LAW REVIEW 1222
Congress Expands Work Opportunity Tax Credit for Hiring Qualified Veterans
By Captain Samuel F. Wright, JAGC, USN (Ret.)
On November 21, 2001, President Obama signed into law the VOW To Hire Heroes Act of 2011, Public Law 112-56. Captain Marshall Hanson (ROA’s Legislative Director), Keith Weller (ROA’s Communications Director), and I (Director of ROA’s Service Members Law Center) were honored to attend and observe.
Section 261 of this new act amends the Internal Revenue Code to: (1) increase the amount of wages eligible for the work opportunity tax credit for veterans who are hired after being unemployed for six months or more during the one-year period ending on the hiring date ($14,000 of first-year wages) or disabled veterans who are either hired within one year after discharge from active duty ($12,000 of first-year wages) or who are hired after being unemployed for six months or more during the one-year period ending on the hiring date ($24,000 of first-year wages), and (2) allow tax-exempt organizations to claim the lesser of the amount of the work opportunity tax credit for hiring veterans or the amount of the payroll taxes paid by such organizations during the calendar year. Section 261 also extends through 2012 such credit with respect to such veterans and provides a credit against payroll taxes for qualified tax-exempt organizations employing such veterans.
On February 9, 2012, the Internal Revenue Service (IRS) put out an announcement about this new law and how to apply for these incentives. You can find the announcement at http://www.irs.gov/businesses/small/article/0,,id=253949,00.html
The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013.
The credit can be as high as $9,600 per qualified veteran for a for-profit employer or up to $6,240 for qualified tax-exempt organizations, but the amount of the credit will also depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. The amount of the credit for qualified tax-exempt organizations may not exceed the organization’s employer social security tax for the period for which the credit is claimed.
ROA strongly supports any provision that will give employers an incentive to hire veterans and that will help address the scandalously high unemployment rate among veterans who have been released from active duty since the terrorist attacks of September 11, 2001.