New Mexico Foster Youth Tax Credit Going Into Effect July 1

A little good news for employers and foster youth living in New Mexico. Republican Governor Susana Martinez has signed into law a bill providing a $1,000 tax credit to employers that hire qualifying foster youth.

Although the New Mexico Foster Youth Tax Credit was signed on March 1, the law does not go into effect until July 1. Beginning then, employers may claim a tax credit of up to $1,000 per each qualifying foster youth they hire.

The $1,000 is based on the qualifying youth’s first full year of employment. If a youth does not remain employed for an entire year, the employer may claim a pro-rated portion of the $1,000 based on the percentage of a year worked. For example, work half a year, claim half the credit or $500.

Interestingly, an individual youth may qualify to generate the tax credit for one and only one employer during any particular tax year. The certification process will include measures to ensure that two employers may not claim a credit based on the same youth’s wages during the same tax year.

Also, an employer may not claim the tax credit for rehiring a youth. The benefit applies only to an individual’s first and original hire by any particular employer.

NWCAN, a New Mexico-based foster youth advocacy organization, published a helpful one-page flyer about the new tax credit. You can read it here.


WOTC Planet blog is now The WOTC BLOG

Hello friends and subscribers. I’m posting today simply to let you know that going forward, The WOTC Planet blog is now The WOTC BLOG.

We’ll be making many improvements this year. The formatting will be improved. There will be more useful information about the WOTC program.  In addition to the usual news updates, we will also be publishing new explorations of the program and how it works.

Please see our new Legal Notice at

Today’s Budget Deal Reauthorizes Empowerment Zones Retroactively for 2017

Employers interested in the Work Opportunity Tax Credit (WOTC) and the federal Empowerment Zone program received good news this morning. Just after 5:30 AM,  President Donald Trump announced that he had signed the Bipartisan Budget Act of 2018.

With this deal, numerous expired tax benefits were retroactively reauthorized including federal Empowerment Zones.  Renewing Empowerment Zones also impacts the WOTC program.

Qualification under WOTC Target Groups D and F, “Designated Community Resident” and “Summer Youth,” respectively, among other things requires that an employee reside within an authorized Empowerment Zone.

The Empowerment Zone program had expired on December 31, 2016.  Anticipating that Congress would eventually reauthorize the program, thousands of employers have continued submitting WOTC applications for employees who reside in the zones.  Recently, State Workforce agencies began sending out Denial Letters for those applications.  Those denials will now have to be challenged and reversed.

Advice to employers and WOTC consultants: Review all denials and promptly appeal any denials under Target Groups D and F for 2017 new hires.

Unfortunately, the authorization only covered 2017.  In practical terms, the Empowerment Zone program expired again on January 1, 2018.  Better luck with the next bill.

WOTC Survives Tax Reform Compromise!

After a flurry of last-hour compromise, the the Tax Cuts and Jobs Act (aka Republican tax reform bill) was finalized on Friday.  At about 5:30 PM Eastern, an updated copy of the bill was released to the public (see Business Tax Reform, Section E (4).)

The pic below is from the the Business Tax Reform section, subsection E(4) dealing with the proposed repeal of the Work Opportunity Tax Credit.  While indicating that the House Bill would have repealed the tax credit, it also states that the Senate bill had no such provision. More importantly, “The conference agreement does not follow the House bill provision.”

Excerpt from Final Legislation

Talk of Tax Extenders Bill — Mopping Up After Tax Reform

Senator John Thune

I received this link to a recent article in Accounting Today from a colleague and a reader of The WOTC Planet.  According to the article, Senator John Thune (Republican from South Dakota) has confirmed the Senate’s intention to act on expired tax incentives, which are typically reauthorized with a tax extenders bill.

Thune is currently Chair of the Senate Commerce Committee.  According to Accounting Today:

The Senate plans to act on a slate of expired tax credits before month’s end, according to John Thune, the Senate’s No. 3 ranking Republican who serves on the Finance Committee. Lobbyists have been told the package of “tax extenders”—renewing tens of billions of dollars in expired tax incentives—could be hitched to must-pass government funding legislation expected in coming weeks.

I found a related mention, published on November 16 in the Wall Street Journal.

. . . [S]enators are also talking about a separate tax-extenders bill that would follow the broader [tax-reform] bill.

It’s not clear what would be in such a package, but Finance Committee members have mentioned renewable-energy tax breaks and the New Markets Tax Credit, which encourages investment in struggling areas

A 2017 tax extenders bill would offer another avenue to restore expired tax benefits missed by current tax reform deliberations.

Proponents of the Work Opportunity Tax Credit (WOTC) have been urging Congress to expand WOTC Target Groups and to make the program permanent. A 2017 tax extenders bill would provide one more potential means to those ends.