Senate Likely to Pass Expanded Work Opportunity Tax Credit Next Week

The EXPIRE Act is expected to pass the Senate next week with an expansion of the Work Opportunity Tax Credit (WOTC)included.

Senate Finance Committee Chairman Ron Wyden indicated in a statement on the floor of the Senate that “the WOTC can help small businesses hire an even greater number of struggling Americans. First, it’ll do more to help the long-term unemployed find work. Those are folks who are deeply at risk of slipping through the cracks.” A summary of the bill as reported by Finance and a link to the legislative language may be found athttp://www.finance.senate.gov/legislation/details/?id=67094f10-5056-a032-52ff-257830e0a938

The summary of the WOTC provision by the Senate Finance Committee is

19. Work Opportunity Tax Credit (as modified)

This bill extends for two years, through 2015, the provision that allows businesses to claim a work opportunity tax credit equal to 40 percent of the first $6,000 of wages paid to new hires of one of eight targeted groups. These groups include members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program, qualified veterans (including those who are unemployed, disabled, or receiving TANF), qualified ex-felons, designated community residents, vocational rehabilitation referrals, qualified summer youth employees, qualified food and nutrition recipients, qualified SSI recipients, and long-term family assistance recipients.

The bill also adds the long-term unemployed to the list of eligible populations. An employer hiring someone who has exhausted their 26 weeks of regular unemployment benefits would be eligible for a 40 percent credit on the first 6,000 of wages paid that first year, or a maximum credit of $2,400 per employee. A two-year extension of this provision is estimated to cost $3.16 billion over 10 years.

Assuming that WOTC in an expanded form is passed by the Senate and is approved by the House, US DOL will be tasked with the administrative definition of long term unemployed for the purposes of receiving the credit.

We are tracking the EXPIRE Act as it moves to the floor.