New employer tax credit could get younger veterans to work
The New York State Division of Veterans' Affairs is promoting a new tax credit to incentivize employers to hire New York's post-9/11 veterans.Post-9/11 veterans, since 2009, have had the highest unemployment rate in the nation — higher than those of their older counterparts and far above the general population, according to the United States Bureau of Labor Statistics."All New Yorkers owe a special debt of gratitude to the brave men and women of the U.S Armed Forces who have served in the years since 9/11," Gov. Andrew Cuomo said. "There are approximately 75,000 post-9/11 veterans living in New York state today. These brave men and women served our country, now it's our turn to help them get back to work.
"The state has allocated $74 million to provide tax breaks that can be applied against the taxes of any private business that hires a post-9/11 veteran after Jan. 1, 2014 and before Jan. 1, 2017, to a full-time position of at least 35 hours a week for at least a year.The amount of the tax credit equals 10 percent of the gross wages paid to a non-disabled veteran, and 15 percent of the gross wages paid to a disabled veteran, for the first year of employment, according to the state Tax Department.The credit is capped at $5,000 for non-disabled post-9/11 veterans and at $15,000 for disabled post-9/11 veterans. It is a one-time credit applied against the 2015 and 2016 franchise tax years; however, any credit not used by an employer can be carried forward for three years.
Another requirement of the credit is that the veteran employee must be a new hire who had been unemployed for at least six months prior. The new policy prohibits employers from firing an employee to replace them with a veteran to receive the credit. Assemblyman Michael Benedetto, chair of the Assembly's Committee on Veterans' Affairs, said the new policy is based on the "Job for Heroes" legislation the Independent Democratic Conference introduced back in Feburary. Senate bill 3043 is sponsored by Sen. David Carlucci, D-Clarkstown, and has 10 co-sponors. There is no same as bill in the Assembly.
"The governor saw the value of the bill and included it in the budget and it was passed last March when we improved the state budget," said Benedetto, D-Bronx.Benedetto said at the time he was in the process of introducing a bill identical to the IDC's but didn't get a chance to because the governor included the policy in the budget."It is quite possible [my] bill was ready to be filed when the governor included [Jobs for Heroes] in the budget," he said. "The credit will partially solve a problem we have across the state of veteran populations who are unemployed.
"The unemployment rate for post-9/11 veterans, as of this year, sits at 10 percent nationwide, according to the Governor's Office. The rate for post-9/11 veterans under age 25 is 10.5 percent.Benedetto attributes this to a lack of communication between veterans and employers as to what vets were trained to do in the Armed Forces and how their skills fit in with private sector jobs.
"[There's] a bad perception out there among some business people that vets have issues…they think they may not be trained properly for the jobs and unfortunately none of this is really true. Veterans have proven themselves to be hard working, reliable, and well trained," Benedetto said.Cuomo, in 2011, launched the "Experience Counts" campaign to facilitate the transfer of military skills to the public and private sectors. Today, the hire-a-vet credit is one of many initiatives to ease veterans' transition to the civilian workforce.
We're still waiting for the tax extensions to come up in congress and get voted on. In the 15 years I've been doing this, they've ended and been extended 5 times. We have all the confidence it will be extended again if not made into tax law. For all those who are taking advantage of the program, keep sending your forms in - remember the 28 day window! The states will accept them if they're filed witin the 28 days although they won't act on them until the program is extended. Stay posted.
The WOTC program ended 12/31/13 but, as has happened in the past, is expected to be renewed. Congress is addressing the program as we speak and our best hope is that it becomes part of the permanent tax code, a proposal included in the President’s budget. States have asked us to proceed as “business as usual” meaning we’re supposed to continue sending our client’s applications in within the 28 day rule. Other indicators that this program will be authorized is that states are continuing to buy online services with Alabama the most recent state to go online. Other indicators are that large employers like Wal-Mart and Home Depot and the like would take a serious profit and cash flow hit if suddenly they didn’t get their millions of dollars of tax credits and we know how powerful their lobby is.
As most of you are aware, states are still behind in processing 2013 credits and in some cases 2012 credits. These credits are for employees hired in 2013 which technically should be taken on your 2013 tax return. As is our policy every year, we want to hold off as long as we can before we wrap up the year. As most companies have a 12/31/13 tax year end which needs to be filed either 3/15/14 or 4/15/14, depending on the structure of the company, we plan on holding off wrapping up the year until 3/1/14. At that time we will run all the year end reports for you and get them to you by 3/7/14 at the latest.
If you have a different tax year or are planning on filing an extension, please let us know so we can accommodate your tax reporting needs.
We sit and wait for the Congress to get around to renewing the WOTC program which expired on 12/31/13. States are continuing to allow us to send them forms although they won't act on them until the program is re-authorized. The two main criterium of signing the 8850 on or before hire date and the 28 day mailing window is still in place. Do you think Walmark, Home Depot, and other large employers can take the earnings hit of no tax credits? Just for fun, using our company averages, Walmart has 2.1 million employees. Assuming 25% turnover (probably higher) they're going to hire 525,000 people a year. Using a conservative 12% eligibles, that's 63,000 eligible people. Using an average credit of $1,500 each (I know its higher since Walmart has targeted veterans who can be as high as $9,600 in creits) thats $94,500,000 in lost profits if the programs are not extended. Not even Walmart can absorb that kind of loss.