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WOTC a flexible policy tool for employment

February 22, 2017

By Stacey May, Director of Tax Credits

Since its creation in 1996, the Work Opportunity Tax Credit (WOTC) program has proven time and again to be an extremely capable vehicle for getting historically underemployed Americans off of government assistance and back to work in the private sector. Because WOTC has an established framework of state workforce agencies across all 50 states, adding carefully-considered target groups to achieve higher employment rates in certain populations is relatively simple and very effective compared to starting entirely new government programs.

WOTC target groups background

The original WOTC target groups of vocational rehabilitation referral, economically disadvantaged youth, economically disadvantaged Vietnam-era veteran, Social Security income recipient, general assistance recipient, youth participating in a cooperative education program, economically disadvantaged ex-convict, eligible work incentive employee, involuntary terminated community employment training association (CETA) employee, and qualified summer youth employee have been tweaked over the years. Some still remain in place, some were modified to work with other legislation, and some no longer exist. What’s important to note is that each modification happened in response to changing times and occurred smoothly within WOTC’s existing framework.

Notable additions and changes over time include: Temporary Assistance for Needy Families (TANF) (food stamp recipients); long-term TANF; various veteran categories including differing levels of unemployment and disability; empowerment zones, enterprise communities, and renewal communities; hurricane Katrina employees; high-risk youth; and the long-term unemployed. The ability to add, subtract, and modify target groups for an endless variety of situations from urban and rural renewal, to natural disaster assistance and relief, to general economic downturn, displays WOTC’s flexibility and durability over the last 20 years.

WOTC target groups today

WOTC’s situation remains fluid today, with the long-term unemployed target group just being added, and legislation in Congress to address other current issues. At this time, bills are proposed to add target groups to assist foster youth, members of the National Guard and student loan recipients. With major tax reform on the horizon, WOTC is an established, proven and well-positioned program that continues to help American businesses hire American workers while reducing poverty and government spending.

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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