TCS Business Updates
November 2009 - SourceCorp Professional Services and Tax Credit Services Announce Strategic Alliance
SourceCorp Professional Services, the nation's leading provider of specialized business tax services, announced today that it has formed a strategic alliance with Tax Credit Services, LLC (TCS), a nationally recognized provider of federal, state and local tax services. Together the two companies expect to provide a wide complement of services and enhanced benefits to their clients.
"We are extremely pleased and enthusiastic about our partnership with TCS," said Stanton Williams, President of SourceCorp Professional Services. "Not only do we expect our relationship with TCS to profit both organizations, but more importantly this alliance allows us to bring a wider range of services and greater value our clients."
Roy Brown, President of TCS, echoed Williams' comments, "TCS looks forward to a long-term, beneficial relationship with SourceCorp. This association will elevate the ability of both companies to provide the best possible service to our clients."
Fort Worth-based SourceCorp provides tax strategies and services including LIFO inventory accounting, R&D tax credit, cost segregation and energy-efficient Commercial Building "Green" tax deductions.
Memphis-based TCS identifies, secures and administers valuable government incentives for their clients, thereby improving their financial performance and reducing their effective tax rate, bringing true value to the bottom line.
October 2009 - Tax Credit Services, LLC. Featured in Memphis Daily News
The Memphis-based firm, which has satellite offices at other locations throughout the United States, has consultants on the Work Opportunity Tax Credit, ...Read more.
May 2009 - Tax Credit Services, LLC. Announces a Strategic Alliance with HR New Hire
HR New Hire announced a partnership with Tax Credit Services (TCS) under the TCS Advanced Partner Program to provide Work Opportunity Tax Credit (WOTC) services.
HR New Hire, an emerging leader in providing human resources software as a service, today announced an Advanced Partnership with Tax Credit Services, Inc (TCS) to offer its tax credit services. TCS will provide Work Opportunity Tax Credit Services for HR New Hire clients.
With a custom suite including payroll, HR, and verification services geared towards streamlining the hiring process while eliminating paper, time, and costs associated with manual processes HR New Hire's automated services can be easily integrated with existing HR applications to further streamline the process. Through the HR New Hire and TCS partnership, employers will have access to a full on-boarding suite where employees are able to electronically complete and sign forms including Federal and State W4’s, Federal I-9 forms, employer specific forms, download employee handbooks, and provide information to process Federal and State tax credits as well as a comprehensive system to maintain and manage this data. Additionally, HR New Hire provides employers with the ability to verify an employee's identity and assure your organization is compliant with local, state, and federal government regulations. For more information please visit www.hrnewhire.com.
March 2009 - Tax Credit Services, LLC. Announces a Strategic Alliance with USVerify, Inc.
USVerify has partnered with Tax Credit Services through our Advanced Partner Program to provide Work Opportunity Tax Credit (WOTC) services.
USVerify, a leader in providing human resources software solutions, today announced a strategic alliance with Tax Credit Services, Inc (TCS). TCS will provide Work Opportunity Tax Credit Services for USVerify clients. As part of the alliance, TCS and USVerify will develop a customized interface that enables an online 8850 process to increase the time to recovery of Federal and State Tax Credits.
USVerify offers a custom suite including payroll, HR, and verification services geared towards streamlining the hiring process while eliminating paper, time, and cost associated with older manual processes. Our automated services can easily be integrated with existing HR applications to further streamline the hiring process. In addition, USVerify provides employers with the ability to verify an employee's identity and assure your organization is compliant with local, state, and federal government regulations. For more information on USVerify visit: www.usverify.com.
December 2010 - Tax Bill Signed Into Law By President on December 17, 2010
Today the President signed into law HR 4853 which is widely regarded as the law that would extend the Bush Tax Cuts for the American people, it contains other provisions as well. Our emphasis focuses on the impact that the new law has directly on businesses.
Summary of Tax Credit Benefits for Businesses:
- Work Opportunity Tax Credit - extended until end of 2011
- Research and Development Credit - extended until end of 2011
- Empowerment Zones - extended until end of 2011
- District of Columbia Enterprise Zones - extended until end of 2011
- Indian Employment Credit - extended until end of 2011
- New Markets Tax Credit - extended until end of 2011
Tax Benefits that were not Extended:
- Renewal Community Tax Credit (up to $1,500 per employee)
- HIRE Act (exempted the employer portion of Social Security Tax)
- Work Opportunity Tax Credit - Hurricane Katrina Target Group (up to $2,400 per employee)
- Work Opportunity Tax Credit - Disconnected Youth Target Group (up to $2,400 per employee)
- Work Opportunity Tax Credit - Unemployed Veteran Target Group (up to $2,400 per employee)
It is possible that some of these expired provisions could be renewed in the near future and we will continue to monitor the Congress for these changes as they occur.
Please email us directly to get additional free information: firstname.lastname@example.org
To discuss the impact that this new law can have on your business, contact us toll free: 877-474-8274 (option 3)
November 2010 - Technology Update: Electronically Signed Form 8850
Since the release of IRS Announcement 2002-44, TCS automated the Form 8850 application process in anticipation that state workforce agencies (SWA) would allow electronic submission of Form 8850. Unfortunately, most state workforce agencies do not accept electronically-submitted Form 8850s and those that do expect TCS to retain originally-signed forms. Although the State Workforce Agencies (SWA) migration had been almost non-existent, TCS continued to be a leader in the industry in preparedness by implementing a limited amount of these SWA's and partaking in BETA testing for others. In addition, TCS has met with members of the SWA, Department of Labor (DOL), US Congress and the US Senate in order to request that the SWA's accept an electronically signed Form 8850 in lieu of the required original (wet) signature on the Form 8850; specifically that the SWA at the very least accept a hard copy of an electronically signed Form 8850 vs. requiring them to accept electronic submissions which ultimately relieves them from the burden and expense of new technologies at the SWA level.
After a much anticipated event it is with great pleasure and excitement that I communicate to you a huge step in favor of these changes and potentially a point in history as it relates to the electronically signed submittal of Form 8850. Recently the members of the Internal Revenue Service Advisory Council (IRSAC) met to discuss many different items of business, but one area dear to our hearts here at TCS was the discussion of the electronically signed form 8850 and I quote the IRSAC specifically: "INEFFICIENCIES THAT ERODE A PORTION OF THE INCENTIVE EMPLOYERS REALIZE FROM THE WORK OPPORTUNITY TAX CREDIT." In these discussions they addressed the inefficiencies and proposed solutions for the processing of From 8850 all of which mimic everything TCS has been fighting for these past years. In fact the IRSAC recommended an immediate solution; as quoted "To alleviate this administrative burden, IRSAC recommends that the Commissioner of the IRS take prompt action to ensure that the Secretary of Labor, or the Secretary's appropriate designee, issue guidance mandating that state workforce agencies treat hard copies of electronically-signed Form 8850s as if they were originally-signed Form 8850s." Specifically the IRSAC proposed that the IRS "take whatever steps necessary to promptly ensure that the Department of Labor issue a Training and Employment Guidance Letter (a "TEGL") mandating that all SWAs treat hard copies of electronically-signed Form 8850s as if they are originally signed Form 8850s."
This solution would further support our recommendation that submittal of an electronically signed Form 8850 should be accepted in all cases. It ultimately allows TCS and its clients to completely automate the WOTC screening process while at the same time adhering to concerns that are equally important to the SWA, as it would not in any way change how they perform their duties nor would it impose any additional burdens on them. In fact, we at TCS believe it will only decrease their certification turn around times.
In closing know that TCS and its executive management, contacts and employees will continue to follow the changes accordingly and TCS will continue to be poised to implement these changes immediately, proving once again TCS is in front of its competition in the market place. We are very excited about these proposed changes and are eagerly awaiting more information.
For questions or comments, please feel free to contact TCS at 877-474-8274. The full report can be found here: www.irs.gov.
March 2010 - The HIRE Act
The President signed the HIRE Act into law at 11:30am March 18, 2010. The law provides several different opportunities for businesses to capitalize on incentives for hiring additional employees who meet the following criteria:
- Haven't been employed more than 40 hours within the past 60 days
- Sign a statement attesting to the unemployment period
In its final form, the law provides the following benefits for hiring these employees:
- Employers are exempt/forgiven the Social Security Tax (6.2%) due on wages paid to the employee up to a maximum wage of $106,800 during 2010
- "Bonus" - employers are given a bonus credit for employees who remain employed for a year. Credit is the lesser of: $1,000 or 6.2% of the wages paid to the employee in 2010
The maximum benefit that can be attained under this plan is $7,622 per employee including the bonus credit.
The IRS is currently developing the forms necessary to implement this program. As these forms become available, TCS will be integrating them into client's hiring processes.
The Work Opportunity Tax Credit (WOTC) and the HIRE Act do not allow for a double dip into both programs. An employer who has WOTC qualified employees must choose either the HIRE Act or WOTC for that employee.
TCS clients can be assured that their tax credit portfolio will be maximized by utilizing both of these programs, as well as others available, to the greatest extent permitted.
As soon as it is available, the screening form will be distributed to all TCS clients for immediate implementation.
March 2010 - H.R. 4213 - Tax Extenders Act
The House of Representatives passed a bill in December 2010 that extends through the end of 2010, beneficial tax credits and incentives that are available to businesses participating in certain activities or doing business in areas that are economically in need of development. On March 10, 2010, the Senate passed the legislation and will now go to a legislative committee before going to the President for signature and finally becoming law.
Tax Credits Included:
- Research and Development Credit
- Empowerment Zones
- Renewal Communities
- Gulf Opportunity Zone (Katrina qualification for Work Opportunity Tax Credit)
- Indian Employment Tax Credit
This legislation will only renew these provisions through the end of 2010 and will need to be renewed again next year.
The Senate voted 62-36 in favor of the legislation.
Democrats: 54 (Yes)/1 (No)
Republicans: 6 (Yes)/35 (No)
The House of Representatives voted 241-181 in favor of the legislation.
Democrats: 239 (Yes)/10 (No)
Republicans: 2 (Yes)/171 (No)
TCS has been continuing to screen our client's employees for these valuable tax credits so that we remain on top of our client's tax credit portfolio and continue to administer them so that our clients are able to take advantage of all of the credits available to them.
November 2009 - H.R. 3953 - "Back To Work Tax Act"
A bill has been introduced that would expand the Work Opportunity Tax Credit to include "Long Term Unemployed Individuals" as a target group which would make their employers eligible for up to $2,400 in Federal Tax Credits. Individuals who are certified as receiving unemployment compensation under State or Federal Law for not less than 26 consecutive weeks ending on the hiring date.
This bill has been referred to the House Committee on Ways and Means.
TCS clients would see little impact to their normal tax credit screening and processing as this potential law would interact and modify programs that are already in existence.
October 2009 - H.R. 3807 - "Economic Stimulus for Rural Communities Act"
This bill has been introduced by Congressman Phil Roe (R-TN) that would expand the Federal Work Opportunity Tax Credit (WOTC) to include "Rural Area Residents" to the growing list of target groups. This target group must live and work in a designated rural area and would be set to expire in 5 years. Congressman Roe says that these areas would be determined by the Secretary of Agriculture.
Any changes that would come from adding this type of new target group will be handled by TCS internally and shouldn't require any additional action on the part of our clients.
This type of expansion of WOTC would increase the employment rate of these designated areas and provide cash back into those local economies.
October 2009 - H.R. 3784 - "Hire America Act"
A bill has been introduced in Congress that would expand the Federal Work Opportunity Tax Credit (WOTC) to include all new hires, not just those who are in the currently required Target Group Categories.
Increased Percentages and Participation
The proposed law would expand the credit to include those employees who are not members of any target group as currently required under WOTC, but would do so at a reduced credit rate.
Target Group Employee is increased from 40% to 50% of qualified wages
All Other Employees is now established at 30% of qualified wages
The bill also increases the credit amount for employees who do not meet the 400 hour requirement to get to the highest tier of WOTC. This increase removes the old 25% credit amount and replaces it with 35%. For individuals who are not members of one of the Targeted Groups, the rate would be raised from 0% to 15%.
Increased Wage Limits
Disabled Veteran group qualified wage limit is increased from $12,000 to $16,000
Summer Youth group qualified wage limit is increased from $3,000 to $5,000
The proposed law would make WOTC permanent and thus it would no longer be subject to sunset dates and Congressional renewal.
Increased Employer Child Care Credit
Provisions are included for an expansion of the Employer-Provided Child Care Credit from 25% of the qualified child care expenditures to 35% as well as increasing the qualified resource and referral expenditures from 10% to 20%.
The increased credit amounts in this bill would give a substantial boost to our economy and we are closely monitoring this legislation as it makes its way through Congress. Our clients will be poised to take advantage of this legislation should it become law.
Our clients will realize a substantial increase in the amount of tax credits that would be made available to them, providing a substantial impact on the local and national economy.
October 2009 - Change in Work Opportunity Tax Credit processing procedures
The Department of Labor issued Training and Employment Guidance Letter No. 3-09 Change 1 on Wednesday October 7, 2009. This notice is concerning Work Opportunity Tax Credit processing procedures by employers and consultants and gives guidance to the individual State Workforce Agencies (SWA) surrounding certification and documentation processes.
What has changed
The letter grants an extension to employers and consultants in implementing updated form 9061 and 9062 for WOTC screening:
- Continued use of the November 2008 ETA Forms 9061 (Individual Characteristics Form) or 9062 (Conditional Certification) with the new hires as part of their certification requests through October 17, 2009 has been given.
- SWA's are instructed to accept the November 2008 previous version during the extension period.
Should Clients expect any changes?
All of the changes are being handled on the TCS side of the WOTC processing. Clients should continue to follow the implementation procedures that have been given to you by your TCS representative.
We have been hard at work making sure that all of our client's WOTC forms are processed with the most current regulations and procedures. If you have any questions regarding this, please contact email@example.com.
A copy of this letter can be found here: Training and Employment Guidance Letter No. 3-09 Change 1
October 2009 - Lawmakers Asked to Extend Tax Incentives for Distressed Communities
Government officials and community revitalization experts asked House lawmakers to extend the federal tax incentives that are available in Empowerment Zones (EZ) and Renewal Communities (RC) programs before they expire at the end of 2009. In testimony before the House Ways and Means Subcommittee on Select Revenue Measures on October 7, the Housing and Urban Development (HUD) general deputy assistant secretary, said the Obama administration supports extending the tax incentives through 2010 in order to encourage business investment, economic revitalization and job creation.
TCS believes that these programs will continue to be a part of our country's financial landscape for many years to come. Companies across the country benefit greatly from these programs and they are vital to reviving the economy in the areas where these zones exist.
These programs provide up to $3,000 per eligible employee, per year in federal tax credits.
August 2009 - California Department of Housing and Community Development Announces Five New Enterprise Zones to Boost California's Economy
Sacramento - Helping to grow jobs and improve California's business climate, the California Department of Housing and Community Development today announced the conditional designation for five Enterprise Zones statewide. The zones are Hesperia, Tulare, Pittsburg, Sacramento and Taft. "California Enterprise Zones give communities a chance to develop their economic potential, improve their quality of life and contribute to the state's economy. Enterprise Zones are part of the Administration's ongoing efforts to increase the number of jobs through state and local incentives," said HCD Director Lynn L. Jacobs.
The California Enterprise Zone Program targets economically distressed areas using special state and local incentives to promote business investment and job creation. By encouraging entrepreneurship and employer growth, the program strives to create and sustain economic expansion in California communities.
The new designations will take the place of the zones set out in statute which expired or will expire in 2009. Each zone designation is in effect for 15 years. Businesses within Enterprise Zones are eligible for substantial tax credits and benefits, for example: Firms can earn $37,440 or more in state tax credits for each qualified employee hired.
Corporations can earn sales tax credits on purchases of $20 million per year of qualified machinery and machinery parts. Up-front expensing of certain depreciable property. Lenders to Zone businesses may receive a net interest deduction. Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment. Enterprise Zone companies can earn preference points on state contracts. Up to 100% Net Operating Loss (NOL) carry-forward. NOL may be carried forward 15 years. In 2006, HCD commissioned a report that evaluated the success of Enterprise Zones in spurring economic recovery. The report shows that, on average, within Enterprise Zones between 1990 -2000: Poverty rates declined 7.35 percent more than the rest of the state. Unemployment rates declined 1.2 percent more than the rest of the state. Household incomes increased 7.1 percent more than the rest of the state. Wage and salary income increased 3.5 percent more than the rest of the state.
The next step in the designation process will be the HCD issuance of a conditional designation letter to each of the new zones. The letters will outline conditions which must be met to be granted final designation. Examples of conditions include a signed emorandum of understanding with HCD, which includes performance measures and benchmarks.
In 2006, the legislature passed AB 1550 which authorized improvements to the Enterprise Zone program by emphasizing economic development, outreach, marketing and accountability. Provisions of the law include additional reporting by both the local enterprise zone and the Department on a biennial basis and an expansion of HCD's audit authority to cover all economic development areas.
The EZ program is one of California's largest and most successful economic development tools. HCD is committed to continuously improving the application process for future designation rounds so that more businesses and communities will be able to take advantage of its incentives. The next designation round will be in 2010 and HCD will be exploring changes to the application process that will ensure the greatest economic benefit for eligible California communities and businesses.
HCD provides leadership, policies and programs to preserve and expand safe and affordable housing opportunities and promote strong communities for all Californians. The Department also supports economic development programs throughout the state. As the lead housing department, HCD is part of the state Business, Transportation and Housing Agency. For more information on the Enterprise Zone Program, visit http://www.hcd.ca.gov/fa/cdbg/ez.
American Recovery and Reinvestment Act of 2009 Adds Two New Work Opportunity Tax Credit (WOTC) Categories
In response to the current economic conditions the President signed the American Recovery and Reinvestment Act of 2009 (H.R. 1) on February 17, 2009. The new law creates two new categories of targeted groups under the existing Work Opportunity Tax Credit (WOTC): unemployed veterans and disconnected youth. These new categories apply to individuals who are hired and begin work in 2009 or 2010.
The WOTC is combined with the Welfare-to-Work credit for qualified individuals who begin working for an employer after December 31, 2006, and before September 1, 2011.
These changes could ultimately decrease federal income tax liability.
Enterprise Zone Programs
Enterprise Zones are targeted areas that have been designated by state or local governments as blighted or economically depressed. Today roughly forty of the fifty states have designated zones to spur economic development in an effort to attract and retain businesses within these boundaries; California and New York just to name a couple.
Our studies have shown that Enterprise Zone Programs in these various states have provided billions of dollars in new business investment, which in turn has created thousands of new jobs. In addition, the programs have increased awareness ultimately reducing the burden on state and local governments to evaluate and address the challenges associated with underdeveloped areas.
Specific locations within eligible Enterprise Zones will have an immediate tax saving.
For more information on a tax credit opportunity analysis or to discuss Enterprise Zones, please contact us today!