Congress has adjourned for 2011 without reauthorizing a number of Tax Provisions set to expire on December 31st and historically bundled, including WOTC and EZ.  In a year in which little legislation was passed, it was hoped that these business tax provisions would be included with a yearlong extension of the 2% payroll tax holiday, extended unemployment benefits and the so-called “Medicare doc fix”

Congressional and political pre-occupuation first with the debt ceiling crisis and subsequently with the outcome of the Supercommittee deflected attention from customary legislative agendas, including the expiring business tax provisions.  With the calendar timeline compressed by mid-November when the Supercommittee disbanded without agreement, there simply was not enough time for House and Senate Leadership to work out the details of extending the business tax provisions including how to pay for them.

The result was Senate passage of a temporary 2 month extension of the payroll tax holiday, extended unemployment benefits and the “doc fix”.  Initially the House rejected the temporary extension but relented on December 23rd.  The result is that when Congress returns in January there will likely be a House-Senate conference to come to a consensus on how to extend the 2 month package for the remainder of the year.  This bill may be an opportunity to reauthorize WOTC and EZ, since both the Senate Finance Committee Chair Max Baucus (D-MT) and the House Ways and Means Chair Dave Camp (R-MI) are on record favoring extension of the business tax provisions.  In addition, WOTC is in the peculiar position of having its core categories expired but having some new provisions passed to help veterans get jobs still in effect through 2012.  When Congress passed this legislation in November, intent to renew WOTC was implicit.

 Longstanding clients also know that past failure to extend the Business Tax Provisions was not uncommon, and between 2000 and 2006 it was almost an annual occurrence.  In all of those instances there was a seamless and retroactive reauthorization of WOTC.  Clients should bear in mind that all of these retroactive extensions included the proviso that they only applied to Employers who processed timely 8850’s to Certifying Agencies.  Therefore, Clients are urged to continue to follow all procedures as if the statute was still in effect.  To do otherwise will result in lost credits in the future.

 We will keep you informed of new developments in 2012 as they occur.  If you have any questions, feel free to contact Roy Goldman at 732.657.5030 Ext. 10.