Home care agencies can earn up to $9,600 per caregiver via the Work Opportunity Tax Credit (WOTC). ClearCare, the #1 private-duty home care software provider, has integrated the background check process and tax credit submissions into the natural workflow of agency administrators. Below is a transcript of a webinar held on 6-30-2015 on the Work Opportunity Tax Credit program, what caregivers are eligible, how to apply for the benefit, and how ClearCare has made the process automatic.
Heather: You have joined us for The Home Care Agency Guide To Work Opportunity Tax Credits. We are super excited to have you all here. This topic has been a pretty one over the last couple of months, and so we are really looking forward to having a great event. I know there's tons of things you guys can all be doing with your time. We are thrilled that you chose to spend it with us. I am Heather [Eisen 00:00:28], I will be your host today. I'm with ClearCare.
Before I introduce our other speakers, just a few little housekeeping items. This event is being recorded, so we will have a link available after the event if you missed anything or want to refer back. For Q&A today, if you look on the right hand side of your screen, you should see a little question widget, question panel. You can type in your questions there and we will look at those throughout the presentation as time allows, but we'll most likely get to most of the questions at the end. Type in as many questions as you want and we will get to as many of those as time allows. We will be sending out the link the presentation and then there are a couple of other items that will be covered today that we'll also include in our followup. There's a lot of really good resources that we're going to make available to you today.
Joining me here at ClearCare is Derek Jones, he's the Director of Agency Education. We are super excited to have Sabrina Champagne, the Director of Tax Credits and Incentives for our employment screening partner, GIS. She's here with us today. Sabrina, I'm just going to turn it over to you. Can you tell us a little bit about GIS? I think this is probably going to be new for a lot of people on the line.
Sabrina: Thank you, Heather. Thank you everybody for joining today. GIS is one of the largest background check providers in the country. We were recently awarded a Partnership award by the US Postal Service for our years of great work with them. We are very pleased to be partnered with ClearCare today. We also manage tax credits and incentives for our clients as we've found that most employers, as they're going through the HR process, enter in the same information needed to identify and capture the federal and state credits available for hiring qualified employees. It just seemed like a perfect fit. GIS is very happy to partner with ClearCare to educate you today about our services for tax credits and what the benefits to you could be.
Heather: Awesome. Thanks, Sabrina. On behalf of ClearCare, we are really excited to be partnered with you as well. We've got a great solution. Derek, why don't you tell us a little bit about ClearCare?
Derek: Great. Thank you for the intro, Heather and Sabrina, for being on. ClearCare, we are a San Francisco based software and technology firm that exclusively supports the private pay home care industry. We have a little over 2,000 home care agencies that we support today. Our mission is to not only help home care agencies operate efficiently and grow, but to improve health care and aging. We spend a lot of our time here thinking about how to we want to age, what will that look like, how will we pay for it? In addition to providing this software, we help our partners think about how technology will support aging today, and also how that will help their business grow. We are more than just software, we are a platform. Just like Sabrina mentioned, one of our most recent partnerships is an integration with GIS into background checks.
When you come to ClearCare we not only provide the scheduling, billing, and payroll but we also provide a suite of resources for home care agencies to really spend the most time they can with their clients. We know that's what's important to the agencies. That's why we like to say we're helping heroes like you. That's why you saw the title slide. Lucy Andrews, one of our most recent heroes, she's an actual customer of ours in Sonoma, California. We always like to refer back to our customers to tell those stories. Where when you're using ClearCare, we hope that you're spending more time helping clients and helping put caregivers to work.
For our agenda today, Heather just gave us a nice intro for the panelists. We're going to dive right into the Work Opportunity Tax Credit program. This is what most of you are here for. We had almost 200 register, and registrations were coming in right up the line, almost 100 on the line here this morning, so we've got a pretty well-attended Webinar. This Work Opportunity Tax Credit can make your business a lot of money. We know there's very low awareness. We want to give you all the details on what it is and how to redeem this credit. How to apply, so we'll give you some links and resources so you can begin implementing this program today. Then we also want to let agencies know we have some ClearCare customers on today, but also some who are considering a software purchase. Might say, "Hey, this tax credit program looks great but also there's a lot of paperwork, there's a lot of process. How can ClearCare help me?"
We're going to show you a couple of ways that we can make that process easier for you. Then we should have plenty of time for question and answer. How do we start, really every webinar we produce here at ClearCare comes from somewhere, and we kind of aha moment, I think about a month ago. We rolled out a new innovation for our current customers today. In partnership with GIS, ClearCare integrated the entire background check process into ClearCare. If you're a home care agency today you know you normally have your software, but then you have to leave the platform, your software platform, to do recruiting. I know this process. When I managed a couple of home care agencies, you recruit caregivers, maybe those applications come in via Craigslist. Then you manually copy the information into your software platform, and then you manually copy that information off into the background check company.
Then you run the background check, and then you print the background check, copy it, scan it, scan it back into the soft-, it's just crazy. Our customers were telling us we had to do something about this to help them. We partnered with GIS so you can run your background checks directly in the ClearCare software today at rates that are at or below market rate. We secured a great rate. One of the parts of this program when we partnered with GIS, we had this aha moment where we saw that customers could pay for almost their whole software, and their background checks in many cases, if we were able to help automate the tax credit process. That's the submission process and also the filing of the taxes. We built that program into the integrated background check process with ClearCare. However, you do not have, if you're not a ClearCare customer today, 90% of this Webinar today is all about just giving you information about how to redeem that credit.
We want to let you know that the origin of this Webinar came from customers saying that they wanted a better to do a file for that tax credit. Heather had mentioned the Webinar will be recorded today. We did write a blog post on some quick tips. If you only have, and maybe you want to share this information on the Work Opportunity Tax Credit with staff members or your HR team. If you find our blog on clearcareonline.com/blog we wrote a blog post just a couple weeks ago I think, on which caregivers qualify, with specific Q&A around how home care agencies can take advantage of the program. As those two things combined, partnering with GIS and writing this blog, we started getting really dozens of customers and just people found the blog saying, "Can you tell us more?" That's why we created the Webinar today.
When you registered, we thought we would share a few of these stats, when you registered for the Webinar we asked a couple of questions. The first was, how familiar are you with the Work Opportunity Tax Credit program? This was another aha moment for us. We think this Webinar will be really helpful because 2% of you said you were experts, 55% of you said did not know anything about this program, and then some of you have heard of it, about a quarter of you have heard of it and you understand some of it. We thought there was a ... We're seeing a huge program where you can earn up to $9,600 per eligible caregiver and this big gap in most home care agencies not even being aware of the program. That's why we're here today. Then we also wanted to know, does your agency participate in the Work Opportunity Tax Credit program? I think based on the first set of the responses it's not too surprising, but 9 out of 10 of you said that you are not participating today.
This is free money. Sabrina will get into kind of what it is and what it isn't. It is a dollar for dollar tax credit, not a tax deduction, but a tax credit on your business taxes every year for things that you're already doing today, which makes the topic kind of even more exciting. You don't have to do anything different. For the caregivers you're already hiring today, you could earn a lot of money for those caregivers. To see that 9 out of 10 of home care agencies are not using it, we're very hopeful that the content of this Webinar will help you earn that cash. A couple other quotes. Now that we knew we were going to have a Webinar, we wanted to make sure that we formulated the agenda and the slides around your topics. When we asked what your learning objectives were, we pulled a few verbatims that represented a lot of your responses.
"How does the tax credit for home care programs work?" We have two folks who said, "Tell me everything," which we thought was good. "The cost, how much does it cost and how do I sign up?" We will definitely cover that. We saw someone say, "Steps to a successful program?" We actually took that literally, or I did, I think maybe the team thought I was a little crazy for taking that literally. We actually had built literal steps to the program and how to implement it. You'll see that in a couple of slides. What are the forms? There are all kinds of IRS forms out there so we brought all of the forms that you would need at your fingertips at the click of a link to make sure that you have those available. You can start using those forms today.
Then we had a lot of agencies asking, knowing that ClearCare has integrated the background check process, how can ClearCare eliminate the paper process for the tax credit programs? We will cover that as well.
With that, I'm going to hand it back over to Sabrina. Let me tell you, Heather and I are here today as kind of hosts. Sabrina is your czar of tax credit programs. She's been doing this for several years at GIS. I think she probably won't brag on herself, so I will. You saw the dossier of clients that GIS works with, McDonald's, huge brands. They also work with Genesis HealthCare. A lot of you who are agency owners today, you're calling to try to win business from referral sources like Genesis home care. They run these international background checks, but also they're pumping thousands of Work Opportunity Tax Credit submissions every month. They are the experts and we're very glad Sabrina runs the tax credit program at GIS. With that Sabrina, I'm going to turn it over to start covering some of the basics on the Work Opportunity Tax Credit program.
Sabrina: Thank you, Derek. The Work Opportunity Tax Credit is often referred to as WOTC. Throughout this call, I will be interchanging WOTC, which is the acronym to cover that. It is a federal tax credit program available to all employers. Obviously, the healthcare industry, every employer would qualify to participate in the program.
What is it? A lot of you have joined this call just to try and find out what it is. Employers can claim a federal income tax on their Form 1120, which is the annual income tax return that's filed, for hiring individuals with barriers to the workforce.
What does that mean? Years ago, back in the 90s, there was a program called the Targeted Job Tax Credit that was founded in response to a problem with our economy at the time. Government decided that instead of pumping money into social programs, they would offer incentives to employers to give people a hand up instead of a handout. What this program does is it screens for people who may be returning from service and need employment, individuals who may be disabled and need assistance and might need a little extra time and training, or individuals that for whatever reason have found themselves out of work for a while and needing help.
If an employer hires somebody that comes from one of those situations, the federal government will give you a tax credit. As Derek said, it's a dollar for dollar credit. It's one of the few areas to where your company can save money below the line. We found this to be lucrative for every one of our clients. As Derek said, oftentimes the amount of savings generated by participating in this program covers the cost of the background checks that we do for our clients. Really, it's a win-win for everybody from the social perspective, as we've also found that the employees hired under this program tend to have a greater tenure. They excel in their positions, and move on, and have been very, very happy and successful in the world that they've been able to be hired into because of these programs. It's a win for the employer with the tax credit and it's a win for the employee because they develop more skills and build their self-esteem as a result of earning gainful employment.
One of the steps to the program is that we ask the employers, it's required by the government, to have an employee complete a Form 8850. That's an IRS form to screen applicants or new hires, depending on when you want to ask the question, about whatever their circumstance may be. Again, this is a federally issued form. We do ask some additional followup questions that are outside of the Form 8850 that would be included on the Form 9061. That's just to make sure that we understand exactly which category an individual may qualify for. Once the candidate completes that form, then the form needs to be submitted to what's called a state workforce agency. Depending on where the employee will be working will determine which the state the forms need to be provided to within 28 calendar days of hire.
Derek: Just to reiterate here, this is actually, this is a stair step that we were talking about, the steps to the tax credit program. We're going to build the steps here. As Sabrina just ... Maybe you can provide more color around this, too. How critical is it for that caregiver to complete that form at or before that time of hire?
Sabrina: It's crucial. The IRS or the state workforce agencies will not accept a form after 28 calendar days of hire. If you hire an eligible employee and did not submit that form in a timely manner, then that credit is lost.
Derek: I think there are two ways to do this. We're going to provide a link to the form. Also, of course, if you're using ClearCare today there will be a link where you can electronically have the caregivers fill this out. The point is for those of you today, this would be part of your HR process. Most home care agencies have a packet that the caregivers complete at their office, or their may send them an electronic link for an application, which is what ClearCare provides. Either way, whichever way you do, you want to make sure that caregiver has that. Just slide this form into that new hire paperwork. Or of course, if you are a ClearCare customer today and sign up for the program, you'll have an electronic link that caregiver can fill out, this very first step of the process, because if it doesn't happen in the first 28 days, even if they qualify and they're eligible for that maximum benefit, it's not possible to redeem that after that 28 days.
Sabrina: Correct. What are the qualified criteria? As I mentioned there's quite a few. We'll get into the different categories, the WOTC credit. As I mentioned, the largest category that we've seen recently is the category of qualified veterans. A lot of people are coming home from their service and are transitioning into the workforce. The government has created multiple categories under the veteran category to qualify for this program. Like I said, individuals who might be receiving some kind of federal assistance, or have a disability.
Some are youths, so individuals that might be on vacation, or out of work or school during the summer months that are hired by an employer, you can earn a credit for those individuals. Even individuals who reside just within a designated community. There are areas throughout the country that have been designated by the federal government as Empowerment Zones or Renewal Communities. If they're working within one of those boundaries as well as residing within one of those boundaries, then they would qualify for this federal program.
Once they are qualified and you determine that an individual is eligible for WOTC, there is a work requirement. An individual must work a minimum of 120 hours to qualify for this credit. You can hire an employee who would qualify, if they only work for you 100 hours, that credit is forfeited. However, once they hit the 120 hour mark, which GIS monitors, identifies, and notifies you when that has occurred, then that individual once you've been certified, generates a 20% credit of the wages paid to that individual.
Then, as they continue to work for you and achieve the 400 hour benchmark, your credit shifts from the 20% up to a 40% credit. Again, GIS, we monitor those benchmarks and then we modify the credit calculation and provide that to you on a monthly basis.
Derek: Sabrina, here when our team was first learning about this, not only the qualifying criteria and the number of hours worked, we continued to get a lot of ... We kind of were second guessing the way we've been classically HR trained, which is that if you know someone has a particular condition, whether a veteran or they're disabled, once the qualifying criteria is technically classifying these caregivers as being designated with some type of attribute. It felt uncomfortable to our team to say, "Is it legal? Is it really okay that I ask this at the accept of the application? Can I make hiring, can I not maybe necessarily make hiring decisions, but can I prioritize not only selecting which caregiver to hire, but also how many hours to give them, based on their qualification criteria?"
Correct me if I'm wrong here, but that's actually the exact intent of the program, which is to find these individuals who might fit these criteria and then give them more hours than you might other individuals. Provided, again, that these caregivers are qualified, they have the right attributes, they're compassionate for seniors and disabled adults but all things considered, the design of the program is exactly that. Identify, hire, and then prioritize giving hours to these individuals. Which I know our team, there's already a couple of questions that have started coming in, like, "Is it legal? Can you prioritize?" I was hoping you could touch on that and just confirm that is actually the intent of the program, the exact design of what the federal government is attempting to incent employers today.
Sabrina: You are absolutely correct, and that is a very common question. That is the intent of this program. Given two identical candidates and if one qualifies for the program and one does not, the government, with this program, is hoping and wanting employers to hire the individual that is WOTC eligible. Yes, it is not looked at as discriminatory. It's actually supporting the government, their initiative, because from their perspective you're taking an individual who may be on the federal payroll in some regard and you're putting them to work. You're assisting them in transitioning from not having a job or from having some kind of supplemental assistance to getting off of that assistance and actually improving their skills, improving self-esteem, and becoming a more contributing member of the workforce.
Derek: Thanks, Sabrina. Then there's a final step here that most agencies will need to take, which is submission on the tax. Any more color for agencies around that?
Sabrina: Absolutely. As we're going through these various steps, we provide reporting, we also hold quarterly calls, and then provide responses to ad hoc questions at any time for our clients. At the end of the year, we provide a annual report which has the total credits broken out. We show full detail of employees that have been certified, the hours and the wages worked. Just so everybody is aware, we also mask Social Security Numbers to prevent any exposure of PII. Then we provide you the credit amount, we also provide you with the form needed to claim your credit, and we provide you direction as to which amounts need to appear on which lines. That way, we're not telling you how to prepare your taxes, we're just showing you the credits that you've earned and how you can claim them when you file your 1120 annually.
Derek: Excellent, sounds great. We're going to dive right into each one of those steps in more detail. There's already a ton of questions coming in from agencies asking, "What about current employees?" There's just a ton of questions around which types of caregivers may qualify. I'm going to pull up a couple of the pieces here. One of the reasons why, Sabrina ... Actually, I don't know that we mentioned this earlier, that when we've spoken with home care agencies who are using this program, when they take a look at all their current caregiver employees who are on their roster, and when they take a look at which one of them may have qualified if they would have had the paperwork submitted within 28 days? We see it, on the average about 15% of caregiver employees who meet the criteria or who meet the hours criteria, the minimum of 120 hours, would have met the qualifying criteria that we're about to go over.
Again, that's highly dependent upon your area, where you live, part of the country where you're recruiting. Across hundreds of home care agencies, this is a stat, it's actually stats from the Home Care Association of America from a topic that they held on this. Where they went in and looked at hundreds of home care agencies and determined that about 15% of caregivers will qualify. Now, some agencies are above that, but actually they reported many agencies, particularly healthcare, typically tends to find more employees who are eligible for the WOTC program.
We also know there a lot of home care agencies who are recruiting veterans, because a lot of times, care recipients, seniors themselves, they oftentimes like to have someone who is their peer take of them, or someone around their age, in functional age. There are a lot of qualifying criteria for the veterans. I'm going to put up both parts of these slides here, and Sabrina is going to walk through the qualifying veteran category and then all of the other categories on the right side.
Sabrina: Thanks, Derek. Starting on the left you will says it says qualified veteran category. You'll see the different listings of veterans. Just to clarify, some people might think that hiring any veteran would qualify for a WOTC credit. Please be aware that is not the case. There are certain qualifications that would enable an individual to be identified as WOTC eligible.
The first one would be a veteran receiving Food Stamps, it's currently called the SNAP program. Someone who has a service-connected disability. Somebody who has a disability and has been unemployed for the past 6 months. Honestly, this is the category that we have seen really come through a bit in the past year. There have been a lot of service people coming home that unfortunately have been disabled for various reasons. Because of that, they've been out of work. We've seen a huge increase in hiring of veterans with disabilities that have been unemployed. A veteran that's unemployed for the past 4 weeks would qualify, and someone that has been unemployed for the past six months. Again, somebody that is just a veteran would not qualify for this program. It would have to be a veteran with one of these circumstances that they're currently going through.
On the other side, you'll see for other qualifying categories, we have both short term and long term TANF recipients. TANF is Temporary Assistance to Needy Families. Other, again, individuals receiving Food Stamps. I touched on this earlier, individuals that live within an Empowerment Zone or Renewal Community would qualify under the designated community resident category. An individual that has gone through a vocational rehab facility would qualify for this program. I'm pretty sure that aren't many ex-felons hired through your agencies, but if there were they would qualify for a credit. Individuals who are currently receiving Supplemental Security Income, also known as SSI, for disabilities usually. The last program they touched on was the summer youth. Those individuals that are on break during summer and are seeking gainful employment. There is a federal credit available for hiring those individuals also.
Derek: Excellent. What we've done here, because we know these categories may be new to some of you on the call, we've created a tool that your agency can download, which goes into more detail on each of these qualifying categories. It's a free tool that you can download directly from the ClearCare Web site. Sabrina, while we're on this slide, there's a couple of questions that I think would be helpful just for us to answer now, because I think they're setting the context for the future slides. There's a couple questions around, please explain the 120 hours and 400 hours. That question comes from Lisa. I'll take my best stab at that if you don't mind, Sabrina.
Lisa, if a caregiver that you hire meets one of the qualifying criteria and you have had them complete the form, and you've submitted the form within the 28 days of hire, that will give you a binary yes/no answer of if they meet one of the qualifying categories. However, the amount of the tax credit is based on the number of hours worked. The minimum number of hours required to start receiving some of that benefit is 120 hours. Anywhere between 120 hours and 399 hours worked, typically you're going to receive 20% of that caregiver's wage in the form of a tax credit up to the maximum benefit, which is here on the slide.
The 400 hours refers to, that's kind of a bonus bonus category, if you will, that's the federal government's way of saying, "Hey, not only do I want you to hire these individuals and put them to work, but I want you to give them meaningful employment with more hours." There is an incentive in place where if you put that caregiver to work for 400 or more hours, the incentive goes up from 25% to 40% of their wage, up to the maximum benefit. Of course, the maximum benefits are here on the right columns for both of these sides here today. There were a few questions around that. Lisa, I hope that helps. If it doesn't, we'll try to do our best to answer more in the Q&A.
Sabrina: Yeah, I've actually, just because we're on this slide, there was a question someone asked, what TANF stands for.
Derek: Sabrina, is that another way to describe welfare?
Sabrina: Yes. The name of the welfare program changed to Temporary Assistance for Needy Families. That's the acronym TANF.
Derek: Excellent, got it. There is a couple more questions that came in and then we'll try to move on to the next slide. These questions are great, keep them coming. We'll do our best to answer them in sequence here. The number of hours worked, Sabrina, is that in a calendar year or from the year, from the start of the caregiver's hire date?
Sabrina: Excellent question. This is a 2 year program, so it's over the course of 2 years from the date of hire of the employee. If you have an employee that was hired, let's say July 15, then the start date on their 2 year term begins July 15. If they work 100 hours in that first year, you would need see them on a report because the haven't met that 120 hour benchmark. If it takes until the second year to hit that 120 and even above up to that 400 hour mark, then they would qualify for the credit.
Derek: Excellent, awesome, and there are a ton of other great questions on this topic that are a little bit more detailed so we're going to save those for the Q&A. [inaudible 00:33:44] 20th time, but continue typing in your questions as they come up. I will turn this one over to Sabrina. Once we've followed the first three steps, we've submitted the paperwork, the caregiver comes back as being qualified and we're putting that caregiver to work I think that the question a lot of folks have is, how much do I know I'm going to save on my taxes, how much can I earn, and how all is that calculated?
Sabrina: Excellent, and as you can see, we have a scenario here where the individual, again, has to work a minimum of 120 hours. Between the 120 to 399 hours there is a 25% credit of the wages. Again, what we do at GIS is we will monitor the hours and wages, and provide you with reports so you will have monthly updates of this, of what to expect for your annual filing. We're constant communication with you, making sure that you're aware of where your employees are in hitting the different benchmarks. Once an employee hits that 400 hour benchmark then they bump up to that 40% credit of the wages paid to them, up until they hit the maximum benefit based on their category, which we just saw on the prior slide. An example here is that if you were to hire an unemployed veteran with a service connected disability, the maximum credit available for that category is $9,600.
You screen the individual, you have them send in the forms within the 28 day [inaudible 00:35:28]. The receive the certificate from the WOTC, the state workforce agency. You're paying this individual within on average $12 an hour. Once they hit the 4 hour benchmark, then that means that you have earned $4,800. I'm sorry, the $4,800 is their wages, the tax credit to you is $1,920. If you continue to retain them and they work 2,000 hours, then they reach the benefit, the maximum benefit of $9,600 in tax credit for you to claim on your 1120 when you file your annual income tax return.
Derek: Fantastic, thanks Sabrina. The math is pretty simple arithmetic, but this is another reason why ClearCare partnered with GIS to not only integrate the background check process but to automate the tax filing and the calculation. Because you could start to see once this tax credit submission is automatic in the ClearCare product and since ClearCare software is connected with the payroll data, we can simply pull how many hours that caregiver has worked within that 2 year period at any moment, and that automatically is connecting with the payroll company and with GIS.
Sabrina: What's nice about that integration, Derek, and for everybody on the line is that with the electronic process, it eliminates the potential for a lost paper or a lost document, or somebody seeing PII that might be on one of the forms. It streamlines the flow of data to the agencies to ensure that you're achieving that 28 day window. There's just a lot of different areas to where it eases the burden of what could be a difficult program to roll out for an employer. That having it all electronic and integrated with the ClearCare services, it just makes it very easy for not only the applicant becoming an employee but for the employer nobody has to chase down a form, or ask somebody for something else, or be in an uncomfortable position. Again, it's all done electronically online and through a secure portal. It's a really nice program to have integrated with ClearCare.
Derek: I think if I'm an agency owner, I'm [inaudible 00:38:15] is this worth it? I think I got it, hey, these can caregivers can qualify, there is a big benefit, but I think when we run this typical scenario that typically ... Again, you can adjust your numbers up or down, but if a typical home care agency has approximately 50 caregivers, 15 to 20% will qualify. I think what we did here is, we took the difference between the two and it's the average. These are very conservative numbers because what we've seen and heard from those who are using this program in the home care industry is that typically more than 15 to 20% of your caregivers may qualify once you know what to look for. Then also, we used the number $1,800 as the average credit for healthcare. Sabrina just covered that there are a lot of credits worth up, into the $9,000 range.
We did the very conservative math, 50 caregivers, about 17% will qualify, that means you have 9 eligible caregiver employees and on an average, $1.800 tax credit, your agency could earn $16,000 in tax credits in that calendar year. Huge win for home care. What would you do with an extra $16,000? That's up to you. Marketing, do you put it back into the business, do you pay your employees as incentives, do you pay the kid's college tuition for that year? I mean, these are real dollars. What we also have seen is that more than covers the cost of even your software and technology costs. Having this integrated into the platform can cover all of your software and technology costs, plus some of the money.
The average that's actually in this exact scenario with 50 client per month at a $12 client per month ClearCare rate comes out to about $7,000 so it actually more than covers the cost of the software just by having the process be automatic. Sabrina, the next slide that we have here is just walking through kind of the full steps of the process and the paperwork that's required at each step.
Sabrina: Yes. As you can see, it starts off with getting that 8850 on or before the first day of work. The 8850 is submitted, GIS then marries that with a Form 9061 that is required to be sent into the state workforce agency. The agency receives all of the screening information, the signed forms. This agency then evaluates the eligibility of that employee. If an employee marks the box stating that they qualify under one of the categories, the agency does their due diligence to make sure that the circumstance truly is what the employee is claiming. Then once the agency is able to confirm that, then they send a certificate back to GIS. We then marry that with the payroll information, again, which would be the hours worked and the wages in order to calculate that credit. Then we provide monthly reports showing you the updates on what the qualified and certified employees are earning your agency as a federal income tax credit.
Derek: Thanks, so you can see there is a process. There are multiple forms and steps involved but again, we just showed that on a very conservative basis you could earn $16,000 of tax credits. Even though there is a workflow and some paperwork required, we do believe it is worth your while. The process that Sabrina mentioned is down on the bottom, and just reiterating one of the big reasons why we want to cover this today is to not only cover the information on the tax credit but to let you know that we have automated the process today. We've actually made this a 3 step process. For those of you who are customers of ClearCare today. At the time of that caregiver filling out the application, actually there's a link that is specific for your agency. You send that link to the caregiver or have them complete it at the time of hiring, whether it's in your office or whether they do it at home, the caregiver completes that electronic form.
When you press the Submit button, your agency actually gets a yes or no within 2 minutes. There's this entire process that happened, there's still some process that GIS takes care of after that yes/no submission comes back, but you will actually know within 2 minutes if that caregiver ... Electronically, you'll be able to log back in and check the report if the caregiver you submitted, 2 minutes later or 2 minutes previously, qualifies for one of those 10 qualifying categories. If I'm a home care agency owner, I would be using that information to know. Because we know when you screen caregivers, typically what Home Care Pulse reports is that anywhere between 5 and 7% caregiver applicants end up making your final screen. You know, being eligible to be referred or employed by your agency.
If you have 100 caregiver applicants, this electronic link and tool with the 2 minute feedback of if the caregiver qualifies can be a really powerful tool for you to help prioritize the stack of resumes and really, the huge amount of caregivers you're trying to screen just to get one caregiver who will be eligible and really fit for a shift at your agency. Then Sabrina, after this submission takes place, so after we've gone through those first, I guess this is a fourth step at this point, caregiver has completed the information, we have submitted the form within 28 days. Then the state has come back and they're doing some research, what can we expect after that submission takes place?
Sabrina: Excellent, so the state takes somewhere between, and again depending on which state we're talking about, 3 to 6 months to go through this information and issue a certificate. This is the best scenario. Once that WOTC certificate is issued by a workforce agency, then that certifies that individual as qualifying for WOTC, for the WOTC credit. Again, it's a 2 year credit so as long as that person is retained for 2 years, not a full 2 years, but you have up to 2 years to claim that full credit.
Another thing that could happen, the agency could look at the information and issue a denial letter stating that, "Sorry, although the caregiver indicated that they qualified, the state did some investigation and found that they do not qualify." When GIS receives these letters, we look at a caregiver's application to see why they were denied and we follow up with the state to find out if maybe they qualified under a different category, or if the state missed something in their investigation. When we receive a denial letter from the state, GIS takes care of working with the state to make sure that we can have that denial changed to a certification.
The other scenario, maybe that would we receive what's called a needs letter from the state. They might want a copy of a DD 214 for a qualified veteran. Or a resident of a designated community, they may want a copy of their drivers license. GIS does our part to get those copies and send them on to the state for you. Again, these are steps that you don't have to manage, you don't have to worry about. GIS works with ClearCare, we would manage that on our own and take care of that to make sure that ultimately we're getting that WOTC certificate, certification issued, for your caregiver.
Derek: Excellent. Sabrina, you mentioned at the very onset that this is a federal program. Federal programs, we know, every year are subject to the budgeting process and the WOTC program has had a history. A history which has been very repeated and there a few things we want to make sure that they audience knew about that today.
Sabrina: Absolutely. Yes, we've seen over the past 20 years what's called a hiatus, which is a lapse in the law for funding of the WOTC program. Again, historically over the past 20 years, it has always been renewed. We came up against this most recently for 2014. The credit had expired on December 31, 2013. For all of 2014 there was no funding for it. The states were not issuing certificates for WOTC eligible employees hired in the year of 2014. However, employers were still required to submit the forms within the 28 days of hire. At the end of the year, the very last week of 2014, Congress passed the WOTC renewal and President Obama signed it into law. Beginning in January of 2015, the state workforce agencies started going though the paperwork that was submitted during 2014 for those qualified individuals.
We are right back in that position. Currently right now, the workforce agencies are still working on going through the 2014 information that was provided. We at GIS and as a tax credit consulting firm, we send in those forms for our clients. For you, we would be sending in the forms even though it is currently in hiatus so that they can be received by the agencies within that 28 day window, and then we are awaiting renewal. Currently, it is included with the tax reform bill that Congress is working on. I know both Congress and the President are working to have this completed before the year ends. From a government perspective, they are trying to relieve the burden of the IRS coming up with forms and changing their policies annually.
They're also recognizing that it's a burden on the employer. If an employer is counting on these programs to be in effect and yet they're waiting to hear whether it is or isn't, that can affect how they plan and invest their funding. They're trying eliminate that. They're trying to make it a permanent tax program included in the current tax reform bill. There's both one in the House and in the Senate currently. Again, we're hoping to see that come true and it is anticipated based on what we're hearing on Capitol Hill. It will be renewed before the year end and that it will be permanent.
Derek: I think that the net of that is we feel confident the program will continue to be renewed. It's actually currently in discussion to be a permanent part of the budget and permanent program with the IRS, and that everything we've discussed doesn't change here, that home care agencies should continue having the paperwork filed at the time of hiring. They should submit within 28 days and the state agencies who are receiving the paperwork are still receiving those.
Even though the program hasn't technically been extended, what Sabrina mentioned, this same scenario happened last year and then it was approved, I think it was mid to late summer, Sabrina, if I'm not mistaken. We're actually kind of repeating history and this has happened in the past. We're not concerned, there are actually very positive indicators that from a bipartisan standpoint that the program will not only be renewed, but we're hoping will become more a permanent law.
Sabrina: Absolutely. Something else to make you aware is that as these programs are renewed, the forms can change. For example, in March of 2015, the IRS issued Form 8850. GIS had it up and implemented in the electronic screening process within 24 hours of the IRS issuing that, so that's another added benefit that you would have with the ClearCare service, is that your forms would be updated almost immediately. That way, you're sure that there's no lapse in any kind of potential for capturing credits and that all the forms being used are the most current versions.
Derek: Excellent. One of the learning objectives for the group, there's a lot of questions pre-Webinar, what's the cost of the service? There are two ways obviously, that you can do that we've talked about this today. On the left side is if your agency just does this on your own. You file the paperwork, you go through the process. Remember, you're going to have to file for the federal WOTC program and individually for any other state level program. GIS does that with the single submission, but you'll have to file at the federal, local level, and submit that paperwork in manually and do the manual calculations of how much the credit is eligible for with your payroll company. That service is obviously free, right? You can do that, a lot of time, effort, and it frankly it's the reason why that cumbersome process is why less than 10% of home care agencies are even implementing the program today because there's just a lot of steps and a lot of paperwork that's involved.
A standard fee that GIS charges, and there are a few firms out there, so this is a market, right? We want to make sure that if you are a ClearCare customer today or you're thinking about implementing the program with ClearCare, it's completely contingent based so it's only performance. Every single submission that you send through the ClearCare platform, GIS submits at a federal and at the state level, they follow up, they make sure that the right paperwork is completed. They also are making sure, working with the integrated payroll provider that you integrate with ClearCare, that the true and accurate calculation of how much that caregiver should earn, up to the maximum benefit, is actually awarded. GIS is taking care of that and there is a 20% completely contingent, performance based charge that's only applied to awarded credits.
Sabrina: Correct. There's no setup fee, there's no ongoing charge, there is no minimum. It is just based on the credits earned.
Derek: I've seen a lot of questions come in. Do I have to charge per caregiver that I submit? Can I submit as many as I want? You can submit as many as you want. Actually, this fee structure, the reason it made a lot of sense to ClearCare when we started talking with GIS about this is it's performance based. They're going to go after every single submission that you send in.
It's kind of like, not kind of, mechanically it's kind of like a collection company. When you owe a creditor, when you're a debtor and you owe a creditor money, that creditor calls you, calls you, calls you. GIS is kind of acting like your creditor on your behalf but to find, to get these tax credits. They're not contacting your caregivers directly, they're just submitting the paperwork to the states, making sure that paperwork comes back and that you are eligible and that you receive the maximum benefit. I think we have one more slide here, just on downstream after that submission takes place through ClearCare, some of the things that GIS is handling on your behalf.
Sabrina: Excellent. Yes, we do screen, as you mentioned, Derek, we screen every applicant for both the WOTC, any other state and local credits. I know we're not touching on that today. We can circle back with individuals who have questions on the state and local credits. Once that caregiver is hired and the forms are sent, then we provide you feedback. Again, monthly reports on where they're hitting the hour and wage benchmarks. Then, we house all of that information for audit purposes. Just again, keep in contact with all the agencies to make sure that you are aware of the credits being earned based on the caregivers that you are hiring.
This way, all of the agencies, the cumbersome hassle of getting a form filled out, again mailing in a form, making sure the state receives it, if the state has questions, you don't have to answer any of this stuff. This is all the paperwork and bureaucracy that we relieve from your plate. This allows you, like Derek has mentioned, to handle your day to day business. We handle all of the labor, back and forth paperwork, to manage your program.
Derek: Excellent, sounds great. Thank you, Sabrina. With that, we'll just do a quick recap. We have a lot of questions so keep typing those in. Looks like we may go a few minutes over our one hour but I know Heather, myself, and Sabrina, actually I'll check with Sabrina. Sabrina, do you have a few minutes after the hour to handle a few Q&A?
Derek: Excellent, okay. Just to recap. Very simple to take advantage of this credit. Whether you're using ClearCare where it's automated or you're using pen and paper today or on another system, this is free money. It's a tax credit that's available for something you're already doing today. It can pay for a lot of costs, cover a lot of costs for your agency for something you're already doing. Make sure that you're aware, your staff is aware, your HR, your manager, your executive director, whoever is involved at your office that they're aware. That you're making sure that one way or another, through ClearCare or paper, that you're filing for every single caregiver that's hired.
Then we had a few questions too about the automatic process with ClearCare. We'll put up a link here, actually right here, at the bottom. There's a lot of questions on how is the program automated with ClearCare and what does that look like. We have a Web page that's dedicated to that and we have some account managers who can actually demo that product for you. With that, I think we're going to turn it over Heather to help moderate some of the Q&A.
Heather: Yeah, thank you. Great Q&A, lots of really good questions out there. Just going to run through a few that I've flagged and we'll get to as many of these as we can. Sabrina, can nonprofits apply?
Sabrina: Yes. Nonprofits would be able to claim this credit against their payroll tax credit, or I'm sorry, their payroll tax liability. You have your [Cuda 00:58:25] and your Social Security taxes that you pay for your caregivers. The WOTC credit can be applied against that liability, since a nonprofit does not have federal income tax liability.
Heather: That makes sense. Then what about current employees? There are a few questions about this. Can they qualify even if that agency has never participated in WOTC before, or is it only for new hires?
Sabrina: This is a new hire program. However, you could screen for somebody that was hired within the past 3 weeks. Again, the requirement by the government is to submit that completed 8850 within 28 days of hire, so it eliminates the potential to go back in what we would call a retro project. Now, from the state and local perspective, there may be some other credits that those current employees would qualify for, but that's a whole different subject. From a WOTC perspective, they would not be qualified. Again, that goes to that 28 day window that is required by the government.
Heather: Great, and then a followup question to that. Is that Form 8850, can that be completed as part of the application process or does it need to come after?
Sabrina: It can absolutely be completed as part of the application process. In fact, we encourage it in the application versus onboarding.
Heather: Okay, cool. Then as far as the qualifying criteria, how do I find out where the Designated Communities are in my area?
Sabrina: That is available on the HUD Web site, the Department of Housing and Urban Development. For anybody using the ClearCare system it would just be provided to you. We would be able to provide that to you manually if it were not, or if a caregiver completes the screening then again, as we mentioned earlier, it would be provided to you within 2 minutes of form completion.
Heather: I'd go for the 2 minutes. Sorry. What is the age limit for summer youth workers, and can it be a high school student?
Sabrina: It absolutely can. Summer youth is an individual that is either 16 or 17 years old and works for an employer between May 1 and September 15 and lives within an Empowerment Zone. Again, that goes into one of those areas designated by the Department of Housing and Urban Development. Again, using the ClearCare product integrated with GIS, if an individual is 16 or 17, completes the screening, they live within the zone, we notify you that as long as they're working for you between May 1 and September 15, they qualify for the summer youth category.
Heather: Then another question about duration. Per an employee, what if that employee only works, they meet their minimum requirement, they work 120 hours within that 2 year period but there are no, they end up leaving after a year. Can we still recognize the tax credits for that employee from the time that they were employed?
Sabrina: Yes. As long as they meet that 120 hour minimum requirement, then yes, they do not need to be retained for a full 2 years. The 2 year window is the window in which they can achieve the maximum value of their category. You might find an individual, so for their example in that instance they worked their 120 hours and then that's it. They would qualify for that credit up to 120 hours. If you have an individual, let's say that meets, they max out on their credit within 6 months but you retain them for 2 years. After that 6 month mark, that's your maximum credit value so it works both ways.
Heather: That makes sense. There were a lot of clarifying questions about the hours and the time frame in which they needed to be completed. I know you've talked about it already but just to be ... Where the minimum and maximum, that just needs to happen at some point within that 2 year window of the date that they were hired, correct? It doesn't have to be within the first year, or a calendar year, or a month, or anything like that. It's within that entire 2 year time frame, right?
Heather: Cool. Then, does overtime get looked at any differently? Does it affect the 25 and 40% of their wage, or is it based on their base wage only?
Sabrina: The overtime hours would still be counted as regular hours, and the wages associated with that would increase the amount of the credit amount. It would all be looked at as regular hours. From an HR perspective and how you're calculating the pay, they change, from a WOTC tax credit perspective there is no difference, they're lumped into one bucket.
Heather: Then kind of a different area, just around the qualifications. Can a single caregiver earn an agency tax credits in more than one category?
Sabrina: Good question. No. What they would do is evaluate the categories in which the caregiver would qualify. Let's say that you have a caregiver that would qualify as an unemployed veteran with the maximum value of $9,600 and they also qualify as a designated community resident, which has the maximum value of $2,400. Looking at the 2 categories in which they qualify for, GIS would automatically file for the greater value. We would select that they would qualify under the $9,600 category of the unemployed veteran. There's only category that an employee or caregiver could qualify for credit, but GIS looks at which category they may qualify for and we always select the highest value when we're filing for a certificate.
Derek: I'll just point out that that's another huge value that GIS brings, where you have someone who is very performance and kind of they ... Their team, Sabrina's team kind of eats what they kill, if you will. They're going to be looking at if that caregiver switches categories. If all of a sudden they bump up into that veteran who is unemployed for more than 6 months, and they jump up to a credit on the bubble, that's sort of when you have that team on your side, all you have to do is submit that paperwork at that point. They're going to take care of making sure you not only get the credit, but that you get the best category, but you get the maximum benefits.
Heather: Cool. I've got a scenario for you, Sabrina. What if you have a person who used to be an employee and then comes back to work for us? Is there any criteria that would relate to whether they can qualify or not? Like it has to be a year or something like that where they would be allowed to be considered for WOTC? Or is it employee hired for the first time only, ever?
Sabrina: Yes, the latter. Unfortunately, any rehire will not qualify for a WOTC credit, so it would have to be a brand new employee. Regardless of how long it's been since they worked for you.
Derek: Awesome. I have one question in here that came up a couple times. There was a question about, this is a great question by Cameron, is the WOTC tax credit a refundable tax credit or nonrefundable tax credit? The difference obviously is refundable will give you money even if you don't owe taxes.
Sabrina: Excellent question. It is a nonrefundable, but it has a 20 year carry forward. If you have a huge amount of credit and it eats up your entire liability for the year, then that credit would carry forward to the next year's liability, and it can be applied for up to 20 years going forward.
Derek: Wow, incredible.
Sabrina: It also has a 1 year carry back, so you could amend your prior year return and that would be refunded back to you. The 20 year carry forward would apply for most situations.
Derek: I think a footnote on that is, there are a couple questions in here about what is the turnaround time to determine eligibility? We have covered that if you're using ClearCare, that's integrated with GIS and you'll know within 2 minutes. However, even at that, you'll know if the caregiver is eligible but GIS then has to submit the paperwork to the states. That process can take 3 to 6 months. What happens if you start filing all of those [inaudible 01:08:34] if you start filing and you start doing a lot of hiring in the new year?
Well those caregivers, you may not hear back from the state by the time that you complete your taxes. That's why that 20 year carry forward is very generous, but it also will help you to make sure that if you file that hey, maybe if those caregivers that make it on this year so they'll be eligible next year for your taxes, and there are states like Nevada that I think right now have like a 4 or a 5 year turnaround period. I don't know if we have anyone on from Nevada on the phone here, but you're going to need at least a multi-year carry forward period. They're trying to clean up some of this in some states. That is not typical. We just are aware that in a few states, particularly Nevada kind of sticks out, but that carry forward will be very helpful.
Sabrina: Something else to keep in mind is that the credit can be claimed when the certificate is received. Let's say that you hired somebody, let's say that you had been participating in the program and a certificate from a 2013 hire doesn't come through until 2015. You can claim that credit in 2015 for the wages paid in 2013 because the government recognizes that you didn't receive that certificate until 2015. They don't want an employer to go back and keep amending because again, the agencies are going to be issuing certificates randomly throughout the year. You're going to have a large influx of certificates over time, and so you just claim the credit as you receive the certificate. Again, it eliminates the need to go back and amend anything. Again, that's the reason why we provide you with monthly reports, so you can keep up to date and working on your provision for your federal income tax statement.
Derek: Excellent, a couple more questions here and then of course, Heather, myself, and Sabrina can be available after the Webinar. We'll send out our information. Sabrina, for the agencies who are using ClearCare today, since this tax credit program is automated, how is the form signed by an employee if they are submitting electronically? That question comes from Tonya.
Sabrina: Excellent question. That's a demonstration that we could schedule for another call. We do have a full online process with screening for eligibility. There is a screen where the caregiver reviews the information that they have provided and then they check a box and type in their name with the date. That becomes the electronic signature of that caregiver. From the government perspective, once they click Submit, GIS time stamps that signature and provides that on the 8850 when we submit the form. It's actually an electronic signature captured when the caregiver completes the screening online and enters in their name with the date.
Derek: Excellent. A couple of lightning round questions here. One came by Ruth Anne. I think you answered it already, but is it 28 calendar days?
Sabrina: Yes. 28 calendar days from the date of hire.
Derek: Excellent. Knowing that caregivers work for multiple agencies, what if the caregivers works for several agencies? Who gets the credit?
Sabrina: The agency that files the form correctly. In essence, if they're all different agencies and the caregiver qualifies for a category for each agency, then all agencies would be able to claim the credit.
Derek: Got it. We already answered the question, let's say if we retained for one whole year? Nope, as long as they meet the criteria.
Sabrina: The 120 hour benchmark, correct.
Derek: Right. And then there was a [inaudible 01:12:53]. I think a lot of these are just kind of duplicate questions. With that, maybe we'll turn that over to Sabrina just for any closing comments and then we'll let Heather close the Webinar.
Sabrina: Thank you. Again, this is a federal program to help reduce your tax liability. Again, we've seen it reduce our clients' effective tax rate. It's the one last program that can help save your company hard dollars. The intent of the program is to hire individuals with various barriers to the workforce. It also is hopefully to incentivize you to, as you hire these individuals, use that money to reinvest and grow and hire more individuals. Again, I just appreciate everybody's time. If you have any questions about the WOTC program or any other state and local credit, my information will be made available. I'm very happy to provide you whatever answers I can.
Heather: That's fantastic, Sabrina. Thank you so much, it was a great presentation. Derek, you too, fantastic. To the audience, you guys asked some phenomenal questions. I'm impressed. I actually learned quite a bit here myself today. A lot of you did ask questions about how to get started, what's the pricing. They're very specific product questions. The first thing to do is really just go to that link that's on your screen, clearcareonline.com/care-guard. You can sign up for a demo there, and we have representatives who can explain all of that to you. Again, we will provide our contact information in the followup, along with links to the reporting and some other really cool employment screening resources that we think you will find really helpful. Thanks again to your audience, our speakers, and we look forward to seeing you on our next Webinar. Thanks a lot.