Work Opportunity Tax Credit (WOTC)
Federal Authorization and Timeframes
The Work Opportunity Tax Credit (WOTC) Program was created by the Small Business Job Protection Act of 1996 (P.L. 104-188)--Act of 1996--and the Welfare-to-Work Tax Credit (WtWTC) was created by the Taxpayer Relief Act of 1997 (P.L.105-34)--Act of 1997. These two tax credits were reauthorized by the Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law106-170)--Act of 1999--through December 31, 2001. On December 31, 2001, the credits' legislative authority expired.
On March 9, 2002, the President signed into law the Job Creation and Worker Assistance Act of 2002--the Act--(Public Law 107-147) reauthorizing and extending the WOTC and WtWTC for 24 months, under Sections 51 and 51A of the Internal Revenue Code (IRC).
Over the next five years the WOTC program continued to be reauthorized, and each reauthorization expanded the program to include more and more target groups. It also eliminated some items such as the earnings test or income guidelines for ex-felons and also increased the filing deadline from their start date of 21 calendar day postmark deadline to the current 28 calendar days postmark deadline.
The Small Business and Work Opportunity Tax Act of 2007 modifications included renaming the Target Group D. High Risk Youth to what is now known as Target Group 5. Designated Community Residents and increased the age limits from 18 but not yet 25 years of age to 18 but not yet 40 years of age by their hire date. This new act also created the new disabled veteran's sub-group that are for those veterans who have a Service-Connected Disability and those veterans that have been unemployed for at least 4 weeks. This lead to an uninterrupted implementation of all the veterans target groups through the VOW Act up to December 31, 2013.
On December 19, 2014 the President signed into law the Tax Increase Prevention Act of 2014, which reauthorized the WOTC program and the Empowerment Zones, without changes through December 31, 2014. This only covered the 2013 and 2014 calendar year leaving the WOTC program in a state of hiatus until December 18, 2015 when President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that extends and modifies the WOTC program and the Empowerment Zones until December 31, 2019. With the new PATH Act an additional target group of 10. Long Term Unemployed (LTU) was implemented. This brings the total number of target groups to 15 targeted groups of individuals with some type of barrier to employment.