WOTC UPDATES

WOTC NEEDS TO BE EXTENDED BY DECEMBER 31, 2019


Peter Cappelli Podcast

Dr. Peter Cappelli, Professor at the Wharton School of Business, has produced a podcast on the Work Opportunity Tax Credit (WOTC). Throughout the podcast, which runs about 14 minutes, Dr. Cappelli discusses the continued benefits and cost effectiveness of the program. To listen,  click on this link.


Recent House and Senate Action on WOTC

HOUSE ACTION ON WOTC EXTENSION:

On Thursday, June 20, the House Ways and Means Committee Reported H.R. 3301 The Tax Payer Certainty and Disaster Relief Act of 2019 which would:

  • Seamlessly extends WOTC through 2020, and retroactively extends through 2020 the Indian Employment Credit and Empowerment Zone hiring; and
  • Provide Disaster Tax Relief which would include an employee retention credit for all 2018 and 2019 federally declared disaster areas through 60 days after date of enactment.

During the Committee's consideration of H.R. 3301, Congressmen/woman Bill Pascrell (D-NJ), Danny Davis (D-IL), Terri Sewell (D-AL), Dwight Evans (D-PA), and Steven Horsford (D-NV) all spoke in support of WOTC

SENATE ACTION ON WOTC EXTENSION:

Also, during the Week of June 16, NEON filed its comments - NEON WOTC Task Force Submission 06-17-19 (final).pdf - with the Senate Finance Committee's tax extender's Task Force on Employment and Community Development and then testified before the Task Force. We emphasized WOTC's public assistance savings, employer acceptance of the program, the flexibility of the WOTC platform, program growth as a result of the five year PATH Act extension, and the need for a seamless permanent extension. We also discussed program improvements with an emphasis on the positive impact of lifting the age forty ceiling on WOTC eligibility for SNAP recipients. In addition, we referenced bills that have been introduced that would make eligible Transitional Foster Care Youth, S. 1651 and those on Social Security Disability Insurance, S. 255.

The Task Force was quite supportive of WOTC. We were asked about our savings estimates and why we don't get credit for them. We referenced our meeting between Dr. Cappelli and the head of the Joint Committee on Taxation during which we were told that they believe the program more than pays for itself.  However, the Joint Committee recommended we speak with the Congressional Budget Office since the Joint Committee on Taxation only estimates the impact on revenues of changes to the tax law, and not the impact on spending programs. We explained that CBO can only estimate total annual program costs, but not how a program like WOTC impacts those costs.

Next Steps:

The recent activity in both the House and Senate on extenders and disaster tax relief has been a very encouraging step in progress towards enactment. It is our understanding that House and Senate tax writers are actively engaging in negotiations on a final package that they hope to enact in the fall. It is important that stakeholders continue to reach out to Congress and urge both enactment and co-sponsorship of S. 978 in the Senate and H.R. 2213 in the House. Go to the take action link above to urge members to co-sponsor. The more co-sponsors we have the more likely it is to achieve a long term extension.

HOUSE APPROPROPRIATIONS FUNDING INCERASE FOR WOTC ADMINISTRATION:

NEON was also instrumental in securing a $2.5 M increase in WOTC administrative funding in the Labor HHS portion of the House passed Defense, the State Department, Energy and Water Development, and Labor, HHS spending bills, H.R. 2740. This would bring total administrative dollars for processing WOTC claims up to $22.3 M, a 12.6% increase which is more than the across the board 10% increase given to DOL. We are working with the Senate Labor HHS Subcommittee to secure a similar increase in the Senate bill.


WOTC PERMANENCY BILLS INTRODUCED

 IN THE SENATE AND HOUSE

WOTC Permanency Bills

On April 2, Senators Rob Portman (R-OH) and Ben Cardin (D-MD) along with Senators Roy Blunt (R-MO), Sherrod Brown (D-OH), Bill Cassidy (R-LA) and Bob Menendez (D-NJ) introduced "The Work Opportunity and Jobs Act",  S. 978, which would make WOTC permanent. This was followed on April 10 by Congressman Mike Thompson (D-CA) and Tom Reed (R-NY), along with Congressman Bill Pascrell (D-NY), Tom Rice (R-SC) and Tom Suozzi (D-NY), introducing S. 2213, which would also make WOTC permanent. The Senate and House Bills and Press Releases from when the bills were introduced can be found below.

H.R. 2213: 

https://www.congress.gov/116/bills/hr2213/BILLS-116hr2213ih.pdf

H.R. 2213 Press Release: https://mikethompson.house.gov/newsroom/press-releases/thompson-reed-pascrell-rice-and-suozzi-introduce-bill-to-permanently-extend

S.978: https://www.congress.gov/116/bills/s978/BILLS-116s978is.pdf

S.978 Press Release: https://www.cardin.senate.gov/newsroom/press/release/cardin-portman-lead-bipartisan-bill-to-make-work-opportunity-tax-credit-permanent

 

Tax Extenders for 2017, 2018 and Disaster Relief Retention Credit

Congress continues to work on moving a tax extenders package for provisions that expired in 2017 and 2018 (Indian Employment Credit and Empowerment Zones) as well as Disaster Tax Relief, including a retention credit for employers located in communities that have been impacted by 2018 hurricanes, wildfires and mudslides. 

 

While NEON continues to advocate for the 2017/2018 tax extenders and Disaster Relief, we are shifting our grassroots efforts towards supporting renewal of the core WOTC program which expires at the end of 2019.  

Click on the take action link on the right on the top of the page to immediately send a message to Congress in support for the House and Senate bills.   

 

The Take Action Message is below:

House: 

Dear Congressman/Congresswoman,

As an employer in your state who actively participates in the Work Opportunity Tax Credit (WOTC) program that will expire on December 31, 2019, I want to urge you to become a cosponsor of H.R. 2213 the Mike Thompson and Tom Reed bill which would make WOTC permanent. WOTC provides me with the resources I need to train and screen for eligible individuals who often have few of the job ready skills that are needed to succeed in the workplace. WOTC works for the government by reducing expenditures on public assistance programs and it works for employers, such as myself, by providing the resources to screen, hire and train those who qualify. I urge you to contact Congressman Mike Thompson and Tom Reed and let them know that you want to cosponsor H.R. 2213.

 

Senate: 

Dear Senator,

As an employer in your state who actively participates in the Work Opportunity Tax Credit (WOTC) program that will expire on December 31, 2019, I want to urge you to become a cosponsor of The Work Opportunity Jobs Act, S. 978 which would make WOTC permanent.  WOTC provides me with the resources I need to screen and train for eligible individuals who often have few of the job ready skills that are needed to succeed in the workplace. WOTC works for the government by reducing expenditures on public assistance programs and it works for employers, such as myself, by providing the resources to screen, hire and train those who qualify. I urge you to contact Senators Rob Portman and Ben Cardin and let them know that you want to cosponsor S. 978.

 

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According to Dr. Cappelli's studies:

●  Employers respond to the tax incentive and change their hiring practices by targeting WOTC eligible individuals.

●  The average WOTC hire stays on the job 2.3 years.

●  WOTC saved states $3.5 B for FY 2018 in matching and administrative costs for welfare, food stamps, and Medicaid.

●  The federal government receives an average net savings of $17,700 per individual just from TANF, SNAP, Medicaid and housing subsidies.

●  WOTC is one of the most cost effective hiring programs ever enacted by Congress.

●  Over a 10 year period, WOTC saves the federal government $167 B in TANF, SNAP, Medicaid and federal housing subsidies, and saves the states $35 B in TANF, SNAP and Medicaid payments.

●  Cappelli Impact of Corporate Tax on Need for WOTC 

●  WOTC- 2013 study executive summary

●  A Detailed Assessment of the Value of WOTC - Cappelli 2013 Study

●  Assessing the Value of WOTC 1 Executive Summary

●  Cappelli LTUE Study September 2015

How WOTC Works


WOTC image1.png

Past WOTC Initiatives

In February of 2018, Congress passed the Bipartisan Budget Act of 2018 which contained a retroactive extension through December 2017 of the Designated Community Resident hiring incentives as well as the Indian Employment hiring incentive.  NEON played an active leading role in this effort. 


In 2017, because of NEON’s efforts, the Social Security Administration (SSA), after a year and a half of work finally agreed to establish a system to provide the State Workforce Agencies (SWAs) with the information needed to determine eligibility for Supplemental Security Income WOTC hires. Prior to NEON’s efforts, SSA was insisting upon charging $35 per enquiry effectively resulting in SSI requests for certification not being processed.


At the end of 2015, NEON led the effort to get Congress to pass the PATH act which included a five-year extension that goes through 2019. The PATH act includes an expansion of WOTC to the Long-Term Unemployed defined as those who have been unemployed for 26 consecutive weeks or longer.

NEON also played a key role in the American Taxpayer Relief Act of 2012 which extended WOTC for 2 years plus a one-year extension of WOTC in 2014.

NEON worked with the Ways and Means and the Finance committee to pass Veterans Opportunity to Work (VOW) to Hire Heroes Act of 2011: Signed into law on November 21, 2011 the legislation is designed to help veterans of war transition into civilian employment. The VOW act amends and expands the definition of the WOTC “qualified veteran” category, granting a tax credit to employers for hiring certain qualified veterans.