Tennessee employers taking advantage of the Work Opportunity Tax Credit (WOTC) program achieved a record high in potential federal income tax savings during the fiscal year that ended in September 2012, announced Burns Phillips, acting commissioner for the Tennessee Department of Labor & Workforce Development. Last year the department issued 64,300 WOTC tax credit certifications to Tennessee employers, representing a potential federal income tax savings in excess of $232 million.

Andy Agnew, who since 1978 has been the owner of Investors of West Tennessee that has four Popeyes Chicken businesses and one Moe’s Southwest Grill in Jackson, said the application process for tax credits is simple and easy to use. “Employers need to know this program exists and how much money it represents that comes back to their bottom line,” said Mr. Agnew. “I strongly encourage employers to take advantage of the tax credit program. I tell small business people all the time they’re leaving money on the table if they don’t apply for potential tax credits.”

The WOTC program is available for use by any for-profit employer, large or small. “Some employers are used to thinking they cannot take advantage of the program or that it’s just for larger employers. That is not the case,” said Roger Littlejohn, state Work Opportunity Tax Credit coordinator. “And a non-profit employer can now take part if the hired employee is from one of five veteran target groups.”

Here’s how the program works: When an employer hires an employee who is from one of 13 targeted groups with significant barriers to employment, he completes two forms – an IRS form and a federal Department of Labor form – and sends those to the Tennessee Department of Labor & Workforce Development no later than 28 calendar days following the employee’s starting date of employment. The TN Department of Labor notifies the employer via a tax credit certification when the employee is certified as an eligible target group member, and the employer then claims the credit as part of his annual tax return with the IRS. The amount of the tax credit is based on the percentage of qualified wages relating to the target group of the new employee.

“There’s no limit to the number of new hires who can qualify for a tax credit,” said Mr. Littlejohn. “Certified employees can amount to huge federal corporate savings – as well as boost employment opportunities.”

Since the WOTC program began in 1996, Tennessee has been one of the nation’s top producing states relating to the amount of potential federal income tax credits it has been able to return to eligible Tennessee employers.

For the 2013 WOTC Handbook to be sent to you or to have questions clarified prior to submitting applications for the tax credits, contact Roger Littlejohn at Roger.Littlejohn@tn.gov, or 615 253-6664.