Work Opportunity Tax Credit Guidance and Transition Relief

In the March 2016 Tax Update, we wrote about the Work Opportunity Tax Credit (WOTC), which the Protecting Americans from Tax Hikes (PATH) Act extended retroactively from January 1, 2015 through December 31, 2019. It also expanded the “targeted groups” of individuals for whom employers may claim the credit to include “qualified long-term unemployment recipients.”

  • As noted in the March article, to claim the WOTC employers must:
  • Obtain certification from the “designated local agency” (DLA) on or before the day the individual begins work; or

Complete a pre-screening notice on or before the day the individual is offered employment and submit the notice to the DLA to request certification not later than 28 days after the individual begins work.

Because the WOTC was extended retroactively for members of targeted groups and the PATH Act created a new targeted group, employers need additional time to comply with the requirements. Therefore, the Treasury Department and the IRS have provided employers with additional time to file the necessary form (IRS Form 8850) with the DLAs.

For targeted groups other than qualified long-term unemployment recipients hired between January 1, 2015 and May 31, 2016, the employer will be considered to have satisfied requirements of the Code if it submits the completed IRS Form 8850 to the DLA to request certification no later than June 29, 2016.

Employers that hire a member of the expanded targeted group, a long-term unemployment recipient who begins work on or after January 1, 2016 and on or before May 31, 2016, will be considered to have satisfied requirements of the Code if they submit the completed IRS Form 8850 to the DLA to request certification no later than June 29, 2016.

Employers who hire a member any WOTC-targeted group on or after June 1, 2016 are not eligible for transition relief. For more detailed information on qualifications of all WOTC-targeted groups and other information, please refer to the March 2016 Tax Update.

http://cdn.e2ma.net/userdata/images/spacer.gif For more information about Miller Cooper’s monthly Tax Update, contact Ricky Max, CPA, Principal or Avrum Katz, CPA, Principal.

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