Tips on the IRS & DOL Employer Tax Credits & Loans

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Presenter
Shawn Parsons | Net at Work
Senior Business Analyst
• HRMS/Abra Suite Consultant for over 25 years
• Over 32 years in Accounting/Finance and HR
• Over 32 years in Systems & IT Consulting
• Prior Industry roles include Governmental Accounting systems, Cost
Management Systems, and Systems Programmer

Presenter
Susan Jimenez| Net at Work
Senior Business Analyst
• HRMS/Abra Suite Consultant and Certified Trainer for over 25 years
• Over 35 years in Accounting/Finance and HR
• Prior Industry roles include Credit Management Supervision,
Accountant and Controller

• Be Prepared for Rehiring Employees - WOTC
• What you need to know about the CARES Act SBA Loans
• Wrap up and Questions
Agenda

Be Prepared for Rehiring
Employees – WOTC
Work Opportunity Tax Credits

Guest Panelist
Brian Kelly | CMS-iRecruit
Managing Partner
Brian is the Managing Partner of CMS-iRecruit and has over 20 years of experience in the Human
Resources software and tax credit industry.
CMS originally developed iRecruit for our Sage HRMS customers to meet the need to automate and
streamline their recruiting, applicant tracking, and electronic onboarding operations. iRecruit was listed as one of CIO Review
magazine’s 20 Most Promising Sage Solution Providers. Brian told the magazine, “Our products offer seamless solutions. It’s an
applicant tracking system (iRecruit) that comes with social media integration, reporting and all electronic onboarding without any
add-on’s to purchase.”
An innovator in online technology, Brian developed a secure web portal to collect and process WOTC data in 2015. The WOTC
portal helps customer’s increase participation and improves processing times while allowing customers to track the value of their
credits in real-time. Brian has a BS in Finance from the University of Central Connecticut. CMS is a member of the Society for
Human Resource Management.
Prior to becoming Managing Partner with CMS he had 12 years of experience with ADP and was promoted thorough operations,
implementations and sales units. In addition was Regional Manager for a Washington D.C. based consulting group implementing
enterprise solutions. In his spare time Brian both plays and coaches ice-hockey and is an avid golfer.

 CMS has provided WOTC administration services since
1997.
 20+ years of experience in Employment Tax Credits and
HR and Payroll Technology.
 Developed a secure online WOTC portal in 2015 to help
customers automate WOTC processing and data
collection.
 Innovator in online technology to automate the
complete hiring process with WOTC portal, web based
recruiting and electronic onboarding products iRecruit
and iConnect.
 Believes in a customer-centric approach to maximize
your return on investment.
About CMS
Brian Kelly
@cmsBrian

1. What is the new legislation?
2. What Tax Credits are available?
3. COVID-19 impact and changes?
4. What are the specific rules do we need to know?
5. How do we calculate the credit?
6. Not sure if we can use the tax credits?
7. When do we use the Tax Credits?
8. We don’t want to do all the follow-up to get paperwork
i.e. DD-214, Drivers Licenses, Release Records?
Common Questions

Introduction to WOTC
 WOTC - Work Opportunity Tax Credit
A Federal tax credit program that helps
provide incentives for workplace
diversity and improve access to good
jobs for American workers.
 Employers claimed $5.3 billion in tax
credits in 2018 under the WOTC program.

 1978 - Targeted Jobs Tax Credit (TJTC), Economical Disadvantage
 1981 – Reagan Administration - The Economic Recovery Act
 1983 – Reagan Administration expanded program “The Employment Act of 1983” a
balanced and realistic approach to addressing our economy's structural
unemployment problem. It provides appropriate incentives for employers to hire
the long-term unemployed.
 1994 - The Joint Committee on Taxation estimates that in 1994 the TJTC program
will cost taxpayers nearly $300 million. It is intended the program will entice
businesses to hiring members of hard-to-employ target groups--predominantly the
economically disadvantaged--in exchange for Federal tax credits.
History of Employment Tax
Credits

Current Legislation:
 After the WOTC tax credit expiring 12/31/2019, President Trump Signed the
Omnibus Spending Bill H.R. 1865, Further Consolidated Appropriations Act,
2020 into law December 20, 2019, extending the Work Opportunity Tax Credit
(WOTC) Program for another year. Business will now be able to take advantage of
WOTC through 12/31/2020.
 Federal Empowerment Zones (FEZ) from 2017
 Indian Employment Credit (IEC) from 2017
 Work Opportunity Tax Credit - Renewed through 12/31/2020
Employers claimed about $5.3 billion tax credits in 2018 under the WOTC
program. There is no limit on the number of individuals an employer can
hire to qualify to claim the tax credit.
“28 Day Rule”
Current WOTC & Legislation

 The WOTC – 28 Day requirement is that the job
applicant needs to complete the IRS Screening
Forms on or before the day a job offer is made. Job
Offer & Hire Date can be the same.
 All forms & documentation must be submitted to
the State Workforce Agency within 28 Days of the
new hire’s start date.
There is no wiggle room on the 28-Day
Rule.
28 Day Rule

 Under IRS Legislation but
 Administered by the DOL - SWA
&
 Empowerment & Rural Renewal
zones managed by the HUD
Legislation.
- Renewed 12/20/2019.
Unique Characteristics of WOTC

Companies:
 C Corps
 S Corps
 LLC’s
 Non Profit 501c’s who hire veterans under the Vow
to Hire Heroes Act.
Which Companies are Eligible?

Overview of Targeted Groups
Employers can hire eligible employees from the following ten
target groups for WOTC:
1. Qualified IV-A Recipient
2. Qualified Veteran
3. Ex-Felon
4. Empowerment Zones & Designated Community Resident (DCR)
5. Vocational Rehabilitation Referral
6. Summer Youth Employee – 16-18 Living in Empowerment Zone
7. Supplemental Nutrition Assistance Program (SNAP) Recipient
8. Supplemental Security Income (SSI) Recipient
9. Long-Term Family Assistance Recipient
10. Qualified Long-Term Unemployment Recipient - COVID-19 ?

Enterprise Zones, RR Counties
Map

Overview of Target Groups
Target Group Max.
Tax Credit
Veteran Target Group Max. Tax
Credit
COVID-19 Impact - Nationwide, more than 10 million
people applied for unemployment benefits last month.

SNAP Recipients
 36,406,681
Source: https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM
(Data as of January 03, 2020)
Fiscal
PARTICIPATION
BENEFIT
AVERAGE MONTHLY BENEFIT
Year Persons Households COSTS Per Person Per Household
ANNUAL SUMMARY
FY 2020 36,406,681 18,513,002 4,462,331,879 122.57 241.04
FY 2019 34,474,188 17,374,002 53,761,253,656 129.96 257.86
FY 2018 39,431,244 19,566,114 58,996,500,061 124.68 251.27
FY 2017 42,228,118 20,900,823 63,711,051,076 125.73 254.02

WOTC Statistics from 2018
There were 2,202,021 WOTC Certifications
issued in 2018.
www.cmswotc.com
4%
4%
9%
3%
66%
3% 0% 0%
9% 2%
EZ - RRC Ex-Felon
TANF Long Term Unemployment
SNAP SSI
Summer Youth Ticket To Work
Veteran Group Vocational Rehabilitation
WOTC Target Group Total Credits %
SNAP 1,458,420 66%
TANF 201,353 9%
Veteran Group 198,145 9%
EZ - RRC 87,230 4%
Ex-Felon 85,796 4%
Long Term
Unemployment 62,459 3%
SSI 54,856 2%
Vocational Rehabilitation 48,300 3%
Ticket To Work 4,832 0.50%
Summer Youth 630 0.20%

Work Opportunity Tax Credit
10-15% of New Hires
Qualify
The tax credits can range from a couple
hundred up to $9,600 per qualified new hire
and depending on the eligibility category of
each new hire.
These values of the credit is determined by
the target group the employee qualifies
under, the number of hours worked, and the
wages earned in the period of employment.

How Is WOTC Calculated?
The benchmarks of Hours Worked and Tax Credit Value fall into 3
Groups:
1. Qualified New Hires must work a minimum 120 to 399 hours to
receive 25% of the 1ST $6,000 of wages.
• EE works 125 Hours earns $1,500 – WOTC Value $375.00.
2. Employee works over 400 Hours, WOTC Value goes to 40% of
first $6,000 of wages.
• Employee works 500 – Earns $6,000 WOTC Value $2,400.00
3. Only for the Long-term Temporary Assistance for Needy
Families (TANF) target group, Receive up to $9,000 (over 2
years).
• 40% of $10,000 of first-year wages
• 50% of $10,000 of second-year wages

What is Your Company Savings?
10-15% of New Hires
Qualify
Number of Employees 500
Number of New Hires/Per
Year
200
Qualifying Ratio 15%
Qualifying New Hires 30
Average Tax Credit $2,400.00
Employers Savings $72,000.00
What does this mean in Revenue?

Turn your HR & Payroll Department into a Revenue
Channel
$$’s earned by EE vs. $$’s Saved by EE
 Let’s figure it out and think about yours, take your Net
Profit Revenue and divide by # of EE’s.
 Most companies have a 10% net profit.
 Forbes did a study which showed a Restaurant group
needed to make $10,000 of Sales to earn $1,000.
 So, a $2,400 tax credit would be $24,000 of revenue.
 Does it make financial sense to use WOTC and retain
your EE’s to improve your revenue.
What is the Real Value of Tax
Credits

How do you Administer Your WOTC
You
You can manage WOTC yourself using the following IRS &
DOL forms

Screen New Hires on IRS Form
8850

Screen New Hires on IRS Form
9061 8850 – 7 Questions
9061 – 11
Questions
Total - 18

How do you Maximize Your WOTC
Or you can Automate

CMS Secure Web Portal
 30% More Qualification
 10 simple questions
that map the 23 IRS
questions on the 8850
and 9061 forms.

CMS Secure Web Portal
 Reduce language
barriers.
 Select up to 100
languages.

How do you Hire & Retain for WOTC
You
You can use your current ATS & traditional methods
Or
Supercharge you Recruiting, Hiring & WOTC Process

How do you Hire & Retain for WOTC
You

CMS WOTC Administration
Real Time
Results

Claim Your Tax Credits
 Employers file the 5884
form to claim the work
opportunity credit for
qualified first- and/or
second-year wages they
paid to or incurred for
targeted group
employees during the
tax year.

Additional Questions?
Additional Questions?
Remember 28 Day Rule – So act Now!

Thank You !!
Reach out to Brian Kelly
 bkelly@cmswotc.com
 860-269-0958
Remember 28 Day Rule – So act Now!

What you need to know about
the CARES Act SBA Loans
What you need to know

SBA Loans – CARES Act
CARES Act
Emergency Funding
Offset COVID-19 Impacts
• Small business impact of COVID-19
• Two Primary Programs:
• Economic Injury Disaster Loan (EIDL)
• Paycheck Protection Program (PPP)

SBA Loans – CARES Act
SBA Loans, a disclaimer
• Net at Work is here to provide information
• We are not attorneys
• Nor do we play them on TV……

Economic Injury Disaster Loan
Is this for us?

Economic Injury Disaster Loan (EIDL)
EIDL Definition Basics
• Up to $10,000
• For temporary loss of revenue
• This loan advance will not have to be repaid.

Paycheck Protection Program
How do we get started?

Paycheck Protection Program (PPP)
PPP Definition Basics
• Quick access to cash to help you keep paying your
employees
• Assist with other expenses:
• Health Insurance Premiums
• Mortgages / Rents
• Utilities

PPP Definition Basics
• Available through June 30, 2020
• 100% federally guaranteed
• No personal guarantees or collateral needed
• May be forgiven
• Payrolls maintained during the crisis
• If not eligible for forgiveness
• Remaining amount will be a loan
• Maximum of two (2) years at 1% with no loan fees
• Payments can be deferred up to six (6) months

Do we qualify?
• COVID-19 has harmed your business
• Between February 15 and June 30, 2020
• Business Types:
• Individual:
• Sole proprietor
• Independent contractor
• Self-employed
• Small business < 500 employees

Do we qualify?
• Business Types
• NAICS Code 72, which includes:
• Restaurant
• Hotel
• < 500 employees per location
• Independently owned franchises < 500 employees
• 501(c)(3) < 500 employees
• Exceptions based on SBA size standards

How much can we borrow?
• Average monthly payroll
• Up to 2.5 times
• Existing in 2019: Average for past 12 months
• New: Average for January / February 2020
• Seasonal: 12 weeks from 2/15 or 3/1 of 2019
• Maximum of $10 Million

How much can we borrow?
• Payroll costs include:
• Salaries, wages, commissions, tips, etc.
• Cash compensation
• Vacation, parental, family, medical, sick leave
• Allowance for separation or termination
• Employee benefits consisting of group health
• Insurance Premiums
• Retirement
• And other items….

Is anything not included?
• Limitations for:
• Earnings for employees > $100,000 / year
• Employees with principal residence outside the US
• Credits for qualified sick and family leave under FFCRA
• Took out EIDL between Feb. 15 and June 30 for Payroll
• You’re required to refinance that loan into the PPP

How can we use the loan proceeds?
• Costs incurred between 2/15 and 6/30 of 2020
• Payroll costs for your employees
• Whether they’re able to work or not!
• Payments for group health care benefits
• Including insurance premiums
• Rent or Interest on mortgage loans
• Utilities
• Interest payments on other debt (pre 2/15)
• Refinance an EIDL made 1/31-4/3

How much of the loan will be forgiven?
• Goal: Keep employees paid 8 weeks from the date of
the loan
• Items from previous slide of covered payments
• Forgiveness is decreased if:
• Reduction in full-time employees
• Reduction in wages paid (by 25%)

How much of the loan will be forgiven?
• NOTE: Not more than 25% of the loan forgiveness can
be attributable to nonpayroll costs
• Submit a request to the lender for forgiveness
• Calculation Worksheet
• Final guidance still in design (AICPA, etc.)

But we already laid off employees…..
• You already laid off employees or cut pay?
• Forgiveness of full amount:
• Rehire employees by 6/30/2020
• Restore your FTE’s and wage levels
• For changes made between 2/15 and 4/26

How do we apply?
• All current SBA 7(a) lenders are eligible lenders
• 100 most active:
• https://www.sba.gov/article/2020/mar/02/10
0-most-active-sba-7a-lenders
• More lenders expected to be in place quickly
• Check with your current lender
• They may be an SBA lender
• Note: 7(a) loans are a different type of SBA financing

How do we apply?
• Verify number of employees
• Most recent 12 months
• Complete the PPP loan application
• Provide required documentation
• Certain certifications

We already got an EIDL (or applied)
• You can refinance the EIDL into the PPP
• You can’t take an EIDL and PPP for the same purpose
• You received an EIDL Grant?
• That amount will be subtracted from the amount
forgiven under PPP

The application…..
• Two-page application

• Legal name and DBA if applicable
• Primary address and phone
• Business TIN (EIN/SSN)
• Contact name and email
• Average payroll dollars, and times 2.5
• Number of jobs
• Purpose of loan

• Owners names with >20% ownership stake
• Standard questions:
• Suspended/debarred by Federal Dept/Agency?
• Involved in bankruptcy?
• Delinquent on SBA loan in past 7 years?
• Received an EIDL?
• Subject to indictment, arraignment, incarcerated, etc?
• Involved in a felony or misdemeanor against a minor?
• Citizen, Lawful Permanent Resident?

• Verifications (initial each)
• Current economic uncertainty necessitates loan
• Funds will be used to make payroll, etc.
• Documentation will be provided to lender
• Loan forgiveness terms understood
• No other loan in this program
• True and accurate
• Lender will review tax documents
• Signatures

How fast will we receive help?
• Confirmation of your application within hours
• Yet you could expect to wait several weeks
• Banks recommend you apply for a bridge loan in the interim

Loan worksheet

How can we get our payroll
information from Sage?
Payroll Reporting

Reporting
Reports
• Net at Work Employer Solutions Team’s reports:
• Available for Abra Suite or Sage HRMS
• All earnings, deductions, taxes
• Employee Amounts
• All earnings, deductions, taxes - Columnar
• Employee Amounts
• Employer Amounts
• All Employee / Employer amounts – two lines per EE
• Employee Only, with any negatives

Reporting
Reports
• Net at Work Employer Solutions Team’s reports
• Report pack
• Available for Abra Suite or Sage HRMS
• Instructional brochure provided
• $350 for four (4) reports

COVID-19 Reporting Strategies
Employee Data Mining

• A new way to look at data
• Traditional View of Data and Reporting.
• Traditional Data Reporting Methodologies.
• The definition of “Mining”.
• Applying the Mining concepts to Data.
• Data Mining Tools.

• A Real-Life Example…
• Benefits usage forecast for laid off employees.
• Multiple pay frequencies.
• Multiple deduction schedules.
• Varying departments and employee statuses.
• Mail Merged to Employees.

• A Real-Life Solution…
• Identify a workable strategy.
• Identify the raw data needed to fulfill requirements.
• Identify the refining methodology and tools.
• Identify the refining cost.

• Things you need to know…
• What are my Raw Data Streams?
• What are the refining tools at my disposal?
• What are the costs to produce?
• What does the final product need to look like?

• In Summary…
• Know what your Data Streams are.
• Know what Tools and Methods are at your disposal.
• Know what’s involved with the Refining.
• Know what your Final Product needs to look like.

Thank You.
Be Prepared.
Stay Safe.

Wrap up and Questions
Any Questions?

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Tips on the IRS & DOL Employer Tax Credits & Loans

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