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

I-9/E-Verify

By: Dave Fowler

I don’t know about you, but I can’t believe it's February already!

I just received guidance from USCIS in response to the following question.

When can an E-Verify case be created when a replacement receipt is used for Form I-9?

I understand this question was recently discussed at an AILA (American Immigration Lawyers Association) get together and the consensus was that an E-Verify case should be created when Form I-9 is completed, even when a replacement receipt is used for Form I-9.

How would you answer this question?

The guidance from USCIS is that an E-Verify case should NOT be created prior to updating the Form I-9 with the employee’s actual document for which the replacement receipt was presented.

What’s the explanation?

As you know, the E-Verify Memorandum of Understanding (MOU) instructs an employer to run E-Verify queries “upon completion of the Form I-9.”  In other words, Form I-9 must be completed (per USCIS definition of completed) before an E-Verify case can be created. According to USCIS, the presentation of a replacement receipt does NOT complete the Form I-9 process and thereby freezes the three-day period for completing Form I-9. During this period, the employee continues to work while his or her Form I-9 is being completed. (i.e., resolved) The E-Verify case should be created within three days from when the employee presents the actual document for which the replacement receipt was presented. So, the core issue is the definition of when a Form I-9 is completed. According to USICS, a Form I-9 is not completed until a replacement receipt presented by the employee is updated with the employee’s actual document for which the replacement receipt was presented.

Why not create the E-Verify case earlier?

Well, creating an E-Verify case for a Form I-9 completed with a replacement receipt can be problematic with E-Verify.

·         E-Verify requires the employee to present a photo ID for Form I-9. Not all replacement receipts contain a photograph. Therefore, creating an E-Verify case without a photo ID is contrary to the requirements of the MOU.

·         If the replacement receipt is for a document subject to E-Verify photo matching, the employer is not able to attest that the photograph displayed by E-Verify matches the photo on the employee’s document. If E-Verify does not return a photograph, employers are instructed to indicate that the photo on the employee’s document matches. However, the E-Verify instructions do not address the situation where E-Verify returns a photograph, but the employee’s document does not contain a photograph. Therefore, completing the photo matching requirement without a document that matches the photograph presented by E-Verify is contrary to the requirements of the MOU.

·         If the employer indicates that the photos do not match, the employer does not have a document that can be forwarded to DHS to resolve the E-Verify case if the employee contests the photo matching result. Not being able to process a referral for a photo matching DHS TNC is contrary to the requirements of the MOU.

So, while your employees may not routinely present replacement receipts for Form I-9, you should protect yourself by ensuring your internal procedures as well as your electronic Form I-9 and/or E-Verify solution is compliant.

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

I-9/E-Verify

By: Dave Fowler

Happy New Year and welcome to 2012. There will be many exciting things happening this year such as new State laws requiring E-Verify, immigration reform discussions, and the Super Bowl. Oh yeah, there is also an election this fall too. Not to be out done USCIS has expanded their website with some new information that can be very helpful to employers.  Here is a summary of what is now available at the USCIS website.

E-Verify Blog

The Beacon is the official blog of USCIS. Check it out at:

Employees from El Salvador with Expiring EADs May Still Be Authorized to Work

Employees from El Salvador who have Temporary Protected Status (TPS) have had their employment authorizations automatically extended until September 9, 2012, even if the employees have not yet obtained a new Employment Authorization Document (EAD). Please visit I-9 Central What's New section for detailed information.

I-9 Central What’s New

Visit the I-9 Central What's New section to learn about updates published by USCIS.

I-9 Central Updated Questions & Answers

Helpful information on how Form I-9 covering topics such as:

• Who Needs to Complete Form I-9?
• How to Complete Form I-9
• Is This Document Acceptable?
• Self Audits Q&As
• Storing Form I-9 Q&As
• Electronic Form I-9 Q&A

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