Work Opportunity Tax Credit (WOTC)
The legislative authority for the WOTC program, which expired on December 31, 2014, has been extended. On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that extends and modifies the WOTC Program (Section 142) and the Empowerment Zones (EZs) (Section 171). In summary, the PATH Act retroactively reauthorizes the following WOTC program target groups for a five-year period, from January 1, 2015 to December 31, 2019:
- A qualified IV-A (TANF) recipient
- A qualified veteran
- A qualified ex-felon
- A designated community resident
- A vocational rehabilitation referral
- A qualified summer youth employee
- A qualified supplemental nutrition assistance program (SNAP) benefits recipient
- A qualified SSI recipient
- A long-term family assistance (TANF) recipient
The Act also provides for an extension of the Empowerment Zones for a two-year period, from December 31, 2015 to December 31, 2016.
The Act introduces a new target group, Qualified Long-term Unemployment Recipients, for new hires that begin to work for an employer on or after January 1, 2016 through December 31, 2019.
Transitional Relief Period for 2015 and 2016 New Hire Certification Requests
The Internal Revenue Service (IRS) published a notice of transition relief for WOTC, meaning employers have additional time to submit their request for 2015 WOTC certification. The relief period allows employers to submit WOTC certification requests for those who began work on or after January 1, 2015, and on or before August 31, 2016, will be considered to have satisfied the 28 Calendar day deadline if the employer submits the IRS Form 8850 to the State WOTC Coordinator to request certification no later than September 29, 2016 postmark.
The Internal Revenue Service (IRS) also published a notice of transition relief for the new WOTC target group Long-term Unemployed (LTU) for hires who begins work for that employer on or after January 1, 2016 and before August 31, 2016, and will be considered to have satisfied the 28 calendar day requirement as long as the employer submits the completed IRS 8850 Form to the State WOTC Coordinator to request certification no later than a September 29, 2016 postmark.