State works to reduce huge backlog for key business tax credit

HONOLULU (HawaiiNewsNow) – A tax credit meant to encourage employers to hire marginalized workers is getting bogged down by a state backlog numbering in the tens of thousands.

Officials tell HNN they are working at getting those numbers down.

The Federal Work Opportunity Tax Credit goes to businesses that hire people from groups that the IRS describes as having “persistent barriers to employment.”

These include youth looking for summer jobs, veterans seeking new careers after serving and ex-felons.

For employers to be eligible, they need to get a certification from the state.

The state’s Department of Labor and Industrial Relations said currently there are 36,000 submissions backlogged.

“It’s pretty common at the state. Everyone is short hand in all departments, said state Sen. Samantha DeCorte (R-Ko Olina, Nanakuli, Maili, Waianae, Makaha, Makua).

“We have youth in our community that don’t necessary want to go to college after they graduate (from high school), so if there is a way that we can incentivize employers to hire youth that don’t necessarily have the work experience, this could be a great thing for our communities.”

Earlier this week, HNN asked the state Labor Department what’s being done to address the backlog.

While no one was available for an on-camera interview, a statement from the department read:

“The State is working to improve the information technology systems used to review tax credit applications. The goal is to streamline the process, enabling faster and more efficient verification of applicants’ eligibility. The DLIR is confident that, as the automated process is implemented and refined across multiple agencies, the backlog will be significantly reduced”

The Federal Work Opportunity Tax Credit has been extended 11 times since it was started in 1996.

The state also points out that the backlogs are happening across the country.

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