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Employers Urged To Stay Current On Tax Credit Plan While Congressional Approval Is Pending

Mar. 10, 2004
No. 04-39

JUNEAU – State labor officials today urged Alaska employers to continue to file timely certification requests for tax credits authorized under two federal employment incentive programs that expired at the end of 2003.

Commissioner of Labor Greg O’Claray said he is confident congress will reauthorize the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work (WtW) tax credit plans.

The programs are funded by the U.S. Department of Labor. The Employment Security Division in the Alaska Department of Labor and Workforce Development administers certification.

O’Claray said Alaska employers should continue to file WOTC and WtW certification requests according to existing schedules and guidelines. New employee filings should be postmarked within 21 days of date-of-hire.

O’Claray said it is important for employers to make sure their WOTC and WtW certifications requests reach the state in a timely manner. The department will announce renewal of the program promptly upon its reauthorization.

The commissioner added, “We expect congress to approve both programs retroactive to January 1. That will help employers avoid gaps in their tax credits, minimize their tax bills and help more Alaskans enter the workforce.

“Continued compliance while reauthorization is pending is important. Alaska employers realized a potential of more than $3 million in tax savings in Fiscal Year 2003.”

Tax credits are available for employers up to $8,500 per worker under WtW and up to $2,400 under WOTC. The incentives encourage employment in targeted groups that traditionally have high unemployment rates including public assistance recipients and veterans.

The reauthorization is included in legislation sponsored by senators Rick Santorum, R-PA and Evan Bayh, D-IN. More than 2.7 million Americans have found work through the WOTC and Welfare to Work Tax Credit, including 678 Alaskans in Fiscal Year 2003.

The Santorum/Bayh amendment would extend the WOTC for an additional two years and combine the WOTC with the Welfare-to-Work tax credit.

The amendment proposes to raise the WOTC age limit from 24 to 39 years of age and increase eligibility for families that rely on food stamps. It would also extend the tax credit to cover a second year of job training for employees from families on welfare.

The WOTC allows businesses to claim a maximum tax credit of $1,500 per eligible employee if the employee works between 120 and 139 hours, and up to $2,400 if the employee works more than 400 hours.

Employers can use the tax credit during the employee's first year of employment to help cover training costs and other start-up expenses.

Additional WOTC and WtW information is available online at jobs.alaska.gov/wotc.htm; by mail: WOTC Coordinator J. Allan MacKinnon, Alaska Department of Labor and Workforce Development, P.O. Box 115509, Juneau, AK 99811-5509, or by phone: 907.465.5955.

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News Media Contacts:
J. Allan MacKinnon, DOLWD Division of Employment Security, 907.465.5955 or
Joe Holbert, Special Assistant/Communications, 907.465.5673

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