How the WOTC Helps Hotels ‘Keep House’ on Rising Costs

Written by Corporate Tax Incentives. Updated May 20, 2019.

WOTC_HospitalityThe Days Inn hotel promotes its multi-national chain with a distinguishable rising sun, and until recently, the tagline: The Best Value Under the Sun. The slogan intended to succinctly convey the business’ value proposition dedicated to “providing value-conscious travelers with the best combination of warm hospitality and integrity for their money.”

Though the Days Inn opted for a rather direct marketing campaign with that phrase, most hotels in the industry do the same, striving to deliver the best value for their customers’ experience and spending margin. But with escalating operating costs - incurred from such factors as swelling minimum wage rates and high employee turnover – hotels across the country suffer an increasing challenge to maintain an acceptable level of service without passing the expense on their customers.

Employment Incentives: Achieving Goals with an Outsourced Tax Expert

Businesses that feel cost-cutting bedbugs tugging at their budget often resort immediately to workforce reductions, and cutbacks or elimination of services. But hotels heavily rely on staff and services for a complete customer experience. Their services and staff are their hospitality. To curtail either one risks the entire business by way of consumer loyalty and satisfaction. And their customers are their business.

Fresh Sheets of Savings

The good news? Hotels are not forced to lie in this bed made of traditional cost-reduction methods. A cart-load of fresh government tax credit and incentive programs are within reach to help offset income tax liability. Hotels can apply the money saved on tax liability towards service-affecting necessities such as staff payroll and training for new employees.

The federal Work Opportunity Tax Credit (WOTC) stands as one of the most popular and rewarding. The WOTC offers $1,200 to $9,600 to companies for each employee hired within 14 target groups. With designated categories, the program incentivizes employers to hire individuals who often bear roadblocks to employment, such as veterans with service-related disabilities and the long-term unemployed.

The exact credit amount is calculated based on the qualified target group, a percentage of wages, and the number of hours worked (at least 120 hours in the first year of employment).

Another perk: the WOTC benefit can offset the employer’s income tax liability and counteract the company’s Alternative Minimum Tax (AMT).

A Buffet of Tax-Saving Ways

Also, some states offer tax incentives that “piggyback” off the WOTC, meaning there is overlapping qualifying criteria, but the credit can be used to offset state income tax liability rather than federal.  Since they apply the same qualifying criteria as the WOTC, a company can generate credits for both the federal and state programs without any additional effort.

Additionally, several states offer employment tax incentives for job creation and employee retention. Typically, these are income-based, but a few states permit employers to offset payroll withholding tax with the credits. The programs often require employers to maintain a specified number of or prove a net increase in full-time jobs year to year.

Savings in Training

With high turnover in the hotel sector, state training incentives pose another viable corridor to buffering their budget. Many states present possibilities in the form of grants, refunds, or credits in exchange for qualified training for their employees. A few examples include the California Employment Training Panel (reimbursement program), the Georgia Retraining Tax Credit (tax credit program), and the Florida FLEX (training grant) program.

What Room Service Won’t Deliver

As hotels grapple with preserving exceptional service and cost-appropriate accommodations, state and federal tax program grants them a feasible means to reallocate vital funds.

But tax credits and incentives are not like room service – the government will not deliver them straight to a hotel’s door. The businesses must know where to look and how to capture the credits accurately. For this, they can call upon a tax specialist. A tax expert can be their concierge for all federal and state employment and training incentives to ensure the company secures all available credit and savings potential.



Elevate Your Tax Savings with WOTC

Topics: Employment Incentives, WOTC

Corporate Tax Incentives

Written by Corporate Tax Incentives

CTI is a tax incentives specialty firm that secures greater tax credits for businesses with our proven project methodology and unparalleled personalized service. For almost 20 years, our elite tax professionals have proactively engaged clients to deliver unmatched value with transparency and efficiency thorough secure in-house software, comprehensive audit-ready deliverables, and 24x7 access to real-time dashboards. We are tax consultancy experts passionate about maximizing credits and incentives for powering the success of your business.