Maximizing Bottom-Line Benefit: Work Opportunity Tax Credit

Maximizing Bottom-Line Benefit: Work Opportunity Tax Credit Lyn Blackmon, Client Service Manager, Tax Credits ADP Beth Willman, Sr. Client Service Manager, Tax Credits ADP

Agenda Federal Tax Credits Updates Leveraging Technology WOTC Program Increasing WOTC Tax Credits Type of WOTC screening process Other Success drivers Reporting tools What’s new?

1/1/17 1/1/17 12/31/19 Legislative Update FedEZ (Federal Enterprise Zone Program) IEC (Indian Employment Credit) WOTC (Work Opportunity Tax Credit) 1/1/17 Program in legislative hiatus as of Outlook for renewal Retroactive claim opportunities available EXPIRED Outlook for renewal Retroactive claim opportunities available 1/1/17 Program in legislative hiatus as of EXPIRED 12/31/19 Legislatively active through Extended 5 years at end of last hiatus (active next three years) Maintain focus on compliance Updates available through ADP Boost blog page: www.adp.com/boost

ADP SmartCompliance® | Work Opportunity Tax Credit What is WOTC? -Work Opportunity Tax Credit is a federal employer tax credit. Its purpose is to incentivize companies, by offering tax credits. -The employer tax credit is based on hours and wages eligible employees earn. Most WOTC credit is up to $2,400 per eligible employee. Some categories are up to $9,600 in credit. Screening Certification Reporting Long-Term Family Assistance Recipient (TANF) Veteran Target Groups Short-Term Family Assistance Recipient (TANF) Supplemental Security Income Recipient Qualified Ex-Felon Summer Youth Employee (in empowerment zone) Food Stamp Recipient (SNAP) Designated Community Resident Vocational Rehabilitation Referral Long-Term Unemployed

Leveraging Technology To Your Benefit

Increasing WOTC Tax Credits And Measuring Success A successful WOTC program involves the following compliance steps: Front end job applicant screening Submitting documents; RFV, DL, and proof of address Following up with state agencies on tax credit certifications Tracking qualified wages and hours via payroll Calculating the tax credit Reporting Results Key Drivers of Tax Credit Performance: Screening Compliance – 95% GOAL (total screened new hires / total new hires) Tax Credit Eligibility Rate (% of screened new hires eligible for WOTC) Submitting WOTC Exports each week Documentation Compliance Monitor your Program ADP action is blue highlight

Why Screen for WOTC Automatically? Helps provide better performance and results than manual approach An effective hiring tax credits capture process helps position the company to collect other incentives Tax credits provide a quantifiable return on your Applicant Tracking System (ATS) investment As additional targeted groups and programs requiring screening are introduced into law, the integration allows for timely participation The tax credits secured can actually help pay for the ATS system cost Credit borrowing is big business. There are approximately six billion credit card solicitations per year. I’m sure that many of you receive multiple offers in the mail each month inviting you to open new credit card accounts. When a person is delinquent on their credit card payment, the creditor may issue a garnishment order. In many states, once a garnishment is received, the employer may be required to send back additional information. Requirements vary by state and county and may require the employer to notarize the response; send copies to third parties, such as the creditor or creditor’s attorney; and provide certification of mailing so that all parties know when and how the copy was sent. There is no standardization regarding creditor garnishments. This makes the process complex and burdensome for employers. Bankruptcies are another type of garnishment that you may receive. Ninety-eight percent of all bankruptcies are personal filings rather than business filings. Banks pulled back during the recession on extending credit, but it was too late. . And it is not as easy as just sending in a payment to the creditor for a garnishment, employers are required in many states to send back additional information. State requirements vary by state, it could even be at a county or jurisdiction level…they may require the employer to: Notarize their response Send copies to third parties, such as the creditor or creditor’s attorney Certification of mailing – in other words they need to know when the copy was sent to the third party or the employee and the method – was it mailed? The frequency of responses can vary – if a continuing garnishment is received an employer might need to response multiple times – other states may require submitting the response with the payment, and so on. And some states may require that you respond in their own form, however, others might be okay in not using their own form, as long as all questions are answered properly and timely. There is no standardization regarding creditor garnishments, and this makes the process very complex and burdensome for those employers receiving orders. There are two types of personal bankruptcies—Chapter 7 and Chapter 13. With a Chapter 7 bankruptcy, debt is forgiven or liquidated. With a Chapter 13 bankruptcy, the individual makes arrangements to repay the debt within a certain period of time. This is often known as the wage earners plan. A rather different type of garnishment is called Wage Assignments because the employee voluntarily agrees that money be withheld from wages without a court order. Wage assignments are governed by state law, and since they are voluntary and the employee can specify the amount, they do not fall under the requirements of the Federal Consumer Credit Protection Act or F-C-C-P-A. Currently, there are three states that do not have provisions allowing wage assignments. They are: Alabama, Connecticut, and Florida. While in other states, written employee or spousal consent is required for wage assignments.

Focus Capturing all potential WOTC credits Best WOTC Processes WOTC embedded in Avionte application* Candidate seamlessly screens within the application Minimize re-entry of information Managers reviews View Forms button in Avionte Managers send ADP any required documents Clients have seen a minimum 15 percentage point increase in screening compliance *or WOTC link within edocs Client Experience Can seamlessly integrate with the Avionte Applicant Tracking System (ATS) Paperwork is substantially reduced from the process Applicants and hiring managers find it easier to navigate the process Achieve better compliance results with screenings and forms Maximize potential WOTC credits

Avionte Application WOTC screening

Avionte Employee screen shot

Focus Back-up WOTC screening Processes Impact WOTC link within edocs Stand-alone WOTC link on Kiosks Mobile WOTC screening Call-in WOTC screening Impact Ensure all candidates screen prior to the job offer regardless of the process Increased candidates time for screening Managers have extra steps Branch Screening compliance % is lower than with automated screening More labor intensive for both Managers and candidates

Focus Weekly Exports that drive success Posting weekly Tax Credit (Payroll), Employee and Location Exports to ADP: Consistency ensures that eligible records are processed timely to the states* Screened records are updated as hired Weekly and monthly WOTC reports are accurate and effective Tax credits are calculated with up-to-date data *This avoids lost credits.

Focus Monitor your Program to drive success ADP provides the WOTC Data Analytics Dashboard Snapshot and Detail Performance Views Actionable and Prescriptive Alerts Customizable Views by Organizational Structure and Timeframe Dynamic Reporting you can drill down, filter and export

Accessing ADP’s WOTC Analytics Go to the ADP SmartCompliance Platform at https://smartcompliance.adp.com Enter your User ID (EX: Jdoe@abcllc) and password

Accessing ADP’s WOTC Analytics Click on Processes, then on Tax Credits >Analytics Dashboard

Analytics Dashboard Snapshot Dashboard Screening Compliance At-a-glance dashboards summarize your WOTC program performance Screening Compliance Form 8850 Compliance WOTC Eligibility Screening compliance rate across your organization Helps prevent lost credit opportunities Status of received, pending and expiring 8850s Helps focus attention on required actions Displays data on WOTC eligibility across your organization Helps identify areas of focus for future job growth

Accessing ADP’s WOTC Reports Click on Reports > Tax Credits > Search Recent reports will be listed. The 8850 Date Verification and Document Follow-up Report are good to review each week Select a date to view historical reports, click Search

What’s New - ADP? Digital Signature Form 8850 Pages 1 and 2, RFV and LTU Forms Will replace the current PIN eSignature Applicant will sign with a mouse or their finger or stylus (mobile device) Will reduce requests for additional documents

What’s New - Avionte? AERO Platform Update to the new platform automatically includes the WOTC screening No changes to the WOTC screening process Access to the candidate record will show the same results

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