New York has extended the NY Youth Works Program from 2014 through 2018. Walton Management Services has been pleased to take a part in increasing the number of private sector jobs by assisting clients in participating in this Program by obtaining more than $14M on behalf of Walton’s clientele for this Program.

Meant to address high unemployment among disadvantaged youth living in New York’s metro areas, the NY Youth Works Program was signed into law by Governor Cuomo in 2011 and administered by the Department of Labor. The Program supports job training and employment for eligible youth ages 16 to 24 and in 2012 included $25 million in tax credits for businesses that hire unemployed and disadvantaged youth and $62 million to support job training programs. The Program expired at the end of 2012.

While skipping 2013, the extension will still help to address the record high unemployment among New York youth by providing tax incentives to employers for employing at risk youth in part-time and full-time positions. Businesses participating in the NY Youth Works Program can earn tax credits worth up to $4,000 per qualified full-time employee and $2,000 per qualified part-time employee. If your business does not have a tax liability equivalent to the amount of tax credit for which you qualify as a business, you may receive a refund.

Call our National Director, Brian DeVido, at 732-660-4244 or email info@waltonmanagement.com to learn more.

Mississippi Enacts Health Care Industry Zone Act

The Mississippi legislature recently approved legislation to expand the healthcare industry and to create new jobs in most Mississippi counties. Businesses may qualify if they create a minimum 25 new full-time jobs and/or have $10,000,000 of capital investment after July 1, 2012 and are engaged in the research and development of pharmaceuticals, biologics, biotechnology, diagnostic imaging, medical supplies, medical equipment or medicine and related manufacturing or processing, medical service providers, medical product distribution, or laboratory testing. Qualified businesses may also take advantage of additional incentives, including Advantage Jobs Credit, Jobs Tax Credit, and Infrastructure Assistance.

For more information contact Janet Daley, Director of State Tax Incentives at 732-660-4261 or info@waltonmanagement.com.

Help a Veteran; Help Your Company!

The number of states focused on assisting Veterans with job placement and certifications continues to expand. Following a federal initiative to expand the WOTC Program to encourage hiring of Veterans, states have increasingly jumped on board with the idea of a public-private partnership to assist Veterans.

In November 2011, Congress passed President Obama’s Returning Heroes Tax Credit and Wounded Warrior Tax Credit, both designed to get veterans back to work and both renewed with the WOTC extension legislation. The Returning Heroes Tax Credit provides businesses that hire unemployed veterans a maximum tax credit of $5,600 per veteran, and the Wounded Warriors Tax Credit offers businesses that hire veterans with service-connected disabilities a maximum credit of $9,600 per veteran. Even though the deadline for obtaining retroactive credits has passed, employers can still file required certification forms to claim benefits.

In addition to federal tax credits, a handful of states are offering tax credits for hiring veterans. The current list includes: Alabama and New Mexico each with a $1,000 per qualified veteran tax credit; Illinois, which provides businesses with a $1,200 per qualified veteran tax credit; the City of Philadelphia, PA, which provides a tax credit worth $2,000 per qualified full-time veteran new hire or $1,000 per qualified part-time veteran new hire; Vermont with a $2,000 per qualified veteran new hire; and Wisconsin, which provides a significant tax credit of $4,000 for the first year and $2,000 for the following two years per qualified disabled full-time veteran by the business and $2,000 for the first year and $1,000 for the following two years per qualified part-time veteran hired by the business.

Connecticut also provides a veteran hiring incentive under its “Hire Veterans First” initiative, which provides grants to businesses hiring veterans to defray the cost of training and wages. The Connecticut OJT Program provides participating businesses with a 50% reimbursement of the qualified veterans’ starting wages for two to nine months to train them at the worksite using other skilled employees as instructors. The initiative also assists veterans in obtaining an apprenticeship (and helps businesses find suitable candidates), reaches out to businesses to assist them in recruiting veterans, and includes job fairs around the state.

For more information on federal and state tax credit programs available to employers for hiring a veteran, contact Brian DeVido, National Director for Walton Management Services at 732-660-4244 or info@waltonmanagement.com.

Why the enthusiasm? Ways and Means Chairman Dave Camp has started a series of meetings with each House Republican for their views on tax reform. The goal of these initial meetings will be to explain three committee drafts dealing with international transactions, financial transactions, and taxation of flow-through entities. The expectation is that WOTC will be addressed and House Republicans, who are often look favorably on WOTC, will be able to weigh in on making WOTC permanent in the tax reform bill. Additional good news came from President Obama whose budget calls for making WOTC permanent. Should the President succeed in teaming up with Senate Republicans on a “grand bargain” for deficit reduction, WOTC will have White House backing in the talks.

With this much cooperation, there is an expectation that the WOTC Program will be renewed for a multi-year period at a minimum if not made permanent with the tax reform. Nevertheless, keep in mind, voicing your support for the Program is important, particularly towards making it permanent. Please reach out to your Congressional representatives to remind them of the benefits from the Program that your business has experienced and the benefits to your employees.

For more information about the Work Opportunity Tax Credit (WOTC) Program, please contact Walton Management Services or call 732-531-7117.

The primary focus of SB 434 and the impetus behind the governor’s revised budget as it relates to the CA EZ Program is to reform the CA EZ Program dramatically under the assumption that as it exists today, it is an ineffective program. While many government programs have inefficiencies associated with them, how these inefficiencies are addressed is of great import in determining whether the end result will be the optimization of the benefits of an incentive program or, instead, simply greater inefficiencies.

1. SB 434 proposes to restrict retroactive vouchering to one (1) year instead of four (4). Proponents of this limitation argue that it is a logical restriction since retroactivity is indicative of the failure of the program to promote the future hiring of targeted individuals. Rather, retroactivity rewards businesses for hiring already completed by a business. The main issue with this argument is that it fails to address the true benefit of most tax credit programs; that is, reducing the cost of hiring and the consequent on-boarding and training. Reducing these costs enables businesses to hire and retain more workers. Furthermore, the business expansions envisioned by many proponents of SB 434 are far more likely to occur if these companies have revenue available with which to expand than if companies are only being rewarded for net new hires. Again, tax credits programs, such as the CA EZ Program, are more about reducing a company’s operating expenses, thereby promoting expansions and additional hiring, rather than incentivizing hiring in the first place. This conceptual misunderstanding of the true benefits of tax credit programs haunts not only the CA EZ Program, but many other similar hiring incentive programs. Thus, while it is certainly reasonable to take a look at the length of retroactivity, it should be done so in consideration of the actual result of these programs: Promotion of not only additional hiring, but also retention of existing workers and increased availability of investment capital through the reduction of operating costs associated with hiring.

2. Both SB 484 and the governor’s revised budget focus on requiring employers to create net new jobs in California in order to claim hiring credit. According to the California Department of Housing and Community Development (HCD), 14% of vouchers indicate that the credit is for new jobs, the rest are credits for existing jobs. Proponents of this reform argue that, of the states that have EZ programs as well, 23 require net new job creation as well. Proponents believe that this reform will create an incentive for worker retention rather than encourage job turnover. There are a number of faults in the logic presented by proponents. First, this argument does not address the effectiveness of these other zone programs. Second, this argument ignores the fact that businesses are encouraged to retain workers in order to capture the credit in the first place as there are hours and wage components to claiming the credit. While net new hire incentive programs certainly have their benefits, a truly beneficial incentive program in a poorly performing economic situation in which jobs are shed often and, at times, in great quantities, is going to need to focus not only on job growth, but also job retention. Third, this argument does not address the issue of turnover due to retirement of workers choosing to leave. Additionally, the high vouchering fees alone discourage blanket and quantity vouchering. Furthermore, proponents of this reform, again, fail to understand the true benefits of new hire tax credit programs; that is, to reduce hiring costs across the board that can then be converted into further investment and even training to retain these low skilled and difficult to hire individuals. One must decide if the CA EZ Program is to be a net new job creation program or an incentive program meant to create new business to California by decreasing operating expenses, particularly those associated with hiring.

3. Both SB 484 and the governor’s revised budget are attempting to create an incentive program that will have greater transparency while at the same time providing for a process for sunset and review in order to ensure that taxpayers are not saddled with ineffective government programs. Without question, transparency is extremely important to any government program or business process. Furthermore, gathering statistics on the performance of government programs is certainly nothing new. What is done with the analysis, how the data is read and interpreted, is as important as the gathering of the data itself. As is understood by many in the public policy field, the question asked is as important as the answer. For example, according to data collected on the vouchering for the CA EZ Program, the makeup of companies’ hiring of individuals with barriers to employment is: 7% economically disadvantaged, 2% ex-offenders, 1% public assistance, and less than 1% veterans, leaving a majority of those vouchered being people living in targeted enterprise areas (TEA). Further, it is posited that many of these TEAs are in high income areas of the state, implying that those vouchered are high income individuals. Proponents of the sunset and review measures therefore argue that, based on these statistics, the CA EZ Program is ineffective in promoting the hiring of disadvantaged workers. However, one could just as easily look at the statistics and conclude that, because TEA is an easy target group to screen for eligibility and because TEA are areas that encompass economically disadvantaged individuals, a greater percentage of TEA vouchers would be expected. Thus, the greater vouchering for TEAs does not exclude the possibility that these individuals are also eligible under the other disadvantaged categories. Consequently, the statistics are skewed towards the most easily vouchered target group, under which other target groups may fall. Therefore, while increasing transparency is always needed in government programs and greater encouragement of hiring from all disadvantaged target groups is applauded, the focus here should be on reworking the vouchering process to more easily identify and capture those individuals falling into non-TEA target groups rather than removing the incentive for hiring from these areas.

4. SB 484 proposes requiring a minimum wage of $16/hr per new hire. Proponents of the increased minimum wage argue that this requirement will create better quality jobs. While a higher wage is certainly desirable and something that should always be encouraged, the alternative result is that mandating such a requirement will limit the employment of the disadvantaged individuals the CA EZ Program is meant to encourage. In all likelihood, already skilled individuals capable of getting jobs within or outside of CA EZs will be attracted to and qualify for positions paying such a wage. However, these same individuals will not qualify under the requirements of the targeted groups, making the CA EZ incentive ineffective in encouraging either job creation or retention. Consequently, firms will have higher hiring costs with limited benefit to be located with a struggling or disadvantaged area and certainly limited to no incentive to hire disadvantaged individuals when they can get higher skilled labor for the same price. Furthermore, as has been argued by opponents of this particular reform, the higher wage would eliminate and/or exclude the temporary agency industry from taking advantage of the CA EZ Program due to the higher minimum wage requirement. It is widely understood that temporary agencies are used by individuals struggling to enter and re-enter the workforce; the very individuals facing barriers to employment such as disabled veterans, ex-offenders, and those on long-term welfare. Temporary agencies allow people to be part of the workforce regardless of their family and household characteristics.

5. The CA EZ Program reforms envisioned in the governor’s revised budget alter the intent and purpose of the CA EZ Program to the degree that it will effectively end the CA EZ Program. Justifications for the virtual elimination of the CA EZ Program are the abuse of the program by big business, including the purposeful elimination of jobs in order to hire qualifiers, the failure of the program to promote and incent new job creation as noted above, and the pitting of communities against each other for business within California. However, forgotten or ignored in these justifications is the effect on small and mid-size companies. Over 94% of claims are made by small businesses, according to California Franchise Tax Board (FTB). Rather than the “throw the baby out with the bath water” approach, a more tempered approach to reform would seem to be justified in this case. As argued previously, greater transparency is desirable and encouraged; the addition of which would reduce the abuse of the CA EZ Program by big business as described by proponents of reforms. Simple adjustments to the CA EZ Program could eliminate the community rivalry for businesses; there are more than a few examples across the country of states with policies in place to prevent intrastate rivalries among communities for companies.

The original purpose of the California Enterprise Zone program when it was established in 1984 was to stimulate business investment in depressed areas of the State and create job opportunities for Californians. While some reform is encouraged and needed, many of the reforms being put forth do an injustice to the original intent of the program by failing to understand that businesses are encourage to invest by having more money available to do so. Reducing and removing costs associated with hiring, regardless whether this reduction takes place in the pre-hire or post-hire stage, will encourage the investment and hiring that California seeks.

Walton Management continues to work on behalf of its clients to ensure that any reforms put in place for existing incentive programs, including the CA EZ, will help companies to grow. Please let your Californian representative know about the benefits you are receiving from the CA EZ Program and your concerns about the path reforms are taking. Please contact info@waltonmanagement.com for assistance in contacting your representative today.

Colorado has limited the credit for new business facility employees to income tax years beginning before January 1, 2014, and repealed the credit effective December 31, 2019; enacted a new credit for income tax years beginning after December 31, 2013; and increased the amount of the new credit dependent upon enactment of a certain house bill. L. 2013, H1265, effective 05/03/2013.

Indiana Infrastructure Development Zone Update

P.L. 133 enables Indiana counties to establish infrastructure development zones.  Further, natural gas, broadband and advanced services, and water infrastructure are to be exempt from property tax in an infrastructure development zone (effective 04/30/2013 and, as stated, effective July 1, 2013).

Maryland Business Improvement Credit

Queen Anne’s County, Maryland has reduced the minimum number of new additional full-time employees required to be employed for a business to qualify for a tax credit against the Queen Anne’s County property tax imposed on real property owned by that business.  Businesses are now required to add a minimum of 12 from 25 new full-time employees and make significant real property improvements in the county, including construction, reconstruction, rehabilitation, or expansion of a nonresidential structure. (L. 2013, H201 (c. 354), effective 06/01/2013 and applicable to tax years beginning after 06/30/2013).

Maryland Cybersecurity Investment Incentive Tax Credit

Effective 07/01/2013, and applicable to all taxable years beginning after 12/31/2013 and before 01/01/2019, businesses may claim a tax credit against the state income tax for qualified investments in Maryland cybersecurity companies. The credit is equal to 33% of the qualified investment, not to exceed $250,000 or the tax liability imposed in that year. The credit terminates June 30, 2019. L. 2013, H803 (c. 390),

Massachusetts Small Business Wellness Program Tax Credit

Effective April 2013, the Massachusetts Department of Public Health has released the regulatory requirements (105 CMR 216.000) for implementing the tax credit for businesses that set up a wellness program for their employees established by the 2012 Health Care Act.  The wellness program tax credit is effective for tax years beginning on or after January 1, 2013 through December 31, 2017. The regulation establishes criteria that will make businesses with 500 or fewer employees eligible for a tax credit towards costs of implementing a DPH-certified program and provides standards for an employer wellness program that will qualify for the credit. Only business entities that have implemented wellness programs that meet the eligibility criteria provided in the regulations are eligible to apply to the Department for certification as a prerequisite for the business entity to claim the allowable Massachusetts wellness tax credit.

New York Youth Works Program

The New York budget signed by the governor on 3/28/2013 (NY S2609D/A3009D) renewed the NY Youth Works Program from 2014 through 2018.  While not renewed for 2013, the Program provides a tax credit of up to $4,000 for full-time and up to $2,000 for part-time qualified new hires between the ages of 16-24 who reside in targeted areas of New York State.

North Dakota Renaissance Zone Exemption

For zone projected approved after 7/31/2013, the maximum exemption that a taxpayer may claim for income in a renaissance zone for any tax year is $500,000. If a zone project consists of a physical expansion of an existing building owned and used by the taxpayer for business or investment purposes, the amount of income exempt from tax is limited to an amount equal to the income derived from the business, or from the investment use of the building, during the taxable year multiplied by a ratio equal to the square footage added by the expansion divided by the total square footage of the building after expansion.

West Virginia Film Industry Investment Credit

West Virginia has lowered the total amount of film industry investment tax credits available in a given fiscal year to $5 million from $10 million (L. 2013, H2514, effective 07/12/2013).

For more information about any of these opportunities, please contact Walton Management Services or call 732-531-7117.

Two upcoming webinars available to learn more about IRS ruling on WOTC retroactivity and how to take advantage of it! Sign up now before it is too late to take advantage of this short-term opportunity to earn significant tax credits for your company.

You will learn:

Webinar Details:

Date: Wednesday, March 20, 2013
Time: 2:30pm – 3:00pm EDT

Register for Wednesday: https://www4.gotomeeting.com/register/336145463

Date: Monday, March 25, 2013
Time: 1:00pm – 1:30pm EDT

Register for Monday: https://www4.gotomeeting.com/register/317037567

Unable to attend? Go to www.waltonmanagement.com to sign up for our free-e-newsletter and receive important legislative updates and announcement about upcoming events.

Join us for a Webinar on Friday, March 15 at 1:30PM EDT - Learn about the recent IRS ruling on retroactivity, and what you need to know to take advantage of retroactive WOTC.

You will learn:

Webinar Details:

Date: Friday, March 15, 2013
Time: 1:30pm – 2:00pm EDT

Register now: https://www4.gotomeeting.com/register/765938903

Unable to attend? Go to www.waltonmanagement.com to sign up for our free-e-newsletter and receive important legislative updates and announcement about upcoming events.

• Employees hired from 1/1/2012 through 3/31/2013 for all target groups EXCEPT Veterans.
• Employees hired from 1/1/2013 through 3/31/2013 for the Veteran target group.

The unprecedented extension provides companies with only six weeks to take advantage of this retroactive opportunity. To retroactively screen for over a year, the best option is to use a vendor with experience specific to WOTC. Walton Management has over 30 years of tax credit experience and has processed WOTC since its inception. Reach out to Walton Management by calling 732-531-7117 or emailing info@waltonmanagement.com.

• Employees hired from 1/1/2012 through 3/31/2013 for all target groups EXCEPT Veterans.
• Employees hired from 1/1/2013 through 3/31/2013 for the Veteran target group.

The unprecedented extension is a fortunate opportunity for those companies and consultants which had raised concerns that they had been unable to maintain processing for WOTC during the hiatus. However, it also provides companies which had continued processing with the opportunity to capture new hires for whom the 8850 was received late and, therefore, either not sent to the DLA to request certification or denied as a result.

In order to ensure that you maximize this WOTC opportunity, reach out to Walton Management by calling 732-531-7117 or emailing info@waltonmanagement.com

Meant to address high unemployment among disadvantaged youth live in the state’s metro areas, the NY Youth Works Program was signed into law by Governor Cuomo in 2011 and administered by the Department of Labor. The Program supports job training and employment for eligible youth ages 16 to 24 and includes $25 million in tax credits for businesses that hire unemployed and disadvantaged youth and $62 million to support job training programs. The Program expired at the end of 2012. S3763 proposes extending the Program through the end of 2014.

The legislation also amends the definition of “qualified employee” to include residents of a “town” and, amends the population threshold from sixty-two thousand to fifty thousand or more.P, eligible participants for the jobs program include unemployed, low-income youth aged 16 through 24 who are located in one of the following areas: Albany, Brookhaven, Buffalo, Hempstead, Mount Vernon, New Rochelle, New York City, Rochester, Schenectady, Syracuse, Utica, and Yonkers. Including the word “town” in the definition and lowering the population threshold from 62,00 to 50,000 for eligible participating municipalities, will expand the program to cover more at-risk youth.

The tax credit program is meant to increase employment for long-term unemployed by helping small businesses to offset some of the costs associated with hiring additional workers. The program is a refundable tax credit against the corporation business tax or the gross income tax, whichever applies to the employer, for each eligible individual employed on a full-time basis during a tax year, if the eligible individual is hired by the employer after October 1, 2012, is employed full-time during the tax year for which the tax credit is provided, was not previously employed by the employer, and did not have full-time employment for 30 or more days prior to being hired by the employer; the employer employs more employees than the average during the during the 12-month period immediately prior to October 1, 2012; and the commissioner of the state Department of Labor approves an application submitted by the employer for the tax credit.

The program sets the amount of the refundable tax credit for each eligible individual employed during a tax year as the total amount of the employer payroll taxes paid during that tax year by the employer with respect to that individual. Employer payroll taxes include the portion paid by employers of State unemployment, temporary disability, and workforce development and basic skills assessments, and federal Social Security, Medicare, and unemployment taxes. An employer may apply for and qualify for a tax credit under the bill with respect to tax years 2013, 2014, and 2015. If the employer’s application is approved for any of those three years, the employer may continue to receive the tax credit for any of the four tax years following that tax year during which the employer meets the requirements of the bill.