FEBRUARY 2011

The Work Opportunity Tax Credit (WOTC) and Senate Bill 146
The WOTC is a federal income tax credit program administered by the U.S. Department of Labor. It provides businesses with an
incentive to hire and retain individuals from groups that have a particularly high unemployment rate or other special employment
needs. The program reduces the federal tax liability and helps job-seekers to move toward economic self-sufficiency.
Generally, businesses that hire from selected groups of qualified job-seekers can generate direct federal tax savings ranging from
$1,200 to $9,000 per qualified employee, which include summer youth hires, certain adult hires, such as residents of federal
empowerment zones or renewal communities (among others), disabled veterans, and long-term Temporary Assistance for Needy
Families (TANF) recipients.

On January 26, 2011, Senate Finance Committee Chair Max Baucus and Ranking Member Chuck Grassley introduced Senate Bill
146, the “Veterans Employment Transition Act” (“VETs”) This job bill will reward employers who hire veterans who had recently
completed their service in the military with a tax credit up to $2,400 per veteran. As discussed above, the WOTC had a similar
targeted group for businesses that hired disabled veterans. However, that category expired December 31, 2010. Unlike the former
disabled veterans targeted group, the VETs job bill will allow servicemen and women to provide documentation directly from the
Department of Defense to the potential employer without having to obtain WOTC certification. An eligible veteran under the VETs
job bill is an individual who has left active duty in the past five years with 180 days of qualified active duty, including individuals who
were on active duty in their respective state’s National Guard, or had a service-connected disability.

In general, employers seeking to benefit from the WOTC program must complete IRS Form 8850 Pre-Screening Notice and Certifica-
tion Request of the WOTC, as well as ETA Form 9061 Individual Characteristics Form, and mail the forms to the respective states’
State Workforce Agency’s (“SWA”) WOTC Coordinator, no later than 28 days from the new hire employment start date. However, un-
der S. 146, the 28 day requirement is waived. Under the VETs bill, job-seekers seeking employment under the expanded veterans
targeted group may provide Department of Defense documentation directly to the prospective employer, and as such, no additional
certification will be required.

Please contact our tax professionals to discuss how the new change to the WOTC program can benefit your business.

As always, please call if you would like to discuss any of these items further.

Your Tax Partners,

Mark G. Cook, Partner Richard A. Linder, Partner Jon Widdowson, Partner

Steven J. Cupingood, Partner David Neighbors, Partner Michael Wu, Partner
John A. Eckweiler, Partner Todd Northrup, Partner Don Leve, Partner
Dan B. Faulk, Partner Javier Ramirez, Partner
Andrew L. Gantman, Partner Thomas E. Wendler, Partner

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communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the
Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.
Notice: Opinions, conclusions, and other information in this message are not intended to represent recommendations or advice to you or any other
person. Each person’s circumstances are unique, and we strongly suggest you discuss your specific situation with your professional advisor before
taking any action based on the information herein or information to which this message refers.