1-19-12 3% Withholding Repeal and Job Creation Act

President's signature sets effective date of various rules in the “3% Withholding Repeal and Job Creation Act”

On November 21, the President signed into law, the “3% Withholding Repeal and Job Creation Act” . As this article explains, the President's signature sets the effective date for a number of Act provisions with an effective date geared to the Nov. 21, 2011, date of enactment.

Enhanced Work Opportunity Tax Credit (WOTC) for Hiring Qualified Veterans

The Act gave a one-year lease on life to the work opportunity tax credit (WOTC), but only with respect to qualified veterans who begin work for the employer before Jan 1, 2013. The Act also made these important WOTC changes for hiring qualified veterans.

Broadened categories of qualified veterans

Under the Act, effective for individuals who begin work for the employer after Nov. 21, 2011, a qualified veteran is a veteran who is certified by the designated local agency as falling within one of the following four categories:
1. The individual is a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for at least three months, all or part of which is during the 12-month period ending on the hiring date.

2. The individual is entitled to compensation for a service-connected disability, and either:
a. has a hiring date that isn't more than one year after having been discharged or released from active duty in the U.S. Armed Forces, or
b. has aggregate periods of unemployment during the 1-year period ending on the hiring date that equal or exceed six months.

3. The individual has aggregate periods of unemployment during the 1-year period ending on the hiring date which equal or exceed four weeks (but less than six months).

4. The individual has aggregate periods of unemployment during the 1-year period ending on the hiring date which equal or exceed six months.


Larger WOTC for hiring certain qualified veterans

Under the Act, effective for individuals who begin work for the employer after Nov. 21, 2011, the maximum amount of qualifying first-year wages against which the WOTC may be claimed is:

• $12,000 for an individual who is a qualified veteran who is entitled to compensation for a service-connected disability and has a hiring date that isn't more than one year after having been discharged or released from active duty in the U.S. Armed Forces.
• $24,000 for an individual who is a qualified veteran who is entitled to compensation for a service-connected disability and has aggregate periods of unemployment during the 1-year period ending on the hiring date which equal or exceed six months.
• $14,000 for an individual who is a qualified veteran who has aggregate periods of unemployment during the 1-year period ending on the hiring date which equal or exceed six months. (Code Sec. 51(b)(3), as amended by Act Sec. 261(a))

 

 

(1) RIA. (n.d.). RIA. Retrieved from https://checkpoint.riag.com/app/view/mainFS?usid=c88d323cb85&lastCpReqId=742828&uqp=967056&bhcp=1

 
 
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