100 people hired is usually a good estimate. Important note: Clients with locations in or near zones or in high poverty level areas usually do much better! 20

21 The HR Screening Advantage Dedicated Rep-All clients are assigned a dedicated customer service representative. Customized Tax Credit Forms- available by download or mail at no charge. Rollout Meetings- for your staff available in person or by phone. Monthly Tax Credit Update ed each month tracking your company s progress. Reporting- wide variety of compliance and tracking reports available as needed. 21

22 HR Screening Success Stories A 3 store operator in Washington State received over $80,000 because he opened a store in an Enterprise Zone. A 30 store convenience store chain averages over $100,000 per year in tax credits and incentives since signing up with HR Screening Services. An 8 Store chain in PA receives over $96,000 each year in credits since signing up 3 years ago. A maintenance and cleaning service qualified over 25% of their new hires and receives over $35,000 annually. 22