03.18.14 |
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Optimizing Your WOTC Screening Process — Fourth Principle: Certifications

We’ve already discussed how screening compliance, eligibility and forms compliance can help companies optimize their Work Opportunity Tax Credit (WOTC) screening process— the next crucial step is certification.

Before employers can claim a credit on their federal income tax return, they must apply with their WOTC state agency and receive certification that newly hired employees belong to one Businesspeople_Seated_2of the target groups eligible for the Work Opportunity Tax Credit.

An employer’s certification percentage is the number of actual certifications received compared to the number of Pre-Screening Notices (IRS Form 8850) sent to the certifying state agency. To help maximize certification percentage, it is important to make sure that all paperwork is in order and to monitor the status of applications with the state agency during the certification process.  In addition, an experienced vendor will not stop at documenting one demographic category, as that category might later be denied due to a small variance in criteria. Instead, an experienced vendor will leverage an inclusive certification process, helping to secure necessary documentation for each potentially eligible category.

Once certification is received, employers use IRS Form 5884 to claim their WOTC tax credit. Form 5884 is filed with the employer’s federal income tax return.  Another value of working with an experienced vendor is that they can help companies track and monitor their submissions and receive certifications faster.  In fact, at ADP, we assist clients in successfully appealing previously denied WOTC certifications where submission of additional information or documentation is required. We’re typically able to reverse three out of four appealed certification denials.*

Learn more about how ADP’s four-step quality review process, monitoring reports and agency relations team can help your company receive certifications faster. Check back to learn about the fifth and final principle: reporting.

*Based on ADP internal data; results may vary.



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