Following quickly on the heels of the Senate Finance Committee meeting, the congressional conference committee on the payroll tax cut met to discuss the the bill that continues the payroll tax cut, extends unemployment benefits, and postpones a cut in Medicare payments to doctors, a s all three provisions expire on February 29.

Certain congressional members are seeking to add discussions on the tax extenders to the conference agenda as a way of bundling all these expired/expiring measure together. Senate Finance Committee chairman Max Baucus(D- Mont) made the most direct appeal for including the tax extenders when he noted that “it’s just fairness” to offer certainly for employers whose tax planning, investment, and hiring strategies are based on being able to predict the legislative and tax landscape accurately.

Further, Senator Ben Cardin (D-MD) appealed specifically for an extension to WOTC, and energy and R&D tax incentives.

House Ways and Means Committee chairman Dave Camp (R- Mich) held a dissenting opinion and said "My view is these are outside the scope of the conference."

TALX is tracking developments in these negotiations as they develop.

Ezrie Yellin

In a session entitled “Extenders and Tax Reform: Seeking Long-Term Solutions,” members of the Senate Finance committee held a hearing on January 31, 2012 to discuss the expiration of the so called tax extenders, of which WOTC is one. The discussion focused on the uncertainty surrounding these tax provisions – provisions that expire often and therefore make tax planning for businesses an exercise in guesswork and risk management.

Committee chairman Max Baucus (D-Mont.) addressed the state of affairs in his official hearing statement, wherein he noted:

Benjamin Franklin once said, “In this world, nothing can be said to be certain, except death and taxes.

But today not even our taxes are certain. There are currently 132 expiring provisions in the code. That number has more than tripled since 1998. These policies, commonly-known as “tax extenders,” expire every year or every two years.

The lack of certainty about these tax incentives is bad for American families, it’s bad for businesses looking to create jobs and it’s bad for our economy. It leaves businesses unable to plan ahead and invest, because year-to-year incentives are ineffective.

Indeed, Mr. Baucus’ point seems to be that without certainty around these tax provisions, including WOTC, employers are stymied in their efforts to execute sound growth plans as they pertain to hiring, investment, and innovation as they can not accurately predict the tax landscape, and cannot, therefore adequately control all the risks involved therein, for both the short and long term. This has the effect of inhibiting economic growth and job creation, rather than acting as an impetus and catalyst to economic recovery.

Says Mr. Baucus:

Each day that businesses do not know whether tax extenders will be in place this year means less American manufacturing, less production and fewer jobs.

In the meantime, we need to pass these tax incentives to help business.

In his own statement, Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee echoes Mr. Baucus’ theme by stating:

If a provision is worthy of being in the tax code, then it generally should be made permanent.

He continues:

Chairman Baucus and I agree, along with many of our colleagues, that the current tax code demands comprehensive reform. In the meantime, before tax reform is accomplished, Congress needs to decide what to do about the tax extender provisions that have expired.

Ezrie Yellin

Recently the Department of Labor Employment and Training administration (DOL ETA) issued guidance to the State Workforce Agencies (SWA’s) regarding procedures for handling non-veteran WOTC certification requests during the current hiatus. As the core WOTC program passed into hiatus on Jan 1, 2012, some taxpayers have expressed uncertainly and doubt as to how the program would continue to be managed and administered by the applicable state and federal agencies. This may seem like a strange question, but during all past hiatuses, the DOL continued to enforce all the rules and regulations (including filing deadlines) across the WOTC program in anticipation that certifications would eventually be issued once the WOTC program was reinstated. This matter was further complicated by the passing of the Vow to Hire Heroes Act of 2011, as this act extended the veterans provisions of WOTC, but did not address the core program.

As expected, the recent Training and Employment Guidance Letter (TEGL) #15-11 instructs the SWA’s to continue accepting all certification request for the currently expired target groups, but not to certify them. Speaking specifically on the prospects of retroactive certification and the still in effect 28 day filing deadline for all WOTC target groups, DOL ETA writes:

. . . in the past when the tax credit program’s authority lapsed and Congress subsequently reauthorized the program, legislative provisions allowed for retroactive certification of eligibility for the period between the expiration date and the reauthorization date. However, to be eligible for the tax credit during that period, employers must have properly filed requests for certification, in a timely manner, and states must have received and logged them in for subsequent approval or denial.

The specific guidance includes the following:

• SWA's must accept and fully process all timely filed WOTC certification requests for employers’ hires made prior to January 1, 2012.
• SWA's must accept, date stamp, log, and retain certification requests for employers’ new hires made after January 1, 2012, until informed otherwise by ETA. However, states may not issue eligibility certifications unless the program is once again reauthorized.

Ezrie Yellin

Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

Colorado recently issued a flyer about a change in their law that allows a postmark to determine timeliness of quarterly contribution reports.  Previously reports had to be received by the due date.  It also mentions the increase in the taxable wage from $10,000 to $11,000 for 2012.  See the following link for a copy of the flyer.

Employer Tax Sevices

Florida will be issuing their 2012 Unemployment Tax Assessment Notices for Interest on Federal Advances next week.  This is the same type of assessment notices issued last year at this time to pay the interest on the state’s federal loan.  The amount due will be 0.092% (0.136% in 2011) of taxable payroll for the period July 1, 2010 through June 30, 2011.  Payment will be due June 30, 2012.

Employer Tax Services

Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

New Mexico sent a flyer with the 2012 tax rate notices sent this week.  It explains the steps that need to be taken to set up their self-service account on the state’s website.  TALX clients will be receiving a letter in the near future explaining how to set up TALX as your TPA.  See the following link for a copy of the flyer.

Employer Tax Services

Maryland sent a letter with the 2012 tax rate notices issued this week.  It indicates that the rate schedule remains the same and also explains the requirements for an employer to set up a payment plan for their quarterly unemployment insurance taxes.  See the following link for a copy of the letter.

Employer Tax Services

Arizona sent an apology notice with the 2012 tax rate notices with regard to some incorrect tax statements sent to employers a few weeks ago.  See the following link for a copy of the notice.

Employer Tax Services