3 Benefits of Automating the Work Opportunity Tax Credit

Written by benefitexpress | September 28, 2018

benefits-of-automating-the-work-opportunity-tax-credit

HR pros, if you follow our blog, you may already know that the Work Opportunity Tax Credit (WOTC) is a valuable employer incentive. As outlined by the United States Department of Labor's Employment and Training Administration (ETA), it allows for an employer credit for hiring employees who may face barriers to employment. Compliance with the requirements to earn the incentive – up to $9,600 over one to two years – can be challenging; however, automation can make it easy.

Keep reading to see how automation can help solve the most common WOTC challenges and improve the overall application process for your organization.

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Challenge #1: Your window of time is short. Really short.

Even if your new hire fits the WOTC eligibility requirements, you only receive the credit if the application is submitted within 28 days of their hire date. We've all had those months that seem to fly by (especially during open enrollment). If you're busy  or, hey, on vacation  and miss the eligibility window, you're out of luck.

Solution: Include a WOTC questionnaire as part of on-boarding.

When the right questions are included in a WOTC questionnaire, no longer will your own schedule impact on-boarding. The questionnaire should extract all the necessary new hire information and determine their eligibility for the tax credit.

HRIS Automation Bonus: In addition to on-boarding integration, there's no worrying about human error or shipping delays. The application will be submitted to the appropriate state agency automatically.

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Challenge #2: Mistakes are costly - over $9,000 in some cases.

Managing to get forms submitted within your 28-day window doesn't guarantee success. If your state workforce agency finds mistakes, they'll return the application without extending your eligibility window.

Even if you submit early, chasing down an employee for missing or incorrect information during their first month can seriously disrupt the on-boarding process. If that employee is eligible for the maximum tax credit, you could lose over $9,000 due to a simple mistake.

Solution: Start the process early.

You should start before the on-boarding process. The Department of Labor (DOL) states that you should complete IRS Form 8850 the day the job offer is made. This also gives you time to double-check accuracy. If the WOTC window is not wide enough to submit, then re-submit applications when errors are found.

HRIS Automation Bonus: An automated system can check your employee's eligibility their first day in the office. In addition, that system can submit the application to the relevant agency on your first day of eligibility.

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Challenge #3: When one window closes, another one might open.

It's entirely possible you have already missed the credit for at least one eligible employee. While it is generally too late to submit after the 28-day window, amendments have been made before. Specifically in reaction to the Protecting Americans from Tax Hikes Act of 2015  there were two provisions: Notice 2016-22 and Notice 2016-40. If another window occurs, employers would be able to apply for tax credits in a "look back" window which they otherwise may have missed.

Solution: Be prepared.

Collecting and updating employee records in companies over a certain size could take so long that the second window is missed entirely. An existing record of eligible employees whose forms missed the deadline will make this window achievable.

HRIS Automation Bonus: An integrated system with eligibility data already stored will make that second window as profitable as possible with minimal time commitment from your HR department.

An HRIS that automates Work Opportunity Tax Credit applications can pay for itself. In fact, we've seen it happen with bCEdge. If you're ready for an all-in-one integrated human resources information system that can defray the total cost of ownership, download our free bCEdge product sheet today!

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Topics: For Employers, Benefits Technology