Vice President of Client Success, Clarus Solutions
Perspective: Tax Credits Available for Trucking
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The trucking industry has its fair share of challenges right now — from high fuel prices to worker shortages. One solution to help ease some pressure may lie in pursuing government tax incentive programs, such as the Work Opportunity Tax Credit. In addition to its financial benefits, there are numerous other upsides, including the ability for companies to provide a more diverse workplace, enabling corporate goodwill and community support.
WOTC provides an employment tax incentive for companies to hire individuals from historically disadvantaged groups such as veterans, ex-felons, people with certain disabilities who have gone through a vocational rehabilitation program, Supplemental Security Income recipients, the long-term unemployed, and people living in areas with high poverty and unemployment. Additionally, employees who live in a household of a qualifying individual — including SNAP recipients (commonly known as food stamps), may also be eligible.
Companies can receive tax credits as high as $9,600 per eligible individual and WOTC will help offset any federal tax liability owed.
We’ve spoken with more than a thousand companies and found only 37% were even aware of WOTC. But many such companies already hire WOTC-eligible individuals. Working with a tax credit expert can help companies easily learn if individuals are eligible. This can be accomplished by asking job candidates to complete a form (provided by your tax credit company) to identify their eligibility. Upon hiring, that form would be sent to the state workforce agency to certify eligibility.
Ultimately the employer doesn’t see the form if done electronically; they only know that the person is WOTC eligible, but not under which category they would fall.
The WOTC form is optional and in some instances, job candidates may feel uneasy about filling it out, as they have concerns about it impacting their personal taxes or other hesitations. But companies can provide more information about the purpose and background to help candidates feel more comfortable. In addition, the rise in electronic screening has contributed to candidates feeling more at ease with the form due to its anonymity when completed online (back in the day, job candidates would fill out a paper form in person before handing it back to an employer).
Companies can reach potential employees in some of these groups — such as veterans — through social media, creating targeted messages to attract candidates. Direct, targeted advertising can reach potential employees who live in specific areas with high poverty and unemployment, that are deemed “empowerment zones” by the federal government, and are a potential qualifier for WOTC. Another effective way to attract these individuals is to partner with state vocational programs or employment nonprofits, which can help match employees to the right fit.
One of our clients, a trucking company with about 1,100 employees that annually hires approximately 600 drivers, had never participated in WOTC. The company’s belief was that it didn’t hire many people that would fit into the WOTC target groups of eligible employees. The company began its WOTC participation and received credits beginning with the hires they made after starting the program (Note: WOTC is not retroactive, so they were unable to apply WOTC to previous hires). Within two years of beginning WOTC, the motor carrier was able to achieve $114,000 in tax credits.
Because it helps a company’s bottom line, the impact is notable when you compare it to the bottom-line impact through revenue generation.
WOTC can be a win-win for both a company and its local area since it benefits both by providing jobs for community members who may have otherwise had a hard time obtaining one.
Overall, the trucking industry faces a range of challenges. Motor carriers need to look for every avenue they can take to help solve or offset these costly challenges, including taking advantage of tax savings and incentive programs such as the Work Opportunity Tax Credit.
Blake Baumann is vice president of client success at Clarus Solutions.
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