Hiring Tax Credits

Employer IncentivesTax Credits

November 5, 2009November 5, 2009

Introduction

CFO Resources, Inc. and ETaxCredits.com

Ken Brice, President and Founder, spent many years in corporate finance learning how to make money for the owners of businesses.

Decided to leave corporate world in 1994.

Started business to help companies improve profitability and cash flow.

Added these tax credits services to portfolio of services in 1996.

Almost 300 clients already taking advantage of this service!

Why We are Talking Today

Federal program in place since 1996 that enables companies to reduce federal income tax liability.

Obama Stimulus Package has expanded this program making it viable for all for-profit employers.

95% of employers are not aware of this program.

Once aware, most employers still don’t participate due to complexity of effective participation.

We’re here to make it effective for you!

Brief History of WOTC Tax CreditsBrief History of WOTC Tax Credits

Established by the Small Business Job Protection Act of 1996, Established by the Small Business Job Protection Act of 1996, (P.L. 104-188).(P.L. 104-188).

The Taxpayer Relief Act of 1997:The Taxpayer Relief Act of 1997: - reauthorized the Work Opportunity Tax Credit (WOTC).- reauthorized the Work Opportunity Tax Credit (WOTC). - established a new Welfare-to-Work Tax Credit for hiring long-term - established a new Welfare-to-Work Tax Credit for hiring long-term welfare recipients.welfare recipients.

In 2008, President Bush reauthorized the programs throughIn 2008, President Bush reauthorized the programs throughAugust 31, 2011.August 31, 2011.

In President Obama’s economic plan for the current administration, the In President Obama’s economic plan for the current administration, the tax credit programs are now expanded.tax credit programs are now expanded.

How it WorksHow it Works

If you hire employees from “Targeted” groups, the If you hire employees from “Targeted” groups, the federal government federal government will pay youwill pay you for hiring them in the form of federal income tax credits. for hiring them in the form of federal income tax credits.

Tax Credits are used by companies to Tax Credits are used by companies to reduce their federal income tax reduce their federal income tax liabilityliability

The good news is you’re probably hiring people from these Targeted The good news is you’re probably hiring people from these Targeted Groups and don’t even know it!Groups and don’t even know it!

Targeted EmployeesTargeted EmployeesOriginal “Targeted” groups consist of:Original “Targeted” groups consist of:

• People on food stampsPeople on food stamps- - 300,000 people going on food stamps every month.300,000 people going on food stamps every month.

• People on Welfare (TANF) People on Welfare (TANF) (over 3 million new applications for welfare in February, 2009, and growing!)(over 3 million new applications for welfare in February, 2009, and growing!)

• People on Supplemental Security Income (SSI)People on Supplemental Security Income (SSI)

• People who are ex-felonsPeople who are ex-felons

• People on state disability programsPeople on state disability programs

• Veterans who come from families on public assistanceVeterans who come from families on public assistance

• Young people who live in empowerment zonesYoung people who live in empowerment zones

• Long Term Welfare RecipientsLong Term Welfare Recipients

Targeted EmployeesTargeted Employees

Obama Administration has expanded the base of new hire Obama Administration has expanded the base of new hire employees that will make companies eligible for tax employees that will make companies eligible for tax credit:credit:

• Expanded the Veterans GroupExpanded the Veterans Group

• Added a Disconnected Youth GroupAdded a Disconnected Youth Group

Veterans Veterans Expanded GroupExpanded Group

Previously, only veterans in a household that had received Previously, only veterans in a household that had received public assistance would qualify.public assistance would qualify.

Now, ALL unemployed veterans returning from active duty Now, ALL unemployed veterans returning from active duty through 2008-2010, and who have been on through 2008-2010, and who have been on unemployment assistance for 4 weeks, qualify.unemployment assistance for 4 weeks, qualify.

Disconnected Youth Disconnected Youth New GroupNew Group

Any person between the ages of 16 and 25 who has not Any person between the ages of 16 and 25 who has not been employed or attended school on a permanent basis been employed or attended school on a permanent basis for 6 months prior to hire. Certain restrictions apply if the for 6 months prior to hire. Certain restrictions apply if the person has a HS diploma/GED or Trade School person has a HS diploma/GED or Trade School CertificationCertification

..

A Snapshot of the Program

It costs the government around $25k to keep an individual on public assistance programs.

The Tax Credit program rewards employers, in the form of tax credits, who hire individuals so they can come off of public assistance.

To qualify for the tax credit: New hire must complete a form on or before the first day

worked. The employer files the form, in specified timeframes, with the

appropriate state agency for certification on each new hire.

Snapshot, con’t. State agencies are charged with administering this

federal program.

Agency determines validity of each tax credit application for each new hire form submitted by the employer.

Many agencies are understaffed and continual follow-up is required to obtain certification.

90% of the applications reviewed by employers are invalid or would be denied if submitted for certification

Why We are Talking Today

Is it worth it?

YES! Now more than ever!Previously, an average of 1 in 10 new hires would qualify

the employer for a tax credit.

In today’s economy, and with recent expansion of tax credit program, now estimated that:

2 in 10 new hires may qualify for tax credit and, the average credit is going up too!

How much credit are we talking about?

Work Opportunity Tax CreditsWork Opportunity Tax Credits

Federally funded, state administeredFederally funded, state administered

Tax Credit for Long Term Welfare Recipients (over 18 months)Tax Credit for Long Term Welfare Recipients (over 18 months)• 40% of first $10,000 in earnings for year 1.40% of first $10,000 in earnings for year 1.

• 50% of first $10,000 in earnings for year 2, for a total of $9,000.50% of first $10,000 in earnings for year 2, for a total of $9,000.

• Qualified Employee must work a minimum of 120 hours.Qualified Employee must work a minimum of 120 hours.

Tax Credit for all but Long Term Welfare RecipientsTax Credit for all but Long Term Welfare Recipients• 40% of first year’s wages, up to a cap of 40% of first year’s wages, up to a cap of $2,400 - over 400 hours.$2,400 - over 400 hours.

• 25% of first year’s wages, up to a cap of $1,500 - under 400 hours but 25% of first year’s wages, up to a cap of $1,500 - under 400 hours but over 120 hours. over 120 hours.

• Qualified Employee must work a minimum of 120 hours.Qualified Employee must work a minimum of 120 hours.

Depending on location, your company may be eligible for an Depending on location, your company may be eligible for an Empowerment Zone credit, Enterprise Community credit, or Empowerment Zone credit, Enterprise Community credit, or Renewal Community credit.Renewal Community credit.

EZs, ECs, and RCs are areas of a city designated by the federal EZs, ECs, and RCs are areas of a city designated by the federal government as distressed areas. government as distressed areas.

Nationally there are:Nationally there are: 65 Urban Enterprise Communities65 Urban Enterprise Communities 6 Urban Empowerment Zones6 Urban Empowerment Zones 30 Rural Enterprise Communities30 Rural Enterprise Communities 3 Rural Empowerment Zones3 Rural Empowerment Zones DC Enterprise ZoneDC Enterprise Zone

Empowerment Zones, Empowerment Zones, Enterprise/Renewal CommunitiesEnterprise/Renewal Communities

Tax credits earning potential per qualified “Zone/Enterprise Tax credits earning potential per qualified “Zone/Enterprise or Rural Community” employee:or Rural Community” employee:

- up to $3,000 per year for EZs and ECs.- up to $3,000 per year for EZs and ECs.

- up to $1,500 per year for RCs.- up to $1,500 per year for RCs.

This credit is calculated at 20% of the first $15,000 in This credit is calculated at 20% of the first $15,000 in earnings for a maximum tax credit of:earnings for a maximum tax credit of:

- $3,000 for EZs and ECs.- $3,000 for EZs and ECs.

- 10% of the first $15,000 in earnings for RCs. - 10% of the first $15,000 in earnings for RCs.

Claim retroactively on existing staff!Claim retroactively on existing staff!

Empowerment Zones, Empowerment Zones, Enterprise/Renewal CommunitiesEnterprise/Renewal Communities

Where’s the Beef?Where’s the Beef?

On average, On average, 10%-20% of your new hires10%-20% of your new hires will be eligible for an will be eligible for an average tax credit of between average tax credit of between $1,500$1,500 and and $2,000$2,000..

To be conservative, simply take the number of people you expect to To be conservative, simply take the number of people you expect to hire and multiply first by 10% and then by $1,500.hire and multiply first by 10% and then by $1,500.

If you don’t know the number of people you’re going to hire and, if If you don’t know the number of people you’re going to hire and, if your turnover is:your turnover is: 20% - multiply the number of current employees by $30.0020% - multiply the number of current employees by $30.00 25% - multiply the number of current employees by $37.5025% - multiply the number of current employees by $37.50 30% - multiply the number of current employees by $45.0030% - multiply the number of current employees by $45.00 35% - multiply the number of current employees by $52.5035% - multiply the number of current employees by $52.50

(quick ballpark numbers)(quick ballpark numbers)

If you would like to reduce your taxes by that amount each year or If you would like to reduce your taxes by that amount each year or more, more, you need to start this program today! REALLY!you need to start this program today! REALLY!

Our Company’s Services:

Screen all employee forms against proprietary and other databases to ensure applying for all possible credit. Follow up directly with employee if more information is required.

File for certifications (employee qualifications) in all applicable states. Follow up with respective government agencies to assure certifications are submitted and

approved. Maintain relationships with agency staff. Maintain an accurate data base of qualified individuals and for what program. Calculate the credits using our proprietary software. Send you quarterly reports indicating the number of certifications we’ve received and the

number who were not certified and why. At the end of the fiscal year, we send you the appropriate annual tax forms to file with your

taxes (and take the deduction) along with copies of all certifications for your records. Leverage CFO experience to create a methodology for accurately capturing income

credits. There are no up front fees – we bill quarterly only when we receive certifications and are

successful. If you don’t get paid, we don’t get paid.

No fee unless employee is certified!No fee unless employee is certified!Guaranteed satisfaction – cancel anytime – no contracts to sign!Guaranteed satisfaction – cancel anytime – no contracts to sign!Whether you outsource it or try to do it yourself, just do it.Whether you outsource it or try to do it yourself, just do it.

CFO Resources, Inc.CFO Resources, Inc.

Don’t let this continue to happen to you!Get your share of some stimulus money

today!

CFO Resources, Inc.The Tax Credits Company

521 Executive DrPrinceton, NJ 08540

Ken Brice, President888-236-7339, extension 703

[email protected]

Call now to get started – your next new hire may be the one who qualifies!