The Senate Finance Committee has approved “The Family and Business Tax Cut Certainty Act of 2012.” The committee approved the package of more than $205 billion in tax cut extensions for families and businesses by a bipartisan vote of 19-5.
This act includes an extension of the Work Opportunity Tax Credit, as well as the new veteran’s credits initiated with the Vow to Hire Heroes Act of 2011. The act extends the WOTC through 2013 and retroactively for 2012.
Work opportunity tax credit.
This bill extends for two years, through 2013, the provision that allows businesses to claim a work opportunity tax credit equal to 40 percent of the first $6,000 of wages paid to new hires of one of eight targeted groups. These groups include members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program, qualified ex-felons, designated community residents, vocational rehabilitation referrals, qualified summer youth employees, qualified food and nutrition recipients, qualified SSI recipients, and long-term family assistance recipients. Based on preliminary estimates, a two-year extension of this proposal is estimated to cost $1.8 billion over ten years.
Returning Heroes and Wounded Warriors Work Opportunity Tax Credits.
Currently businesses are allowed to claim a work opportunity tax credit (WOTC) for hiring qualified veterans in the following targeted groups and up to the following credit amounts:
- Veterans in a family receiving supplemental nutrition assistance: $2,400
- Short-term unemployed veterans: $2,400
- Service-related disabled veterans discharged from active duty within a year: $4,800
- Long-term unemployed veterans: $5,600
- Long-term unemployed service-related disabled veterans: $9,600
A credit against Social Security taxes is also available to tax-exempt employers. Transfers are made from general revenues to make the Social Security trust fund whole. The provision expires on December 31, 2012. The proposal would extend these credits for an additional year, though 2013. Based on preliminary estimates, a one-year extension of this proposal is estimated to cost $125 million over ten years.
Max Baucus, (D-Mont), Chairman of the committee said that “Businesses need certainty so they can plan for the future. They need to know how transactions will be taxed. They need to know what income will be taxed. Without this certainty, they are less able to know how much money they have to hire new workers or invest in new technology or machinery, the engines that help our economy grow.
Read the Senate Finance Committee The Family and Business Tax Cut Certainty Act of 2012 summary.