First off, what is WOTC? I’m sure you have heard this term lurking around. It could even be your firms 4-letter-word if you know what I mean. WOTC stands for Work Opportunity Tax Credit and is a government tax incentive offered to employers for hiring individuals from certain target groups who have consistently faced employment barriers. Tax credits range from $1,500 to $9,600 for each qualified candidate with no limit to the number of tax credits your firm can earn.
Sounds too good to be true, doesn’t it? How do you know which candidates qualify? How do you get candidates to fill out the ever-so-complicated paperwork? How are WOTC forms submitted?
Not to mention, candidates aren’t required to complete 8850 forms, and the form is a pain in the crab. But, if you can figure out an efficient process to get those docs into candidate’s hands and filled out with all the necessary details (and there are a lot of them). You could be as happy as Mr. Crabs.
The Standard WOTC Process
Typically there are 5 steps to gaining a WOTC tax credit.
Step 1: A candidate must complete the IRS Form 8850 (also knows as the WOTC Pre-screening Notice) “on or before the day a job offer is made.”
Step 2: The candidate must fill out the Department of Labor’s ETA 9061 WOTC Individual Characteristics form.
Step 3: You, the Staffing Firm, must submit both forms as an application to a WOTC provider within 28 days of the eligible candidates’ start date. Applications can be submitted in different ways depending on the state you are hiring in.
Step 4: If your new hire is indeed WOTC-eligible, your provider will then issue a certification that can take weeks, months, or sometimes longer.
Step 5: Ensure that you have documentation to prove each new-hire is actually part of the target group that qualified him or her to be eligible for the WOTC credit. Some providers will want this documentation as part of the application process and others will ask for it after the fact.
As you can see there are quite a few barriers to overcome in order to earn Work Opportunity Tax Credits. Fear not, follow these three steps and you can make the most of these credits without sinking your ops department.
- Outsource WOTC Management
It can be a real pain in the a%$ to manage the diplomacy of WOTC tax credits. There is typically a lot of back and forth between the government and your firm – and lots of appeals that have to be filed. Most self-managed WOTC programs fail after 6 months because of all the heavy lifting. You could have an employee or department solely devoted to WOTC management if you’re part of a larger firm. Save that money to redeploy your ops resources and hire a management company to assist you. They only get paid when you get paid and will normally take a small percentage of your return. Plus, WOTC is all they do. They are up-to-date on all laws and are incentivized to get you the largest return possible.
- Simplify the 8850
The 8850 is a monster, and it is not required. You hand a candidate this ‘optional form’ in paper or interactive PDF, what do you think is going to happen? Candidates choose not to complete it or complete only a portion, or if they did fill it out completely, it has been done inaccurately. Either way, you’re SOL. To eliminate these issues you can build a decision tree model to guide candidates through the 8850 form using conditional fields and simplified questions. If candidates qualify, custom workflows can populate the additional questions or materials needed.
- Include it in onboarding
When you incorporate WOTC forms into your current onboarding process it’s no surprise that more will come back complete. Candidates will assume it’s just another piece of required paperwork in order to start the job. A TurboTax-like experience will ensure you get all the data needed for not only your onboarding paperwork but the 8850 as well.
EmployStream’s onboarding automation solution includes an integrated WOTC program, enabling your team to gather WOTC data at the time of onboarding and without error (due to our simplistic progressive field approach). Forms are completely electronic and uploaded directly to 3rd party processing teams. This eliminates countless hours that companies may spend tracking down documents and submitting forms. This also contributes to an increase in total tax credits, because the files are sent in a timely manner. Thousands of dollars in tax credits may be lost if the applications are not filed timely. With EmployStream, the WOTC forms are uploaded automatically on a daily basis. This ensures the 28-day deadline is met.
EmployStream has processed hundreds of thousands of WOTC applications in the past few years and has helped its customers gain thousands in tax credits because of it. Give us a shout to learn more.