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On the Other Hand

Some people think that the Enterprise Zone program doesn’t do a good enough job of demonstrating that employers made a definite, proactive decision to hire an employee that will provide them with a tax credit. The federal WOTC program attempts to do that more, but there is a flip side to the issue, as reported in a Fort Wayne, Indiana newspaper:

Job app gets personal when tax break is aim

Dennis Pequignot of Whitley County is retired from General Electric, but the pension he receives covers only basic living expenses. And he isn’t old enough to receive Social Security benefits.

So to fill the financial gaps when his car needs work or property taxes are due or when an unexpected expense arises, Pequignot worked at a local hardware store.

About 19 months ago, that changed. Business was down, workers saw their hours cut, and Pequignot was laid off. Because he was receiving a pension, though, he was ineligible for unemployment benefits.

His only choice was to look for another job, and so far, he’s found nothing.

What he has discovered, though, is that some unusual questions – questions he’s never seen before – are showing up on job applications. Are you a veteran? Are you receiving unemployment benefits? Are you receiving food stamps or aid for dependent children? How old are you?

The questions left Pequignot stumped.

They are part of something called a Work Opportunity Tax Credit that gives employers tax breaks for hiring people who fall into 12 categories, including unemployed veterans, people receiving food stamps or other government aid, felons, and youth who have few skills and aren’t working or going to school.

The tax credit companies get for hiring people from select groups ranges from $2,400 to $9,000 per employee, depending on how long they remain employed, according to the Department of Labor website that explains the program.

This made Pequignot wonder. He’s hasn’t drawn unemployment or other assistance. He’s got a good work history. But he won’t create a tax credit for anyone who hires him.

Does this put him at a disadvantage? Will he ever make it through an initial screening if employers hire only people who carry tax credits with them?

Various officials familiar with the program don’t think it puts people at a disadvantage. The program makes people who have issues in their background that would preclude their getting a job worth taking a chance on, I was told, but the WOTC program hasn’t been used much in this area.

Marc Lotter, communications director for the Department of Workforce Development, said he hasn’t heard any objections to the way the program operates.

Anthony Hudson, who runs a program called Blue Jacket, which helps felons find work, was surprised to hear some of the questions on the applications, though answering those questions is usually designated as voluntary.

“People who put those questions in their applications are violating the law,” Hudson said. “It’s like asking how old you are (a question that is being asked) or whether you have any health problems.”

To Hudson, it encourages businesses to hire people just to get a tax credit. He fears it could be abused, with companies hiring people and discarding them just to get a tax break, though the credit appears to be based on a percentage of what the employee was paid. According to the program, a company can get a credit for an employee who works as few as 120 hours.

From the questions that are appearing on applications, some companies are obviously seeking to take advantage of the credits, but Hudson said if he ran a small, for-profit business, he probably wouldn’t even try because it is so complicated. He said that in this area, 83 percent of all businesses never take the tax credit on an employee when they are eligible, largely because they aren’t aware of the program or because the process is so complex.

Blue Jacket, in trying to find jobs for people with felony convictions, does make employers aware that all prospective employees have criminal records, but it doesn’t bring up the tax credit until a company has hired someone.

Then Blue Jacket fills out the necessary paperwork, which takes about four hours, and notifies the hiring company that it is eligible for a tax credit.

Workforce Development, on the other hand, certifies that certain prospective employees are eligible for a tax credit before hiring takes place.

It’s a federal program, Lotter said. “They passed the law and designated us to administer it.”

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