Federal government contractors with at least fifty employees and government contracts valued at more than $50,000 are required to have affirmative action plans “to employ and advance in employment qualified special disabled veterans, veterans of the Vietnam era, recently separated veterans, and other protected veterans at all levels of employment, including the executive level.” 41 C.F.R. § 60-250.43. Compliance with veterans affirmative action plans can be time consuming and, in some circumstances, burdensome. However, for a limited time, the Government may compensate businesses for hiring veterans and meeting their veterans hiring targets by way of tax credits, all thanks to the VOW to Hire Heroes Act of 2011, which specially expanded the Work Opportunity Tax Credit.
According to the IRS’s November 9, 2012 Tax Tip publication:
- Employers may be able to claim the expanded Work Opportunity Tax Credit for qualified veterans who begin work on or after Nov. 22, 2011, but before Jan. 1, 2013.
- The maximum tax credit is $9,600 per worker for employers that operate for-profit businesses, or $6,240 per worker for tax-exempt organizations.
- The amount of credit will depend on a number of factors. Such factors include the length of the veteran’s unemployment before being hired, the number of hours the veteran works and the amount of the wages the veteran receives during the first-year of employment.
- Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit. In order to be eligible for the tax credit, employers must file IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. The form must be filed within 28 days after the qualified veteran starts work.
Be sure to consult with tax counsel and/or your accounting firm to make sure that your company can take advantage of the tax credits for veterans it wants to hire between now and the end of the year. If it can take advantage of the limited time tax credit, then this is an easy “twofer”: a way to satisfy your company’s veterans hiring and affirmative action requirements and get a tax credit all at the same time.
Michael J. Schrier is the attorney responsible for the content of this article.