by Roger Russell
A vendor has rolled out new software that helps identify tax credits that are associated with the hiring process.
The product developer says that the software will help businesses claim their share of the billions of dollars that are lost each year for failure to identify the credits that are available during the hiring process.
"Existing screening methods only identify a few of the more than 150 tax credits associated with the hiring process," said Bill Becker, a CPA and co-founder of ITax Group Inc., the inventor of job credit screening automation.
Employers who neglect the work opportunity credit during the hiring process stand to lose thousands of dollars, according to Becker. The company’s primary product is JobCredits, a technology and service-based solution that screens, captures and secures all federal, state and local hiring-related credits.
"Overall, billions of dollars go unclaimed each year because of the mounds of paperwork involved with the application process," said Becker.
"There’s not only the work opportunity credit, which most people are familiar with, but there are also four other federal programs, as well as 140 to 150 state programs," he said. "Our system is particularly important for businesses with locations in more than one taxing jurisdiction."
The work opportunity credit is worth 40 percent of the eligible employee’s first year wages up to $6,000, or $2,400 for most employees. The credit for summer youth is $3,000.
Employees eligible for just the federal credit include qualified members of families receiving aid for dependent children, qualified veterans, high-risk youth, ex-felons, vocational rehab referrals, qualified summer youth, qualified members of families receiving food stamps and supplemental social security income recipients. New York Liberty Zone business employees are also treated as members of a targeted group. Eligible employees other than those of New York Liberty Zone businesses must be certified by a state employment agency.
Becker, who co-founded ITax just two years ago, said that the company already has a number of Fortune 1000 clients, including Home Depot and Honeywell. The company’s system will work for small to midsized firms as well as the Fortune 1000, said Becker. "We’re currently not targeting the small firms but we have plans to do so in the near future," he said.
The program that Becker developed screens candidates for state credit programs throughout the country. "Just to do a Form 8850 on paper could take as much as 20 minutes," said Becker. "Our program takes from one to two minutes. It selects 10 to 12 yes-no questions out of hundreds in our database, depending on the locale, the applicant or the type of business. We’ll automatically find any credit for which the employer is eligible."
Explained Becker, "Right now we serve our clients through an ASP model. We set up and customize each client with the installation, and we train our client’s employees on how to use it." ITax processes the credit all the way to the Department of Labor. When the company receives the credit it pays a percentage of the credit as a "success fee" to ITax.
"Ninety percent of job applicants don’t qualify," said Becker. "For the 10 percent who do, we know within the first two minutes of the application process. After we get their signed form, we do all the back-end processing, and we’ve taken the total burden away from the employer."
Becker said that the system tracks the entire process, so the employer can check where in the system the application for credit is at any given time. "Our credit track screening logs each event from the original screening to hiring to processing to getting the application to the state and federal agencies."
Although services have been in existence for some 25 years to aid employers in the screening process, "they’re largely a paper-driven, manual process in which the employer phones in the information to the service," said Wayne Neale, marketing vice president of ITax.
"What’s important in maximizing the credit is that every applicant that comes into the company be screened as they begin the process," said Neale. "If you miss people, you’re missing a finite opportunity. Once everyone is screened, it’s important that we receive the paperwork for everyone who qualifies, because it needs to get to the federal government within 21 days of the first day of work."
The real-time reporting and tracking system can immediately identify the location where, for example, Home Depot hired 20 people, but only 10 were screened.
"Home Depot has a hiring kiosk that everyone goes through, but not everyone is directed to the screening process. Once a person is screened and they qualify for the credit, if we don’t have the signed form within three days, we send e-mail to the hiring manager or call them up to make sure we can get it to the applicable agencies on time."
