Most companies are sitting atop a gold mine of fresh dollars, ready to flow into their bottom line… but they don’t even know it. No, it isn’t having the sales team comb through your existing customer base to uncover up-sell opportunities (although that is certainly a proven and profitable strategy).
This secret treasure trove is hiding in plain sight inside your HR department. Your HR team can help your company qualify for Work Opportunity Tax Credit (WOTC) dollars.
Sadly, 80% of companies miss out on this additional cash flowing back into their business. Why? Because some companies are simply unaware of the program. Still, others are aware but are burned out from the frustrations of trying to obtain these funds.
Originating in 1996, the Work Opportunity Tax Credit (WOTC) is a voluntary federal tax credit which provides incentives to employers for hiring members of certain disadvantaged groups which face high rates of unemployment. Some of these groups include:
- TANIF, SNAP, and SSI recipients
- Residents of Empowerment Zones or Rural Renewal Communities
- Long-term Unemployed persons
The intention is to help these targeted groups obtain employment so they can gain the skills and experience necessary to obtain better job opportunities in the future.
After a new hire has worked at least 400 hours, employers can claim a tax credit equal to 40% of their new hire’s first $6,000 of wages (or $2,400). The amount a company could earn back for first year wages ranges between $1,200 and $9,600. The actual amount is dependent upon which target group the employee belongs to, and how many hours are worked.
Why More Companies Don’t Claim WOTC
The idea of possibly getting money back from the government puts a smile on everyone’s face. So why don’t more companies make the effort to claim their Work Opportunity Tax Credit? There are a number of factors that contribute to this reality:
- As we mentioned before, some companies don’t know about it.
- The WOTC is a voluntary program.
- Businesses sometimes pull themselves out of the game because they assume they won’t qualify.
- Leadership at some corporations are afraid to screen employees for fear of offending them or having employee’s private information being exposed.
- The IRS’s filing deadlines for the WOTC are strict.
- Administrating the process (screen employees, obtained signed forms and filing) is a little time-consuming.
- Some companies tried to claim their credits but quit in frustration.
How to Make Claiming Your WOTC Easy
A few weeks ago, we shared some tips on how to make sure you get the maximum credits possible. If you are a medium to a larger sized company, administrating the program in-house is a smart way to go. But if you want to put your team’s time to more valuable use, you could consider an even easier way. You probably guessed it: let an expert handle the process for you!
This is where Cost Management Services (CMS) comes in. CMS has been helping companies take advantage of the Work Opportunity Tax Credit for 20 years. CMS handles screening your new employees, tracking hours worked, filing all paperwork, and ensuring you receive the maximum credit possible. Best of all, CMS only invoices you a fraction of the credit you receive, once they have secured your savings.
Why Now Is The Time to Take Action
If your company hasn’t taken advantage of the Work Opportunity Tax Credit or has tried unsuccessfully in the past, now is the perfect time start. There are several reasons why.
- Because of the PATH (Protecting Americans from Tax Hikes) Act of 2015, the Work Opportunity Tax Credit is now extended through 2019.
- Thanks to the PATH Act, you can claim WOTC retroactively for qualified employees who hired after December 31, 2014 and before January 1, 2020.
- The PATH Act of 2015 puts you in a position to start fresh today with any new hires through the end of 2019.
- A new target group has been included in the credit: qualified long-term unemployed individuals hired on or after January 1, 2016.
Don’t leave money on the table. Whether you are thinking about handling in-house or contracting a firm such as CMS to assist you, we want you to have the best information possible. Join us for an upcoming live webinar on this topic.
[FREE WEBINAR] Don’t Miss Out On Work Opportunity Tax Credit Dollars!
Wednesday, February 28th 2017 @ 1:30 PM EST