CMS MS WOTC Federal l Tax Credits Agenda What is WOTC ? - - PowerPoint PPT Presentation

CMS MS WOTC Federal l Tax Credits

• What is WOTC ?
• Common Objections to WOTC
• WOTC Objectives and Benefits
• Which Companies are Eligible?
• How Is WOTC Valuable to Your Company?
• Mel Kleiman: Quality of Hire
• How to Maximize your return on WOTC

Agenda

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• CMS has provided WOTC administration services since 1997.
• 20+ years of experience in Employment Tax Credits and HR

and Payroll Technology.

• Developed a secure online WOTC portal in 2015 to help

customers automate WOTC processing and data collection.

• Innovator in online technology to automate the complete

hiring process with WOTC portal, web based recruiting and electronic onboarding products iRecruit and iConnect.

• Believes in a customer-centric approach to maximize your

return on investment.

About CMS

Brian Kelly @cmsBrian Mel Kleiman Employee Retention Expert & Speaker

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• 1. Can we get an Update on the new rules?
• 2. Can it work with our current system?
• 3. We want to know what Tax Credits are available?
• 4. How do we calculate the credit?
• 5. We don’t want to do all the follow-up to get paperwork i.e.

DD-214, Drivers Licenses, Release Records?

• 6. Not sure if we can use the tax credits?

Over 100 Companies joining today with over 1000 EE’s in Size Totaling more than 96,000 EE’s being represented

Common Questions

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Introduction to WOTC

• WOTC - Work Opportunity Tax Credit

A Federal tax credit program that helps provide incentives for workplace diversity and improve access to good jobs for American workers.

• Employers claimed $5.3 billion in tax credits

in 2018 under the WOTC program.

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• 1978 - Targeted Jobs Tax Credit (TJTC), Economical Disadvantage
• 1981 – Reagan Administration - The Economic Recovery Act
• 1983 – Reagan 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.

• 1994 - 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.

History of Employment Tax Credits

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Current Legislation:

• After the WOTC tax credit expiring 12/31/2019, President Trump Signed the Omnibus

Spending Bill H.R. 1865, Further Consolidated Appropriations Act, 2020 into law December 20, 2019, extending the Work Opportunity Tax Credit (WOTC) Program for another year. Business will now be able to take advantage of WOTC through 12/31/2020.

• Federal Empowerment Zones (FEZ) from 2017
• Indian Employment Credit (IEC) from 2017
• Work Opportunity Tax Credit - Renewed through 12/31/2020

Employers claimed about $5.3 billion tax credits in 2018 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”

Current WOTC & Legislation

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Enterprise Zones, RR Counties Map

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Empowerment Zones

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Proposed Legislation:

H.R.2213 - To amend the Internal Revenue Code of 1986 to make the work

• pportunity credit permanent.

House - Ways and Means House - 04/10/2019 Referred to the House Committee on Ways and Means.

Legislation on the Table

US Department of Agriculture - The new requirement, set to go into effect in April 2020 The Able Bodied Adult Without Dependents (ABAWD) Work Requirement SNAP has two sets of work requirements. If you are age 16 – 59 and able to work, you will probably need to meet the general work requirements to get SNAP benefits. The general work requirements include registering for work, participating in SNAP Employment and Training (E&T) or workfare if assigned by your state SNAP agency, taking a suitable job if offered, and not voluntarily quitting a job or reducing your work hours below 30 a week without a good reason.

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• The WOTC – 28 Day requirement is that the job applicant

needs to complete the IRS Screening Forms on or before the day a job offer is made. Job Offer & Hire Date can be the same.

• All forms & documentation must be submitted to the

State Workforce Agency within 28 Days of the new hire’s start date. There is no wiggle room on the 28-Day Rule.

28 Day Rule

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• Under IRS Legislation but
• Administered by the DOL - SWA

&

• Empowerment & Rural Renewal zones

managed by the HUD Legislation.

• Renewed 12/20/2019.

Unique Characteristics of WOTC

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Companies:

• C Corps
• S Corps
• LLC’s
• Non Profit 501c’s who hire veterans under the Vow to

Hire Heroes Act.

Which Companies are Eligible?

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Overview of Targeted Groups

Employers can hire eligible employees from the following ten target groups for WOTC: 1. Qualified IV-A Recipient 2. Qualified Veteran 3. Ex-Felon 4. Empowerment Zones & Designated Community Resident (DCR) 5. Vocational Rehabilitation Referral 6. Summer Youth Employee – 16-18 Living in Empowerment Zone 7. Supplemental Nutrition Assistance Program (SNAP) Recipient 8. Supplemental Security Income (SSI) Recipient 9. Long-Term Family Assistance Recipient

• 10. Qualified Long-Term Unemployment Recipient

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Overview of Targeted Groups

• 1. Qualified IV-A Recipient

An individual who is a member of a family receiving assistance under a state plan approved under part A of title IV of the Social Security Act relating to Temporary Assistance for Needy Families (TANF). The assistance must be received for any 9-month period during the 18-month period ending on the hiring date.

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Vow to Hire Heroes Program

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Overview of Targeted Groups

• 3. Ex-Felon

A “qualified ex-felon” is a person hired within a year of:

• Being convicted of a felony or
• Being released from prison from the felony
• First Step Act – December 18th, 2018

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Overview of Targeted Groups

• 4. Designated Community Resident
• A DCR is an individual who, on the date of hiring:
• Is at least 18 years old and under 40
• Resides within one of the following:
• Federal Empowerment Zone
• Renewal community

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Overview of Targeted Groups

• 7. Supplemental Nutrition Assistance Program (SNAP)

Recipient

• A “qualified SNAP benefits recipient” is an individual

who on the date of hire is:

• At least 18 years old and under 40, AND
• A member of a family that received SNAP benefits for:
• the previous 6 months OR
• at least 3 of the previous 5 months.

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Overview of Targeted Groups

• 9. Long Term Family Assistance Recipient
• A “long term family recipient” is an individual who at the time of

hiring is a member of a family that meet one of the following conditions:

• Received assistance under an IV-A program for a minimum of the

prior 18 consecutive months; OR

• Received assistance for 18 months beginning after 8/5/1997 and

it has not been more than 2 years since the end of the earliest of such 18-month period; OR

• Ceased to be eligible for such assistance because a Federal or

State law limited the maximum time those payments could be made, and it has been not more than 2 years since the cessation.

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Overview of Target Groups

Target Group

• Max. Tax Credit

Veteran Target Group Max. Tax Credit

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SNAP Recipients

• There Are 36,406,681 Million People In The United States Receiving

Supplemental Nutrition Assistance Benefits.

• That is 1 in 9 people nationwide.

Source: https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap

SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM

(Data as of January 03, 2020) Fiscal PARTICIPATION BENEFIT AVERAGE MONTHLY BENEFIT Year Persons Households COSTS Per Person Per Household ANNUAL SUMMARY FY 2020 36,406,681 18,513,002 4,462,331,879 122.57 241.04 FY 2019 34,474,188 17,374,002 53,761,253,656 129.96 257.86 FY 2018 39,431,244 19,566,114 58,996,500,061 124.68 251.27 FY 2017 42,228,118 20,900,823 63,711,051,076 125.73 254.02

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WOTC Statistics from 2018

There were 2,202,021 WOTC Certifications issued in 2018.

www.cmswotc.com

4% 4% 9% 3% 66% 3% 0% 0% 9% 2% EZ - RRC Ex-Felon TANF Long Term Unemployment SNAP SSI Summer Youth Ticket To Work Veteran Group Vocational Rehabilitation

WOTC Target Group Total Credits % SNAP 1,458,420 66% TANF 201,353 9% Veteran Group 198,145 9% EZ - RRC 87,230 4% Ex-Felon 85,796 4% Long Term Unemployment62,459 3% SSI 54,856 2% Vocational Rehabilitation 48,300 3% Ticket To Work 4,832 0.50% Summer Youth 630 0.20%

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Work Opportunity Tax Credit

10-15% of New Hires Qualify

The tax credits can range from a couple hundred up to $9,600 per qualified new hire and depending on the eligibility category of each new hire. 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 employment.

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How Is WOTC Calculated?

The benchmarks of Hours Worked and Tax Credit Value fall into 3 Groups:

• 1. Qualified New Hires must work a minimum 120 to 399 hours to

receive 25% of the 1ST $6,000 of wages.

• EE works 125 Hours earns $1,500 – WOTC Value $375.00.
• 2. Employee works over 400 Hours, WOTC Value goes to 40% of first

$6,000 of wages.

• Employee works 500 – Earns $6,000 WOTC Value $2,400.00
• 3. Only for the Long-term Temporary Assistance for Needy Families

(TANF) target group, Receive up to $9,000 (over 2 years).

• 40% of $10,000 of first-year wages
• 50% of $10,000 of second-year wages

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What is Your Company Savings?

10-15% of New Hires Qualify Number of Employees 500 Number of New Hires/Per Year 200 Qualifying Ratio 15% Qualifying New Hires 30 Average Tax Credit $2,400.00 Employers Savings $72,000.00

What does this mean in Revenue?

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Mel Kleiman, is one of the nation’s leading authorities on recruiting, selection, and retention of frontline employees and the people who manage them. He is a pragmatic businessman as well as a keynote speaker, trainer and consultant on hourly employee recruiting, selection, and retention. Mel is known for delivering high-impact, high-energy sessions that deliver hands-on, practical information and advice his audience members can put to immediate use to improve their businesses. The author of five books which include the bestselling “Hire Tough Manage Easy” and “The 5 Firsts”. Mel writes regular columns for numerous trade journals. You can sign up for his daily blog, at www.melkleiman.com

Mel Kleiman: Quality of Hire

Mel Kleiman Employee Retention Expert & Speaker

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Self-motivated Talented and trainable Accountable Responsible Stable

The Key to Maximizing WOTC:

Mel Kleiman, is one of the nation’s leading authorities on recruiting, selection, and retention of frontline employees and the people who manage them. He is a pragmatic businessman as well as a keynote speaker, trainer and consultant on hourly employee recruiting, selection, and retention. Mel is known for delivering high- impact, high- energy sessions that deliver hands-on, practical information and advice his audience members can put to immediate use to improve their businesses. The author of five books which include the bestselling ‘Hire Tough Manage Easy’ and “The 5 Firsts”. Mel writes regular columns for numerous trade journals. You can sign up for his daily blog, at www.melkleiman.com

Mel Kleiman Employee Retention Expert & Speaker

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• 1. Attract potential STARS.
• 2. Hire STARS.
• 3. Retain STARS

(Otherwise all you have are holes in your bucket).

The Key to Maximizing WOTC:

Mel Kleiman, is one of the nation’s leading authorities on recruiting, selection, and retention of frontline employees and the people who manage them. He is a pragmatic businessman as well as a keynote speaker, trainer and consultant on hourly employee recruiting, selection, and retention. Mel is known for delivering high- impact, high- energy sessions that deliver hands-on, practical information and advice his audience members can put to immediate use to improve their businesses. The author of five books which include the bestselling ‘Hire Tough Manage Easy’ and “The 5 Firsts”. Mel writes regular columns for numerous trade journals. You can sign up for his daily blog, at www.melkleiman.com

Mel Kleiman Employee Retention Expert & Speaker

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It takes great questions to get the right answer to hire the STARS. The #1 key to retaining the STARS: Make their first day the best day they will ever have.

• It starts with the first hour.
• It ends at the end of the day.

The Key to Maximizing WOTC:

Mel Kleiman Employee Retention Expert & Speaker

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How do you Administer Your WOTC You

You can manage WOTC yourself using the following IRS & DOL forms

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Screen New Hires on IRS Form 8850

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Screen New Hires on IRS Form 9061

8850 – 7 Questions 9061 – 11 Questions Total - 18

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How do you Maximize Your WOTC

Or you can Automate

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CMS Secure Web Portal

• 30% More Qualification
• 10 simple questions that

map the 23 IRS questions

• n the 8850 and 9061

forms.

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CMS Secure Web Portal

• Reduce language

barriers.

• Select up to 100

languages.

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How do you Hire & Retain for WOTC You

You can use your current ATS & traditional methods Or Supercharge you Recruiting, Hiring & WOTC Process

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How do you Hire & Retain for WOTC You

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ATS Integration

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ATS Integration

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CMS WOTC Administration

Real Time Results

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Claim Your Tax Credits

• Employers file the 5884

form to claim the work

• pportunity credit for

qualified first- and/or second-year wages they paid to or incurred for targeted group employees during the tax year.

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Additional Questions?

Additional Questions?

Remember 28 Day Rule – So act Now!

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Thank You !!

Reach out to Sean Kelly

• skelly@cmswotc.com
• 860-269-0539

Remember 28 Day Rule – So act Now!

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