Disproving the Top 3 employee tax credit misconceptions
Technology has transformed the process of qualifying employees for tax credits and collecting Uncle Sam’s incentives. What was a manual, red tape-ridden process ripe with high potential for errors has become a streamlined digital transaction.
In my last column, I hinted at the fresh revenue stream that automation afforded employers of hourly workers on the tax credit front. Now I’d like to take a look at some of the most frequently cited reasons for companies failing to maximize screening candidates for potential government incentive windfalls.
3. I’m busy – and screening for tax credit eligibility takes too long…
Not with technology, and more specifically, not with an integrated online hiring platform, such as an applicant tracking system or a talent management system. Let’s take the most popular form: the WOTC (Work Opportunity Tax Credit Screening) 8850, which allows employers to claim up to $9,000 in federal tax credits per eligible hire. Screening new employees for WOTC eligibility by pushing papers is as antiquated as the Pony Express, even if you’ve upgraded from snail-mailing completed forms to faxing and emailing. Enter phone screening, which reduced about 90 percent of the paperwork but still fell short when it came to ensuring each worker was effectively screened and tracked. In other words, money was still slipping through the cracks. Today’s hiring technology platforms allow employers to capture applicant data up front, seamlessly integrate with a tax screening partner, and then effectively screen candidates for tax incentive eligibility during the pre-employment phase. No stamps or fax line needed.
2. Now that the HIRE Act is over, it’s not worth my time.
The Hiring Incentives to Restore Employment (HIRE)Actof 2010 received a lot of headlines and buzz.But the $17.5-billion HIRE Act, which exempted employers from paying Social Security tax for qualifying workers, lapsed when 2011 hit. Despite its high profile, this program represented just one of more than 170 available federal, state and local incentive programs. In addition to WOTC, there are green credits for building energy-efficient workplaces, as well state-funded Enterprise Zone incentives (EZs) for companies doing business in targeted blighted or “up-and-coming” areas. This list doesn’t end here. New job creation and targeted training programs will also qualify you for tax credits. Here is where technology comes in to help employers: these state and federal programs are constantly being added to, subtracted from and tweaked by lawmakers. Keeping track of these on your own can be daunting, and fortunately, the best screening platforms available will reflect these changes in real time to produce accurate results.
1. All of Uncle Sam’s money is already spoken for.
Hardly. According to incentive screening, management and compliance firm Incentives Advisors, whose clients include Chipotle Mexican Grill, billions of dollars in unclaimed credits get left on the table each year. Some of this is attributed to businesses that choose to completely forgo incentive screening, while the balance is attributed to companies who screen employees inefficiently via manual paper and phone processes. This is especially true for companies fueled by hourly workforces, as upward of 90 percent of these businesses fail to cash in on tax credits.
If you still need some motivation for upgrading your technology to take advantage of the fresh revenue stream available through government incentive programs, there is this; on average, 15 percent of your workforce will qualify for incentives. Of course, if you are equipped with hiring technology and the ability to screen applicants during pre-employment, you would never want to pass on better potential quality hires solely to lay claim to a bevy of new employee tax breaks. After all, these programs call for workers to be on your books for a minimum length of time before they become eligible for incentive program pay-outs. And the workers who fail the interview and background check but pass the tax credit screening process with big, shiny dollar signs aren’t likely to stick around.
Harnessing the best available hiring technology available to integrate automated tax screening into your HR processes is not the only way to claim these credits and incentives. But if you’re looking to build this program into a true profit center for your company fueled by a fresh revenue stream, it’s the only way you should consider.
Amanda Richardson / As SVP of Product and Marketing, Amanda manages product development of Snagajob's business solutions making it easier for hourly employers to source, hire, manage and train workers. She is also responsible for business development efforts. Oh, and she loves brunch.