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HIRING AND TRAINING INCENTIVES
UNCOVERING HIDDEN OPPORTUNITIES
Bill Becker, CEOINCENTIVES ADVISORST: [email protected] | www.incentivesadvisors.com
Discussion Overview
Introduction to hiring credits. Current market trends. Screening process. Measurement for success. Beyond screening / hiring credits. Does your company qualify? Why do companies opt out? Selling to finance. Qualifying questions for a tax incentives
company.
What if you could...
improve profits while funding HR and other corporate investments?
make it easy by leveraging HR technology?
capture even more incentives by making simple changes to existing processes?
Poll: How much experience do you have with hiring credits?
a. None or very little awareness of them.b. I’m aware of them but currently not screening.c. I’m currently screening manually with paper 8850 form.d. I’m currently screening through phone Integrated Voice Response (IVR).e. I’m currently screening electronically.
A little background
Billions of dollars in federal and state tax dollars available to employers who qualify.
Programs encourage investment/hiring
Increase cash flow by reducing the amount owed in estimated quarterly or annual income taxes dollar for dollar.
Process to claim these credits is complex and can be time-consuming, leaving many incentives unclaimed.
Market Trends
Continuing extension and expansion of federal programs and revival of grant programs which had lost funding.
2010 federal payroll incentive that targets the unemployed.
New state programs focus on reducing unemployment and creating jobs.
Now is the time to capture these available funds.
Over 170 Hiring Incentive Programs
Hiring Credits
Federal
State Credits
Geographic Programs
25%
30%
45%
Work Opportunity Tax Credit (WOTC)
Jointly managed by Dept. of Labor and IRS. Encourages employers to hire individuals who
qualify as a member of a targeted group: Dislocated workers. Veterans. Qualified youth. Receiving government assistance. People hired from disadvantaged areas. And more…
Provides a federal tax credit up to $9,000 if you hire these individuals.
Geographic based credits
Both federal and state jurisdictions offer tax credits to businesses to locate in disadvantaged or targeted growth areas.
Programs include: Renewal Communities (RCs) Empowerment Zones (EZs) State Enterprise Zones
Can be 50% or more of your total hiring credits.
Sample state zone credits
Arizona Enterprise Zone – $3,000 over 3 years per job created.
Florida Enterprise Zone –$1,500 per new hire in designated areas.
Georgia - $20,000 over 5 years per job created.
California Enterprise Zone – $37,500 over 5 years.
Examples of new programs in 2010
• Florida - up to $ 1,000 per unemployed individual hired.
• New York - $5,000 per employee.
• Texas - $2,000 per unemployed individual hired.
• Maryland - up to $5,000 for creating jobs for formerly unemployed.
• California- new jobs creation credit.
Poll: How much experience do you have with the HIRE Act?
a. Not familiar with this program.b. I’m aware of it but currently not screening.c. I’m currently screening manually with paper W-11 form.d. I’m currently screening through phone Integrated Voice Response (IVR).e. I’m currently screening electronically.
HIRE Act
Hiring Incentives to Restore Employment (HIRE) Act payroll (cash) incentive.
Waives employer’s 6.2% Social Security taxes for employees who have worked under 40 hours the past 60 days.
If employee stays one year, also receive $1,000 income tax credit.
60% of candidates screened so far have been eligible.
HIRE Act ends Dec. 31, 2010 but could extend through 2011.
How screening works -- manually
HR or Tax Partner
follows up with hiring
managers to make sure forms are
submitted in time.
Job Seeker completes and signs 8850 Form along with
job application.
Hiring Manager
submits 8850 for every hire to Tax Partner or State Dept. of Labor within
28 days.
Missing Forms
Lots of extra paper and
mailing
Difficult to get all forms
submitted
Rejected eligible
candidates
Dept of Labor certifies
employees if eligible and forms are legible.
Screening electronically
Candidate completes your online application.
Tax credit screening is a seamless step within the application.
Takes between 30 seconds and two minutes.
Dynamic screening questionnaire
After clicking ‘Submit,’ begins the tax screening process. Seamlessly integrated into your job application.
Know who is eligible before hiring
Eligibility results within your recruiting solution.
Estimated dollar amount per eligible candidate is available in some systems if interested.
Tax forms available with your hiring packet.
Stock the Pond
Opportunity beyond 100% screening/forms compliance.
Increase candidate pool without sacrificing quality.
Natural fit with hiring automation.
Benefits of screening with an online application
Efficient. No need to add an extra hiring step.
Eliminates 90% of paperwork with tax credit screening.
Accountability – ensure high compliance through reporting
Informative. Informs who is eligible before interviewing and hiring.
Results: Maximized credits turning HR into a profit center!
Measuring for success
Non-screening programs: Training Incentives
Millions of dollars are available to employers who increase their workforce skill set through training.
How it works: State dollars are allocated annually. Employers complete detailed applications to state. Both internal and external training is allowed Applications are reviewed and approved/denied. Cash grants are received in reimbursements.
Can significantly reduce workforce training costs.
Non-screening programs: Negotiated Incentives
Millions of dollars are available to employers who create or maintain jobs in local markets.
How it works: Negotiate incentives. Pre-application requirements. Applications are reviewed and approved/denied.
Credits can be up to 10% or more of the payroll and/or capital investment.
Non-screening programs: Other Programs
Credits designed to encourage investments in research and development.
Cost segregation studies to increase cash flow through accelerated deductions.
Green incentives - Energy efficiency/renewable energy optimization.
Who is Eligible – Dispelling the Myths
Are you a for profit, nonprofit or a government entity?
Is your company profitable or paying corporate incomes taxes?
Is your company hiring?
Is your company making other investments in workforce training, capital, or research and development?
Is your company aware of or currently taking advantage of available programs?
Why companies “opt out” of the program
Not currently profitable.
It was too complicated/HR is overloaded.
We didn’t get enough benefit from the program.
Fear of litigation/EEOC.
Company culture.
Selling to Finance
Think/speak accrual basis, not just cash basis.
Consider Earnings Per Share (EPS) Impact.
Relate incentives benefit to operations metric (number of stores, widgets sold).
Build ROI, including hard costs “at risk.”
Elements of a successful program
Knowledge and experience to capture the incentives available in areas where my company has locations?
Ability to leverage technology and tax expertise to screen for all available programs upfront during the application?
Integrated process for capturing non-screening programs?
Experienced tax managers with availability to handle state-specific programs and proactively monitor new available programs?
Flexible reporting which fits the corporate structure and make it easy to monitor program success?
Cost effective solution?
