The Military Incentive Program (MIP) Act of 1991 created an employer tax incentive program designed to promote the employment of West Virginia veterans, reservists and National Guard members.
Korean Conflict and Vietnam Era veterans who are economically disadvantaged and all disabled veterans are targeted by this program. Also included in the act are unemployed members of the National Guard and Reserves.
Through the creation of this program, West Virginia recognizes that these individuals are important people. The sacrifices made by them merit their preferential treatment in both the public and private sectors. By providing tax credits to private sector employers who employ these veterans, West Virginia publicly recognizes their service to the nation and promotes a preference for hiring in the private sector.
How much tax credit can an employer receive?
Tax credits are based on a percentage of the first $5000 in wages paid to the individual after one continuous year of employment. Employers may claim a 30 percent tax credit for hiring economically disadvantaged Korean Conflict and Vietnam Era veterans, 25 percent for unemployed members of the Guard and Reserves, or may claim a credit ranging from 10 to 100 percent for disabled veterans. The actual percentage is equal to the percent of service connected disability compensable by the Veterans Administration for disabled veterans.
For example, an employer who hires an economically disadvantaged Korean Conflict veteran may claim a tax credit equal to 30 percent of the first $5000 in wages paid to the veteran after one year of employment, or a maximum of $1500.
If, however, the employer had hired a 100 percent disabled veteran, the maximum tax credit would be $5000.
The hiring of an unemployed National Guard or Reserve member would bring a maximum of $1250 to the employer.
To which taxes does this credit apply?
The MIP credit may be applied against the personal income tax liability of proprietorship or partnership employers, or the corporate net income taxes by corporations.
Are there any limitations on using the tax credit?
Yes. An employer can only claim the credit against taxes which the employer is required to pay to the State of West Virginia. The tax credit could not be applied against West Virginia unemployment compensation taxes. The taxes may not be assigned. The taxes may not exceed the employer's total tax liability with respect to the specific tax against which the tax credit is required to be applied.
How long must the individual work before the credit applies?
One year. The employer cannot claim the tax credit until the individual has been employed for one continuous year, unless the individual voluntarily leaves the job, becomes totally disabled and cannot work, or is terminated for good cause shown. If one of these conditions exists, the employer may be eligible to claim a partial tax credit.
Does the program require time-consuming paperwork?
No! This program is designed to eliminate red tape. The individual is responsible for presenting a voucher of eligibility to prospective employers. Employers are responsible for:
(1) insuring the voucher has been certified by the local WorkForce West Virginia office;
(2) completing the Employer Declaration with such basic information as date employed, job title, wages paid, employer tax number and other identifying information, and signing and returning the voucher within five working days of hire date to the Job Service office which issued the voucher;
(3) after receiving the Employer Certificate from Job Service, and after the individual has been employed on year, claiming the tax credit at the time income taxes are filed.
