The IRS Chief Counsel’s Office issued a memorandum released on February 4 responding to an inquiry from a Colorado business if Section 280E would prohibit a taxpayer from receiving a WOTC credit for wages incurred when carrying on a business engaged in selling marijuana. The Associate Chief Counsel concludes that, “Yes, § 280E prohibits a taxpayer from entitlement to the § 51 WOTC for wages paid or incurred in carrying on a business of trafficking in marijuana.”
Department of Labor
The USDOL recently released new performance statistics for the national WOTC program. For the fiscal year ending September 30, 2021, the states issued 2.08 million WOTC certificates. This is an increase from the previous fiscal year in which 1.6 million certificates were approved.
On January 24, New York governor Hochul signed Senate Bill 7725 to modify another bill signed in December 2021 related to WOTC. S2802 would have required the state’s Department of Labor to publish certain statistics about WOTC certifications including the names of employers receiving certificates. After receiving feedback that such information would violate federal privacy laws, the legislature passed, and the governor signed S7725 to remove personally identifiable information from the reporting requirements. Look for the NY Department of Labor to begin publishing quarterly data regarding the WOTC certificates they issue starting this year. The data that New York will be publishing will be essentially the same as provided to USDOL.
On February 3, Assembly Member Joyner introduced Assembly Bill 9171 to create a new state income tax credit linked to and equal to the federal WOTC.
A similar bill was also introduced in the Maryland General Assembly by Delegate Eric Luedtke (D). HB2 would create a state income tax credit matched to and equal to the federal WOTC. The bill is cross-filed with SB0598 which will have a committee hearing on February 23.
In the state Ways and Means Committee hearing on January 26, there were speakers in support of the bill from both the labor and business communities. Delegate Jason Buckel (R), the minority leader in the Maryland House of Delegates, expressed his interest in the bill and pointed to a letter from the Chief Legislative Officer of the Hogan administration in support of the concept, indicating bipartisan support for the bill.
Yet another state is proposing a state tax match for WOTC. Georgia House Bill 1197, introduced February 7, proposes, “A credit against the tax imposed under this article shall be allowed in an amount equal to the total amount of the federal work opportunity tax credit properly claimed for a given taxable year by a taxpayer on its federal income tax return, provided that such amount shall be limited to the amount of the federal work opportunity tax credit allowed on the basis of Georgia qualified first-year wages.”