The Work Opportunity Tax Credit (WOTC) is a federal program available to employers of all sizes. Enacted in 1996, this program was created to encourage the hiring of targeted groups of workers who historically struggled to find employment, such as: unemployed or disabled veterans, SNAP (food stamp) recipients and select other groups.
Organizations and companies in industries such as retail, distribution, food service, call centers, maintenance, construction, hospitality, staffing and other businesses, which rely on an hourly wage workforce, are well suited to benefit from this tax credit. The credit represents a permanent reduction in income tax and directly reduces a business’s effective tax rate.
In the past, the WOTC program was difficult to administer, requiring exhaustive paperwork and personal signatures. Because of the difficulty of the process, many businesses operating smaller facilities weren’t able to take advantage of the opportunity to earn these valuable tax credits. In 2012, changes were implemented that included removing the need for hand signatures and introducing electronic applications, eliminating many of the program’s challenges.