Tennessee businesses save millions with employer tax credit

Staff Reports • Updated Dec 3, 2017 at 10:45 PM

NASHVILLE – The Tennessee Department of Labor and Workforce Development continued to issue a record number work opportunity tax credits to business owners across the state.  

A streamlined, modernized application process makes it easier for employers to take advantage of the beneficial tax credit.

Between January and October, TDLWD approved nearly 124,000 WOTC applications, which totaled more than $322 million in tax credits to Tennessee employers. The state has already far surpassed the total number of certifications made in all of 2016.

 “This tax credit benefits everyone involved,” said TDLWD Commissioner Burns Phillips. “It can help improve an employer’s bottom line, while assisting someone who faces significant barriers when looking for employment.” 

Eligible workers must come from targeted groups who consistently have a difficult time entering or reentering the labor force. Those groups include people who have been unemployed for a long period of time, veterans, food stamp recipients, ex-felons, people in vocational rehabilitation, supplemental Social Security income recipients, as well as several other groups of individuals.

The WOTC provides federal tax credit incentives to employers who hire eligible individuals. A company can receive a tax credit that ranges from $2,400-$9,600 per approved employee.

Supplemental Nutrition Assistance Program recipients make up the largest group of work opportunity tax credits, with just more than 108,000 certifications in 2017. Short-term Temporary Assistance for Needy Families recipients rank second with more than 5,000 certifications. Both veterans and long-term TANF recipients have nearly 3,200 certifications, so far this year.    

In 2015 the TDLWD overhauled a stagnant WOTC program. Prior to modernization, employers had to fill out paper applications and department staff had to manually process and approve the paperwork. That led to a backlog of applications and a drop in certifications.

Employers can now go online and submit applications for the tax credit. Not only has the new system eliminated 700,000 pieces of paper each year, along with the cost of manually reviewing each application, the WOTC automation also sped up the approval process, which led to a dramatic increase in certifications.

“By making the process easier for employers, they are now able to take advantage of this beneficial program that can reduce their income tax liability,” Phillips said. “But more importantly, each one of those certifications represents a Tennessean who is now working and providing for their family.”

Taxable employers claim the WOTC as a general business credit on Form 3800 against their income tax liability.


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