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Making the most of Work Opportunity Tax Credits.

The Work Opportunity Tax Credit (WOTC) was enacted to encourage the hiring of employees who fall into specific target groups, support business growth and help drive the economy. While companies of all sizes have benefited from this program by hiring new talent and capturing valuable credits, the process for screening, verification and document submission can be complicated and labor intensive. However, many businesses are increasingly looking to programs like WOTC to help offset rises in the cost of doing business.

It's a dilemma that can leave even experienced financial executives struggling to find the most efficient way to maximize WOTC credits.

Capturing WOTC credits can be challenging, particularly for companies with employees spread across multiple geographies and tax jurisdictions. Many may lack the bandwidth or expertise to efficiently manage WOTC complexities and capture the greatest value of credits possible. Without efficient screening, verification and documentation, companies with eligible employees may be unable to mobilize quickly enough to realize these savings.

The WOTC program has the potential to help significantly reduce a company's overall tax liability both through credit value and volume. Nationally, the average WOTC is valued at approximately $1,550 per employee. The following industry best practices may help ensure companies don't miss out on thousands of dollars in potential credits:

Screen All Applicants. While many companies assume their candidates are largely ineligible, WOTC parameters are constantly changing to include a wider pool of applicants.

Don't Delay. To receive WOTC certification for a newly hired employee, companies are required to submit necessary WOTC documentation to the appropriate state workforce agency within a narrow 28-day window. New technologies such as Web-based electronic signatures, voice signatures and secure document submissions can help accelerate the process to potentially claim more available credits.

Seek Assistance. While the administrative burden can discourage employers, leveraging third-party expertise to provide turnkey support can help.

As the tax landscape becomes increasingly complex, it may become even more important for companies of all sizes to understand the programs that can help reduce their overall tax liability at the federal, state and local level. With the Affordable Care Act on the horizon, it is essential for companies to be even more diligent about staying ahead of the curve.


--Jim Brown, senior division vice president and general manager, ADP Tax Credits

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Author:Heffes, Ellen M.
Publication:Financial Executive
Geographic Code:1USA
Date:Jul 1, 2013
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