Hiring Tax Credits May Get New Life

The U.S. Congress may extend, retroactively, tax credits popular among entry-level employers like UPS, Federated, Wal-Mart, FedEx, and many restaurants such as Pizza Hut.

The Work Opportunity Tax Credit and the Welfare-to-Work Tax Credit expired at the end of 2005. The former provides credits to employers who hire certain employees who have been receiving food stamps, are disabled, are ex-felons, and who reside in bad neighborhoods. The latter is an incentive for hiring long-term welfare recipients.

Beth Henricks, president of the First Advantage Tax Consulting Services Division, expects Congress to pass an extension of both tax credits (although they’re not part of the big tax legislation you may have read about recently). First Advantage helps employers manages the process of identifying eligible employees, screening employees, and various paperwork for these and a host of other tax credits, many at the state level.

Henricks says employers are still screening employees for the credit, in hopes that it’s reinstated. Some states are issuing certifications to employers almost as if the credits never went away, with the assumption they may be back.

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She says that some of the biggest proponents of the tax credit include Reps. Charlie Rangel (a New York Democrat and long-time Work Opportunity Tax Credit champion) and Jerry Weller, as well as Sens. Rick Santorum, Charles Grassley, and Max Baucus.

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