A recent story arose from the gulf coast oil-spill disaster regarding the hiring of prison labor by British Petroleum, to clean up areas damaged by the ill-fated Deep Water Horizon.  Louisiana has the dubious distinction of having the largest prison population of any American state, about 39,000.  The state only has facilities to house half of that population, the other half are housed by private, for-profit penal institutions.  The prisoners are made available as free, or very cheap labor, by work release centers and parish jails.

A hold-over from a George W. Bush law extends lucrative tax relief for the hiring of prisoners that are eligible for work release.  Companies can earn a $2400 per-hire tax credit, and get back up to 40% of the wages they pay the “high-risk” workers.  The prisoners that qualify, through good behavior and obedience, are called Trustees.  They can be eligible for work-release during the final three years of their sentence.

Coastal residents, many who were severely impacted by the spill, expressed outrage at local meetings.  The sight of laborers wearing red pants and white t-shirts with the words “Prison Labor” on them went over like a lead balloon.  With livelihoods suddenly disappearing and a huge burden to the local economies, these residents felt they should have first dibs on any available work.  The prison-supplied cleanup workers lost the uniforms almost overnight, but everyone still knows who they are.  British Petroleum isn’t saying anything, but reporter Abe Louise Young, from Axis of Logic, witnessed an unmarked van full of workers on their way back to a parish jail facility.

Many states also have tax credits available for hiring inmates, or other individuals considered to be risky.  Take a look through your states applicable laws to see whether you or your business can obtain tax relief in this way.

Disclaimer:  The information contained in this article is in no way intended for use as legal tax advice.  No assumption should be made that a tax attorney, enrolled agent or former IRS employee was involved in the creation of any content herein.  Advice on personal or business tax matters can be obtained by contacting Advanced Tax Help at (800) 970-8704, or by logging on to www.advancedtaxhelp.com