The bipartisan spending bill has just passed in the House of Representatives and would extend the Work Opportunity Tax Credit (WOTC) through December 31, 2020. The bill would retroactively extend other important tax credit programs for employers, i.e., the Federal Empowerment Zones Program (FEZ), the Indian Employment Credit (IEC), and Disaster Relief Tax Credits for employers who continued to pay employees working in locations in areas affected by certain major disasters declared in 2018 and 2019. The FEZ and IEC tax credit programs will be reinstated retroactively from January 1, 2018 through December 31, 2020.
First Advantage has been working diligently all year to ensure that lawmakers in D.C. understand how important these tax credit programs are to our clients by participating in hill walks and attending in-person meetings with Congress members and their staff. It is clear that Congress listened to our messaging and realizes the significance of the tax credit programs.
The next step is that the bill will be put to vote in the Senate and then it will move to the President for signature. We anticipate that this will occur by the end of this week.
On a related note, we are continuing to monitor the Supplemental Nutritional Assistance Program (SNAP) and any changes to this WOTC-category program. The program, which is utilized by more than 40 million Americans, is authorized through 2023 and would be fully funded ($67 billion) via the 2020 spending bill. The program continues to be a lightning rod issue in Washington as the Trump administration continues to work separately to find ways to increase eligibility requirements, including a recently finalized rule adjusting the threshold for states to be able to waive the SNAP work requirements. This change may result in an estimated 600,000 – 800,000 Americans losing their SNAP assistance, and although the overlap with that SNAP population and the WOTC-eligible SNAP population should be minimal, we are always monitoring legislative changes in this area to ensure a smooth and ongoing administration of our clients’ tax incentive programs.
We at First Advantage are thrilled for our clients that, if this bill is passed and signed, WOTC will not go into hiatus and we will begin to quantify the benefit of the 3 additional tax credit programs (FEZ, IEC, and Disaster Credits) for our clients for the 2018 and 2019 tax years as soon as the President signs the bill. Also, we will continue to update you as the bill progresses through its next steps.
We look forward to continuing to partner with you to ensure that you are aware of and utilizing all of the benefits available in tax credit programs. If you have any questions on the programs discussed in this alert and how they might impact you, please contact your First Advantage Tax Consultant or your legal counsel.