Federal Authorization & Timeframes
On May 25, 2007, the President signed into law the Small Business and Work Opportunity Tax Credit Act of 2007 (P.L. 110-28). The legislation modified the WOTC provisions in the Tax Relief and Health Care Act of 2006 signed into law on December 20, 2006, and extended the tax credit through December 31, 2011.
The Tax Relief and Health Care Act of 2006 (P.L. 109-432) merged the Welfare-to-Work Tax Credit (WtWTC) with the Work Opportunity Tax Credit (WOTC) effective with those job seekers with a hired date beginning January 1, 2007.
Some of the significant changes which apply to hires who begin work for an employer after December 31, 2006 are:
It eliminated the earnings test or income guidelines for ex-felons.
It increased the maximum age for Supplemental Assistance Nutrition Program (SNAP) recipients from those who were 18 but not yet 25 years of age to 18 years of age but not yet 40 years of age.
It increased the filing deadline for Certification requests to 28 calendar days from 21 calendar days.
It incorporates the Welfare-to-Work tax credit into the WOTC and considers it Target Group I. Long Term Family Assistance Recipient.
The Small Business and Work Opportunity Tax Act of 2007 (P.L. 110-28) modifications which apply to those new hires who began work after May 25, 2007, are:
It renames the Target Group D. High-Risk Youth to Target Group D. Designated Community Residents and increases the age from 18 but not yet 25 years of age to 18 but not yet 40 years of age; and expands this group to include certain Rural Renewal Counties.
It establishes a new disabled veteran's sub-group for veterans that are considered to have a Service-Connected disability and discharged from the military within the last 12 months or a Veteran that has been unemployed for an aggregate six months within the last 12 months.
It clarifies the Individual Work Plan under Target Group E. Vocational Rehabilitation Referrals.
It extends the WOTC for 44 months through August 31, 2011.
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012.
In summary, this legislation:
WOTC's authorization had expired on December 31, 2013. On December 19, 2014, the President signed into law P.L. 113-295, the Tax Increase Prevention Act of 2014 (the Act), reauthorizing the WOTC program and the Empowerment Zones (EZs), without changes, from December 31, 2013 through December 31, 2014. With the new Act, on December 31, 2014, WOTC's legislative authority expired. So, while P.L. 113-295 retroactively reauthorized WOTC, we are again in a hiatus period for 2015 hires.