January 15 | Tax Exempt and Hiring Veterans? Keep Filing WOTC Certification Requests for Your New Hires

January 15, 2014

Tax-Exempt and Hiring Veterans?
Keep Filing WOTC Certification Requests for Your New Hires!

Although the Work Opportunity Tax Credit (WOTC) expired on December 31, 2013, tax-exempt organizations that are hiring veterans as new employees should continue to submit certification requests to their State Workforce Agency (SWA). In order to be eligible for the credit, which ranges from $1,560 - $6,240 depending on the length of employment and the employee’s qualification status, employers must file certification requests within 28 days of the new hire’s start date. Tax-exempt organizations who hire qualified veterans can benefit from the WOTC by claiming it as a payroll tax credit.

At this time, it is unclear whether Congress will pass legislation extending the expired WOTC program or for all targeted groups beyond December 31, 2013. However, in the past, Congress has given retroactive authorization of the program. To be eligible for the WOTC during the “hiatus” period between the expiration date and the reinstatement date, employers must have submitted certification requests on a timely basis.

The Employment and Training Administration (ETA) has instructed SWAs to accept and retain certification requests for employees hired on or after January 1, 2014; processing of those requests is suspended pending further legislative action and guidance from the ETA. The ETA has issued an update on the status and requirements of SWAs during the hiatus period. View the ETA Guidance Letter 8-13 here.

WOTC Benefits for Tax-Exempt Entities

WOTC Background:

The WOTC is a federal program which allows tax-exempt organizations who hire qualified veterans a payroll tax credit. Certified new hires who work at least 400 hours may qualify for a credit of 26% of first year wages. Those working at least 120 hours, but less than 400 hours, may qualify for a credit of 16.25% of first year wages. Qualified first year wages are limited to $24,000 per newly hired veteran and vary by eligibility category.

For-profit entities, including those affiliated with tax-exempt organizations, follow the same certification request process. However, for-profit entities may claim an income tax credit ranging from $1,200 - $9,600, depending on the length of employment and the target category below:

  • Members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program
  • Qualified ex-felons
  • Designated community residents
  • Vocational rehabilitation referrals
  • Qualified summer youth employees
  • Qualified food and nutrition recipients
  • Qualified Social Security recipients
  • Long-term family assistance recipients
  • Qualified veterans

We hope you find this information valuable. As always, we are here to help. Your Mueller Prost advisor can help you understand the complexities and requirements of the WOTC, and we can also assist you in filing for the credits. If there is any way our team can assist you, please don’t hesitate to contact us at 314.862.2070.


Jeanette Bax-Kurtz
Shareholder and Director of Not-for-Profit and Regulatory Services


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