Overview
Title
To amend the Internal Revenue Code of 1986 to improve and enhance the work opportunity tax credit, to encourage longer-service employment, and to modernize the credit to make it more effective as a hiring incentive for targeted workers, and for other purposes.
ELI5 AI
The bill wants to change how businesses get rewards for hiring certain people, like veterans or those getting special help, by giving them more money back if they do. It's like saying, "If you hire someone who really needs a job and they work longer, you get a bigger thank you from the government."
Summary AI
H.R. 6833 seeks to revise the Internal Revenue Code to enhance the work opportunity tax credit, which aims to provide incentives for hiring specific groups of people. The bill proposes to increase the percentage of wages that can be claimed for this credit, especially for people who work longer hours and for veterans, allowing for higher wage limits. It also changes the rules for summer youth employees and long-term family assistance recipients, and removes the age limit for supplemental nutrition assistance program benefit recipients to qualify for the credit. These changes are intended to make the tax credit more effective starting in 2024.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "Improve and Enhance the Work Opportunity Tax Credit Act," aims to amend the Internal Revenue Code of 1986. The primary focus is to improve the Work Opportunity Tax Credit (WOTC) as a hiring incentive, particularly for targeted groups, and to encourage longer employment tenure with employers. Key changes include adjusting the tax credit percentage and raising the wage limits that can be considered for the credit. This bill also removes the age cap for Supplemental Nutrition Assistance Program (SNAP) recipients, among other technical adjustments, to modernize and enhance the effectiveness of these incentives.
Summary of Significant Issues
One of the bill's challenges is its complexity. The amendments introduce varied percentage credits and wage limits, especially when considering veterans and non-veterans. These nuances could present implementation challenges for employers who need to track and apply different credit levels and wage calculations.
Moreover, the bill proposes changes by striking out existing provisions and adding new ones, raising potential issues of oversight and misunderstanding in how these modifications align with the broader tax code. The removal of the SNAP age limit also brings attention to the lack of context regarding why such a limit existed, or the anticipated positive impacts of its removal.
Impact on the Public Broadly
For the general public, these amendments to the WOTC could broaden opportunities for employment among targeted groups by providing greater financial incentives for employers to hire them. If effectively implemented, it could lead to increased employment rates for veterans and recipients of public assistance programs. However, the complexity and specificity of the credit might also result in some confusion or unintended non-compliance due to misinterpretations, especially among small businesses or employers who lack access to financial or legal expertise.
Impact on Specific Stakeholders
Employers: They may benefit from the increased incentives for hiring from targeted worker categories, potentially reducing hiring costs for eligible employees. However, the administrative burden and complexity of applying these credits, with different wage calculations and tenure requirements, could pose challenges, particularly for smaller businesses.
Veterans and SNAP Recipients: Veterans may see more job opportunities with increased wage credit limits. However, the distinction between different veterans and SNAP recipient categories might raise fairness concerns. For SNAP recipients, removing the age cap could open employment opportunities for older individuals, increasing their participation in the workforce.
Legislators and Policymakers: They face the challenge of ensuring the amended tax credit aligns with broader policy goals, such as equitable job creation and support for vulnerable groups. Additionally, clear communication strategies are needed to ensure both employers and employees understand the changes and how to comply.
In summary, while the bill proposes significant enhancements to the Work Opportunity Tax Credit, its implementation may require careful consideration and clear guidance to maximize its benefits and minimize potential confusion or negative impact.
Financial Assessment
The bill H.R. 6833 outlines several financial amendments to the Internal Revenue Code, specifically expanding and modifying the Work Opportunity Tax Credit (WOTC). These changes primarily involve adjustments to the percentages of wages eligible for tax credits, targeting improved incentives for hiring specific groups of workers.
Increased Wage Percentages and Limits
The amendments propose that the credit be equal to 50 percent of the qualified first-year wages up to $6,000 for each eligible worker, up from the previous rate of 40 percent. For individuals who perform at least 400 hours of service, the credit also applies to wages between $6,000 and $12,000. This increase aims to provide greater encouragement for employers to hire and retain employees who can maintain longer service, potentially improving the stability and productivity of both the workforce and the businesses that employ them.
Specific Provisions for Veterans
The bill includes an increased limitation on the wages that can be taken into account for qualified veterans, affecting how much an employer can claim in tax credits. For veterans, the caps are $12,000/$24,000, $14,000/$28,000, or $24,000/$48,000, depending on the veteran classification. This differentiation is intended to provide a stronger incentive for employing veterans with varying backgrounds and qualifications.
Concerning Financial Complexity
With these financial changes, there is potential for increased complexity that might affect employers. The amendments, which involve unique percentages and thresholds for different worker categories, such as veterans and other targeted groups, could lead to administrative challenges. Employers may face difficulties in compliance due to the complexity in understanding and applying these percentages and thresholds, especially if they lack in-house tax expertise.
Youth and Family Assistance Provisions
For summer youth employees and long-term family assistance recipients, the bill revises the percentage of eligible wages and imposes caps, like restricting qualified wages to $3,000 annually for certain categories. These nuanced percentages and limits further add to the complexity of the tax code, raising potential compliance challenges as employers may struggle to apply these changes consistently.
Policy Impact Without Economic Detailing
Finally, the removal of the age limit for recipients of supplemental nutrition assistance programs to qualify for the WOTC might have significant broader impacts. However, the bill does not provide detailed economic or social evaluations of this change, leaving stakeholders uncertain about its financial ramifications or potential benefits.
In summary, the proposed changes in H.R. 6833 involve significant adjustments to the financial incentives available to employers hiring targeted groups. While these adjustments aim to enhance hiring incentives, they could also introduce complexity and compliance challenges that require careful consideration and possibly additional guidance for effective implementation.
Issues
The complexity of the amendments in Section 2, particularly the varied percentages and thresholds specific to different classes of individuals, such as veterans and non-veterans, can complicate its application and understanding for employers and potentially result in unintended non-compliance, which is significant for all stakeholders involved in hiring and payroll processes.
Section 2 introduces several amendments that include striking out existing clauses and inserting new ones. This raises concerns about potential oversight and the broader implications that these changes might have on related tax code sections, which could lead to financial and legal complexities.
The removal of the age limit for qualified supplemental nutrition assistance program benefits recipients in Section 3 does not provide details on the broader economic or social impact of such a change, which may have financial and policy implications for employers and the affected individuals.
Section 2's amendments to the work opportunity tax credit could lead to inconsistency in treatment between veterans and non-veterans because of the different limitations and thresholds, raising ethical concerns regarding fairness and equal opportunity.
The amendments made to clarify the treatment of summer youth employees and long-term family assistance recipients in Section 2 do not clearly explain the rationale behind adjusting percentages, leaving ambiguity around the purpose and expected outcomes of these changes.
Throughout Section 2, there is heavy reliance on technical references to the Internal Revenue Code, which may obscure understanding for those without legal or tax expertise, potentially causing issues for small businesses or entities without access to such expertise.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of this act establishes the official name as the "Improve and Enhance the Work Opportunity Tax Credit Act".
2. Improving and enhancing work opportunity tax credit Read Opens in new tab
Summary AI
The section amends the Internal Revenue Code to increase the work opportunity tax credit, making it possible for employers to get credits of up to 50% on the first $12,000 of wages for individuals who perform at least 400 hours of service, and raising limits on wages for qualified veterans and certain other individuals. These changes will start applying to workers who begin employment after December 31, 2023.
Money References
- (a) In general.—Section 51(a) of the Internal Revenue Code of 1986 is amended— (1) by striking “shall be equal to 40 percent” and all that follows and inserting the following: “shall be equal to the sum of— “(1) 50 percent of so much of the qualified first-year wages with respect to each individual for such year as does not exceed $6,000, plus “(2) in the case of individuals who have performed at least 400 hours of service for the employer, 50 percent of so much of the qualified first-year wages with respect to each such individual for such year as exceeds $6,000, and does not exceed $12,000.”
- (b) Conforming amendments relating to limitation on wages taken into account for certain veterans.—Section 51(b)(3) of such Code is amended to read as follows: “(3) INCREASED LIMITATION ON WAGES TAKEN INTO ACCOUNT FOR VETERANS.—The $6,000 and $12,000 amounts under paragraphs (1) and (2) of subsection (a) shall be increased to— “(A) $12,000 and $24,000, respectively, in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(I), “(B) $14,000 and $28,000, respectively, in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(iv), and “(C) $24,000 and $48,000, respectively, in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(II).”.
- (2) Section 51(i)(3)(A) of such Code is amended by striking “40 percent” and inserting “50 percent”. (d) Conforming amendments relating to treatment of summer youth employees.—Section 51(d)(7)(B) of such Code is amended— (1) by striking clause (ii), (2) by striking “, and” at the end of clause (i) and inserting a period, (3) by redesignating clause (i) (as so amended) as clause (iv), and (4) by inserting before such clause (iv) (as so redesignated) the following new clauses: “(i) in lieu of the amount determined under subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to 40 percent of the qualified first-year wages for such year, “(ii) in the case of an individual described in subsection (i)(3)(A), clause (i) shall be applied by substituting ‘25 percent’ for ‘40 percent’, “(iii) in the case of an individual described in subsection (i)(3)(B), no wages shall be taken into account under clause (i), “(iv) the amount of qualified first-year wages which may be taken into account with respect to such individual shall not exceed $3,000 per year, and”. (e) Conforming amendments relating to long-Term family assistance recipients.
- — (1) IN GENERAL.—Section 51(e)(1) of such Code is amended by striking “family assistance recipient—” and all that follows and inserting the following: “family assistance recipient, in lieu of subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to— “(1) 40 percent of so much of the qualified first-year wages with respect to such individual for such year as does not exceed $10,000, and “(2) 50 percent of so much of the qualified second-year wages with respect to such individual for such year as does not exceed $10,000.”.
3. Removal of age limit for qualified supplemental nutrition assistance program benefits recipient Read Opens in new tab
Summary AI
The section removes the age limit for qualifying for Supplemental Nutrition Assistance Program benefits in the Internal Revenue Code, specifically eliminating the restriction for those over 40 years old. This change will affect individuals who start working for an employer after December 31, 2023.