Software helps operators manage tax-credit program in-house

Nation's Restaurant News, Sept 16, 1996 by Alan Liddle

Many restaurants companies were pleased when Congress recently enacted the Work Opportunity Tax Credit -- a new version of the long-running Targeted Jobs Tax Credit program, which died in 1994.

In simple terms WOTC offers employers tax credits of up to 35 percent of first-year wages -- or a maximum of $2,100 per eligible employee -- as an incentive to hire members of targeted low-income groups. Among them are food-stamp recipients, people in families receiving Aid for Dependent Children, "high-risk youth" and people who live in government-designated "empowerment zones" and enterprise communities."

Under WOTC targeted employees must stay on the job at least 400 hours if the employer it to receive the tax credit. However, the WOTC's one-year authorizations -- from Oct. 1, 1996, through Sept. 30, 1997 -- has some operations wondering if they should bother to gear up to administer the program in-house or use an outside service provider.

Wendy's International Inc. of Dublin, Ohio, participated in the old TJTC program for 12 years -- claiming tax credits amounting to millions of dollars for 4,300 of the 57,000 people it hired in 1992. It was administering TJTC in-house with five staffers and a specialized software package from Shipman, Maison & Associated of Chicago when that federal program ended.

However, Wendy's income-tax audit analyst Marilyn Dawson said the quick-service chain has reservation about in-house management of WOTC because the company would have to lay off anyone it hires in connection with the program if Congress doesn't authorizes a continuation.

Outside contract administration of federal and state targeted jobs tax credit programs are fairly common, including Management Insights Inc. of Dallas; McKenzie-Chase Management of Bellevue, Wash.; Shipman, Maison & Associates; The Alameda Co. of Alameda, Calif.; and SMS Management Services of Florence, S.C. For those companies that want to try to save money through in-house administration helped along by a specialized software package, Shipman, Maison & Associates appears to be the only game in town.

The company's signature software program, Target, is intended for larger, multiunit operations, and the basic package starts at about $10,000, company sources said. They said a new "lite" version of Target, which is intended for operators with up to five outlets, should be available by the Oct. 1 start of WOTC and should sell for about $1,000.

Target is a DOS-based application for IBM-compatible personal computers and networks. It will run as a DOS window under the Window under the Windows graphical user interface.

The program includes a list of questions for new hires that quickly help to determine if he or she is from a targeted group, outlines the steps needed to get eligible workers certified as such by appropriate agencies, tracks the hours of the targeted workers for the purpose of computing the credit and helps compile necessary documentation and reports. In cases where administrative procedures differ from state to state, Target notes the differences through screen prompts or by printing out state-appropriate forms, letters or reports.

Dawson of Wendy's said that when she managed TJTC in-house using Target, "we handled record keeping and new-hire interviews at corporate, but we sent [eligibility-verification] paper work to the unit manager, who had to follow up and make sure it was filled out and mailed back." She characterized the software program as "user friendly."

Some Shipman, Maison & Associates customers opt to use Target in-house while contracting with the company to handle employees eligibility screening interviews and other duties.