Bulletin: WOTC Transition Relief Guidance Released
The Work Opportunity Tax Credit (WOTC) program had been in hiatus since Jan 1, 2015. On December 18, 2015 the President signed into law the Protecting Americans From Tax Hikes Act of 2015 that extends the Work Opportunity Tax Credit (WOTC) retroactively for hires from January 1, 2015 through December 31, 2019. The legislation also added a new target group to WOTC for long-term recipients of unemployment benefits.
While many employers may have continued to screen applicants and submit 8850s for certification during that time period, some employers either did not screen applicants or did not submit eligible 8850s to the state workforce agencies for certification. For many employers, it was difficult to continue to invest time and resources into a screening process without the certainty of the program being renewed.
The IRS has issued Notice 2016-22 that allows for “transition relief” for employers to file WOTC form 8850 for any hires (other than the newly added target group for qualified long-term unemployment recipients, for employees qualifying for that category, transitional relief period is for hires from January 1, 2016 through May 31, 2016) made between Jan 1, 2015 and May 31, 2016. The IRS is forgoing the normal 28-day filing deadline for WOTC to allow employers to capture any missed tax credits that may have gone unclaimed while the program was uncertain. Notice 2016-22 gives specific relief for two provisions of the WOTC program. First, it allows employers to retroactively screen applicants hired during the applicable time period. Second, it allows employers to satisfy the 28 day timeline for submitting the 8850 for certification so long as the application is made by June 29, 2016.
WOTC certification requests for all hires made during the transition period can be filed until June 29, 2016 Equifax offers eSignature on both our phone-in screening system and online screening application. Any individuals who are identified as possibly credit-eligible can now electronically sign a fully compliant tax credit screening without the need for paper forms to be processed or managed, which may lead to a more efficient and valuable process.
Contact us to receive more information on how you may benefit from this guidance.
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