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Tax reform, the proposed budget and what’s happening with WOTC

May 31, 2017

By Stacey May, Director of Tax Credits

As Congress moves forward with tax reform, advocates of the Work Opportunity Tax Credit (WOTC) are working to ensure the importance of this legislation is realized and kept at the forefront. Recently, the Ways and Means Committee held a tax reform retreat to go over general prospects for legislation. Although not too many details were discussed, WOTC does maintain strong support from several committee members.

Why WOTC is important in tax strategy

Tax reform could take several paths at this point, so it is important for WOTC’s supporters to remain vigilant and flexible to the changing environment. If broad consensus is reached for wide-reaching, revenue neutral, and permanent reform, the goal is to get WOTC included for the long-haul. However, if something less than full reform occurs, WOTC should at least remain intact through its current expiration date at the end of 2019. No one knows exactly what will happen, but for now, the House is holding meetings on tax matters and the Senate is holding off.

Additionally, with the Trump administration’s budget being released, focus at least partially shifts to convince them that WOTC is worth keeping because it plays a critical role in promoting the goal of tax reform, getting high-risk Americans to work, and reducing welfare costs. While details of the budget in this respect are few as far as which tax items they want to keep and what they want to discard, they should be open to hearing the cases for each. WOTC fits well with Trump and Speaker of the House Paul Ryan’s (R-Wis.) anti-poverty initiatives, and merits a strong case for inclusion.

Finally, Minority Whip Richard Durban (D-IL) recently introduced the Helping to Encourage Real Opportunities (HERO) for At-Risk Youth Act, which would expand WOTC in the following ways:

1. Modifies the Summer Youth target group by doubling the current credit and making it valid year-round

2. Adds an At-Risk Youth category for 16-24 year-olds who, for the six months prior to hire, are not regularly attending school, unemployed and do not have workplace skills

3. Adds a target group for youth who have aged out of foster care

4. Reauthorizes empowerment zones

WOTC should be well positioned to survive tax reform in whatever form it may take, but it is critical that supporters continue to keep the pressure on Congress and the White House throughout the process.

For more information or assistance on WOTC and employment tax credits, call 888-556-0123, email taxcreditrep@hkpayroll.com  or submit our online form.

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