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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.

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