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Senator Cardin’s Statement on the WOTC Long-Term Unemployed Category

Senator Cardin (MD) was the co-author (along with Senator Portman) of the amendment accepted into the Finance Committee extender bill which would add a new category to WOTC for hiring long-term unemployed individuals. In a press-release, Senator Cardin said the following about this amendment:

I am very proud of my work to extend the availability of the Work Opportunity Tax Credit (WOTC) to promote the hiring of the long-term unemployed. WOTC has been extremely effective in encouraging employers to take chance on hiring individuals who are difficult to hire and in so doing, dramatically reduced the burden of public assistance with respect to the unemployed. Studies on the Work Opportunity Tax Credit have shown that for every WOTC hire, the federal government saves approximately $17,000 by encouraging the hiring of hard-to-employ individuals.

Senate Finance Committee Passes Two-Year Extender Bill With Enhancements to WOTC and R&D

The Senate Finance Committee has passed a two-year extender bill. While 105 amendments were offered by committee members, Chairman Hatch did not allow very many of those to be included. In order to enhance the chance of passage, Senator Hatch even withdrew his own amendments related to permanent extension of certain provisions such as the R&D tax credit.

The modified Chairman’s Mark included enhancements to WOTC and the R&D credit that had appeared in last year’s EXPIRE Act.

Regarding WOTC:

The Chairman’s modification extends the work opportunity tax credit to employers who hire individuals who have exhausted regular compensation benefits under State and Federal unemployment compensation laws. With respect to wages paid to such individuals, employers would be eligible for a 40 percent credit on the first $6,000 of wages paid to such individual, for a maximum credit of $2,400 per eligible employee.

To hear the kind words committee members had for WOTC, scroll to a little past the hour and 10 minute mark of the hearing.

The modification to the research credit would allow certain small businesses to utilize the credit against payroll withholding taxes as opposed to income taxes. This is important because many small businesses or start-ups engaged in research and development are not yet profitable and therefore do not have income tax liabilities. In addition, eligible small businesses would be able to offset AMT liability which is currently not allowed and hampers the use of the credit for small businesses.

Amendments Offered to Senate Finance Extenders Bill

The Senate Finance Committee is still scheduled to markup an extenders bill tomorrow, July 21. The Committee has released the amendments which various Senators would like to have included in the bill. Notably, Committee Chairman, Senator Hatch himself has offered an amendment for the permanent extension of the R&D credit which is consistent with legislation already passed by the House.

Senators Portman and Cardin have offered two amendments related to WOTC. First, so expand WOTC by adding a new target group for individuals who are long-term unemployed. They note that this amendment was included in the last extenders bill passed by the Committee last year. Second, they propose making WOTC permanent, which was not a part of the 2014 EXPIRE Act.

Senate Finance Committee Scheduled to Markup Extenders Bill July 21

The Senate Finance Committee has released a “Description of the Chairman’s Mark of a Bill to Extend Certain Expired Tax Provisions” with the notice that it is scheduled for markup in committee on July 21.

The description simply extends the provisions for two years, from the beginning of 2015 through the end of 2016. It will be interesting to see if there are any amendments made during the committee’s markup similar to those that appeared in last year’s “Expire Act.”

New Tax Extender Talk

POLITICO’s “Morning Tax” has a pair of updates on tax extender legislation:

Lots happening on the tax extenders front, at least rhetorically. Pro Tax’s Katy O’Donnell reports the Senate Finance Committee could mark up a two-year catch-all extenders package as early as next week, according to aides and lobbyists. Over on the House side, Ways and Means Chairman Paul Ryan renewed his pitch for early action on the issue to avoid another end-of-year rush like the one last year that forced Congress to renew expired tax cuts for just a few weeks. “I would love nothing more than to come back from the August recess with a plan in place to enact in September,” Ryan said during a POLITICO breakfast, adding that he would like to make some extenders permanent. On the last point, even though Democrats generally oppose making some routinely extended breaks permanent, several signed on to legislation that would indefinitely extend an expired tax deduction for teachers who buy school supplies with their own money.

However, since tax extenders are generally supported by everyone, they are easily used as leverage to get something else done too. That dynamic doesn’t lend itself to speedy resolution.

A CCH report confirms that the Senate Finance Committee may be looking at extenders soon, but also quotes committee Chairman Hatch as saying, “There’s no urgency on that…”:

Over 50 tax credits and deductions commonly referred to as extenders could be marked up as soon as the end of July, but Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, said there might not be enough time to reach that goal despite his desire to do so. “There’s no urgency on that as far as I’m concerned,” Hatch told reporters on July 9. “I’m not saying were going to do it by the end of July. I’m just saying its likely we could.”

Part of the problem, according to Hatch, lies in the Senate schedule and the demands of other legislative priorities, especially an extension of the Highway Trust Fund, all of which will keep Hatch busy on the Senate floor. Despite his interest in holding an extenders markup in the near future, he admitted that the timing is hard to nail down. “It’s difficult to bring the committee together. We’ll see,” he said. “We have so many pressure packs on our plate on this committee that it’s not going to be easy no matter what we do.”

At the same time, Hatch said he has contemplated holding a markup during the week beginning July 13. “Well we’re certainly looking at it,” he noted. But that seems highly unlikely as committee members John Cornyn, R-Tex., and Rob Portman, R-Ohio, said they have heard of no plans to hold a markup during the coming week.

Senate Finance Committee Releases Tax Reform Proposals

After multiple delays, the Senate Finance Committee has released a series of five working group reports on tax reform:

The Business Income Bipartisan Tax Working Group Report

The Community Development & Infrastructure Bipartisan Tax Working Group Report

The Individual Tax Bipartisan Tax Working Group Report

The International Tax Bipartisan Tax Working Group Report

The Savings & Investment Bipartisan Tax Working Group Report

The subject of tax extenders and federal credits are dealt with in the Business Income working group report. There are few specific proposals outside the idea that businesses would benefit from more certainty than the current extenders process provides. One of the pillars of the report, however, is a major emphasis on “strengthening and making permanent the research and experimentation tax credit.”

California Competes Fiscal Year 2015-2016 Application Dates Announced

GO-Biz has announced the application deadlines for the next year of California Competes Credits:

July 20, 2015, through August 17, 2015 ($75 million available)
January 4, 2016, through January 25, 2016 ($75 million available)
March 7, 2016, through March 28, 2016 ($50.9 million plus any remaining unallocated amounts from the previous application periods)

Decisions for the above application rounds will be made at committee meetings scheduled on November 10, 2015, April 14, 2016, and June 16, 2016.

IRS Provides Notice That All Empowerment Zones Extended Through 2014

While the federal Empowerment Zones were extended legislatively as part of tax extender legislation at the end of 2014, the IRS requires that the states extend the expiration dates of their zones. In the past, the IRS decided to deem all Empowerment Zones extended unless a state proactively requested that their zones not be extended.

IRS Notice 2015-26 explains that states had until May 11, 2015 to affirmatively decline extension and that none did.

Permanent WOTC Proposed in House

Ways and Means member, Congressman Tom Reed (R-NY) and Congressman Charlie Rangel (D-NY) have introduced H.R. 2754 to permanently extend WOTC. Apparently this bill was introduced with the blessing of Chairman Ryan and is going to be part of the House Republican strategy of proposing the permanent extension of a number of important components of tax extender legislation.

Here is a letter from the authors explaining the reason for the bill.

Illinois Governor Suspends Business Incentive Tax Credits

In a press release on June 2, Illinois Governor Bruce Rauner announced the suspension of “all future incentive offers for business attraction and retention.” The move is part of the Governor’s attempt to deal with a multi-billion dollar budget deficit.

Effective Immediately: Immediate suspension of all future incentive offers to companies for business attraction and retention.

This includes EDGE Tax Credits, Large Business Attraction Grants, Employer Training Investment Program Incentive Grants and Prime Sites Grants.

Will defer application approvals for film tax credits and High Impact Business designations.

All commitments previously made in any of these programs will be honored.

White House Threatens to Veto Permanent R&D Tax Credit Bill

The White House issued a statement saying that the President would likely veto H.R. 880 which seeks to enhance and make permanent the federal R&D tax credit:

The Administration supports enhancing, simplifying, and making permanent the Research and Experimentation Credit (“R&D credit”), and offsetting the cost by closing tax loopholes. The President’s Budget proposes to do so as part of pro-growth business tax reform that is revenue neutral over the long term. Making the R&D credit permanent will increase its effectiveness, since it will allow businesses to make investments and create jobs today confident that they will continue to benefit from the credit in the future. Moreover, four-fifths of the R&D credit is attributable to salaries of U.S. workers performing U.S.-based research—meaning that the credit helps create high-skilled jobs, as well as encouraging new innovations and future productivity.

However, the Administration strongly opposes House passage of H.R. 880, which would permanently extend and expand the R&D credit without offsetting the cost, adding to long-run deficits. By making the R&D credit permanent without offsets, H.R. 880 would add $180 billion to the deficit over the next 10 years. H.R. 880 violates the very standard that House and Senate Republicans approved less than a month ago in their concurrent budget resolution, which requires offsetting the cost of any tax extenders that are made permanent with other revenue measures. If the House passes H.R. 880, it will have approved nearly $600 billion in deficit increasing tax cuts mainly for corporations and wealthy estates this year – none of which are provided for in the Republicans’ own budget.

California Competes Credit Update

GO-Biz updated its FAQ for the California Competes Credit on April 29.

Of interest is their update to the table listing historical credit to investment ratios for applications accepted into the second round of the application process:


In addition, the have posted a full listing of all credit recipients with links to their respective contracts.

Paul Ryan Comments on Tax Extenders

On April 29 Ways and Means Chairman Paul Ryan spoke at an event for the Christian Science Monitor. The following a a transcript and video of an exchange with reporters regarding the status of tax extender legislation this year:

Question: There have been a few extender bills sort of trickling out of Ways and Means this year, state and local, R&D. Can we expect more of those, and will a permanent solution to all the extenders be a part of a limited tax reform?

Paul Ryan: Yeah, I think that’s a good question…. We likely will do some more bills out of committee. My goal is to avoid what happened last year, which is on December 11th people found out what the tax policy was going to be for two more weeks. I can’t tell you how many farmers I’ve talked to about section 179. They’re going to make a big purchase, like a $250,000 Case Magnum, or something like that, and they have from December 11 until December 31st to make a decision. That was ridiculous. And so all along, we wanted to show where we’re going, what we want to do to help add to certainty – because we had this uncertainty problem – and so yes, I do believe the extenders can be either part of a limited tax reform package this summer, or, if we just can’t come together with the administration on that, then we immediately move the extenders and do those as early in the fall as possible so we can give people time to prepare and plan. So, sooner rather than later as far as I’m concerned, and you know we’re pretty clear about what we think should be permanent.

Question: Let me make sure I get this, tax extenders as early as this summer, and perhaps by fall?

Paul Ryan: Yeah.

GOP Majority Leader Makes Permanent R&D Tax Credit Top Priority

Majority Leader Kevin McCarthy, in a memo released May 1, lists the simplification and permanent extension of the Research and Development Tax Credit a top priority for Congress:

Innovation is essential to achieving and maintaining economic prosperity in this increasingly competitive world. Yet our place as the most innovative nation on earth cannot be taken for granted. We must stay focused on promoting growth and expanding opportunities for the next great idea. In that vein, we will start in May with what I hope will be an ongoing push towards advancing science and technology with consideration of: H.R. 880, the American Research and Competitiveness Act of 2015 (Brady) to simplify and make the research & development tax credit permanent.

BNA’s Laura Mahoney on the California Competes Credit

As always, Laura Mahoney provides detailed clarity on California’s tax incentive programs:

Demand for a new tax credit aimed at business expansion in California continues to outstrip supply as state regulators iron out details for awarding the credit and recouping it if businesses don’t live up to their promises.

About 250 businesses asked for $289 million in credits from a pool of $75 million to be awarded by the Governor’s Office of Business and Economic Development (GO-Biz) April 16. It’s the third application round since the program was created in 2013, and the application window closed Feb. 2.

In the first two rounds, 400 companies asked for $500 million in credits from a pool of $29 million awarded to 29 companies in June 2014, and 286 companies asked for $329 million from a pool of $31 million awarded to 56 companies in January 2015.

A total of $151.1 million is available in the 2014-15 fiscal year, with one more round of applications and award of the final $31.1 million scheduled for June 18. In the next fiscal year, $200 million will be available for the credit.

In exchange for the credit, companies commit to creating and retaining jobs, and investing in equipment, intellectual property and other business development tools. It helps if they plan to invest in areas with high poverty and unemployment rates.
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