Business and Economic Development

Legislative Background:

The Small Business Job Protection Act of 1996 (Public Law 104-188) created the Work Opportunity Tax Credit (WOTC) Program, which was designed to assist individuals from certain targeted groups to enter or re-enter the labor force. The program was originally authorized for a 12-month period. (10-01-96/09-30-97).

The Taxpayer Relief Act of 1997 (Public Law 105-34) reauthorized, amended, and extended the WOTC program for an additional nine months (10-01-97/06-30-98). The reauthorization made certain modifications to the original tax credit program including, but not limited to, the following:

  • replaced the previous credit with a two-tiered system that provides a 25% tax credit for certified employees who work at least 120 hours, but work less than 400 hours, and a 40% tax credit for certified employees who work more than 400 hours;
  • modified the eligibility requirement with respect to TANF/AFDC recipients to include those recipients receiving benefits for any nine months of the previous 18 months;
  • added SSI recipients as a new category of eligible workers.
In addition, the Taxpayer Relief Act of 1997 established the Welfare-to-Work Tax Credit (WTW) which was designed to assist "long-term family assistance recipients" to enter or re-enter the workforce. The WTW tax credit is administered under the WOTC certification procedures established by the Small Business Job Protection Act of 1996. Information regarding the WTW tax credit is provided in this package.

The Tax and Trade Relief Extension Act of 1998 (Public Law 105-277) reauthorized and extended the WOTC program for 12 additional months (07-01-98/06-30-99) retroactive to its previous legislative expiration date of June 30, 1998. In addition, the Act also extended the WTW Tax Credit through June 30, 1999. This extension applies to new hires that begin work for the employer on or after July 01, 1998, through June 30, 1999.

The Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law 106-170) was signed into law on December 17, 1999. It extends the WOTC/WTW Tax Credits for a 30-month period through December 31, 2001, (07-01-99/12-31-01) and makes the reauthorization retroactive to the credits' previous expiration date of June 30, 1999. In addition, the Act also changes the definition of non-qualifying rehires to exclude a person from qualifying an employer for the tax credit if, prior to the hiring date, the person was employed by the employer at any time. The rehire's WOTC status at the time of the original hire now is irrelevant. The reauthorization applies to individuals that are hired by the employer on/or after July 01, 2002, and before January 01, 2004.

The Job Creation and Worker Assistance Act of 2002 (Public Law 107-147; Sections 604 & 605) was signed into law on March 9, 2002. It extends the WOTC/WTW Tax Credits for a 24-month period through December 31, 2003, (01-01-02/12-31-03) and makes the reauthorization retroactive to the credits with a previous expiration date of 12-31-01.

This information is provided as a general program guide only and is subject to change without notice as the legislative authority is amended. For more information regarding these programs, please contact the State WOTC Coordinator (lclegg@nhes.state.nh.us) at (603) 228-4079, FAX - (603) 229-4321.

WOTC Target Groups At-A-Glance

A) Qualified IV-A Recipients * * * This target group refers to any person who is a member of a family receiving AFDC/TANF or benefits under a successor program for any nine months during the 18-month period ending on the hiring date. An IV-A recipient is, for purposes of the WOTC, a family member who is specifically listed on the IV-A grant.

The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

B) Qualified Veterans * * * This target group refers to any veteran as one who:

  • is a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for at least a three-month period during the 15-month period ending on the hiring
  • has served on active duty (other than active duty for training) in the Armed Forces of the United States for a period of more than 180 days, or was discharged or released from active duty in the Armed Forces of the United States for service connected disability; and
  • did not have any day during the 60-day period ending on the hiring date that was a day of extended active duty in the Armed Forces of the United States. The term "extended active duty" means a period of more than 90 days during which the individual was on active duty, other than active duty for training.
The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

C)Qualified Ex-Felons * * * This target group refers to any one who:

  • has been convicted of a felony under any statute of the United States or any state, and
  • has a hiring date that is not more than one year after the last date on which he/she was so convicted or was released from prison, and
  • is a member of an economically disadvantaged family.
The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

D) High-Risk Youth * * * This target group refers to any person who:

  • is at least 18, but not yet age 25, on the hiring date, and
  • has his/her principal place of abode within an empowerment zone (EZ) or enterprise community (EC).
In the case of a high-risk youth, the term qualified wages shall not include wages paid or incurred for services performed while he/she lived outside of the EZ/EC.

Note: At this time, there are no empowerment zones in New Hampshire, and only one enterprise community, located in Manchester. To find out if a specific address is in the Manchester EC, go to the EZ/EC web site at http://www.ezec.gov and click on the EZ/EC Interactive Locator Map. You may also find out by calling the Community Connections Information Center at 1-800-998-9999. The applicant must also continue to live in the enterprise community while earning wages to qualify for the credit.

The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

E) Vocational Rehabilitation Referral * * * This target group refers to any person:

  • having a physical or mental disability that, for that individual constitutes or results in a substantial handicap to employment, and
  • was referred to the employer upon, or at any time after, completing or while receiving rehabilitative services pursuant to an individualized written plan for employment under a state plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973, or
  • a vocational rehabilitation program for veterans, carried out under Chapter 31 of Title 38, U.S. Code.
The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

F) Qualified Summer Youth Employee * * * This target group refers to any person who:

  • performs services for the employer between May 01 and September 15; and
  • has attained age 16 but not yet age 18 on the hiring date or, if later, on May 01 of the calendar year involved; and
  • has not been employed by the same employer prior to the 90-day period between May 01 and September 15; and
  • has his/her principal place of abode within an empowerment zone (EZ) or enterprise community (EC).
In the case of a qualified summer youth employee, the term "qualified wages" shall not include wages paid or incurred for services performed while he/she lived outside of the EZ/EC.

The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $3,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $750. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $3,000. This allows a maximum credit amount of $1,200.

G) Qualified Food Stamp Recipient * * * This target group refers to any person who:

  • has attained the age of 18 but not yet 25 on the hiring date, and
  • is a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for the six-month period ending on the hiring date, or
  • receiving such assistance for at least three months of the five-month period ending on the hiring date, in the case of an able-bodied adult without dependents who ceases to be eligible for food stamps under the work requirements at Section 6 (o) of the Food Stamp Act of 1977.
The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

H) Qualified SSI Recipient * * * This target group refers to any person who is:

  • receving Supplemental Security Income (SSI) benefits under Title XVI of the Social Security Act for any month ending within the 60-day period on the hiring date.
The tax credit for this target group is calculated at the rate of 25% of the qualified first-year wages up to $6,000 for employees working at least 120 hours, but less than 400 hours. This allows a maximum credit amount of $1,500. For employees working at least 400 hours or more, the credit is calculated at the rate of 40% of the qualified first-year wages up to $6,000. This allows a maximum credit amount of $2,400.

http://www.nhes.nh.gov/services/employers/documents/des-805-2102.pdf


 


 
NH Works
Tag Line
Employer Resources
 
 

Office of Workforce Opportunity
NH Division of Economic Development
Copyright 2014
America's Workforce Network