Work Opportunity Tax Credit (WOTC) Retro Guidance and Transition Relief Update

Work Opportunity Tax Credit (WOTC) Retro Guidance and Transition Relief Update

The week of March 8, the IRS released Work Opportunity Tax Credit (WOTC) Guidance and Transition Relief. The notice details the transition relief, commonly referred to as “retro look back” for WOTC to cover the hiatus period in 2015 and the extended delay for 2016. If you have never done WOTC before, you now have an opportunity to recapture and claim WOTC credits for all hires made from January 1, 2015, until May 31, 2016. Any credits identified can be claimed and used immediately. If you currently participate in the WOTC program, now is a great opportunity to review your metrics and see if you are maximizing the available credit

The details that your business needs to know are as follows:

  • For those hired between 1/1/15 and 5/31/16, except the new Long Term Unemployed, the IRS Form 8850 filing timeline requirements have been extended to allow forms to be submitted by 6/29/16
  • For the new Long Term Unemployed hired between 1/1/16 and 5/31/16, the filing requirement for IRS Form 8850 also will be met if submitted by 6/29/16.
  • For the new Long Term Unemployed category, they will be issuing a new IRS Form 8850 and ETA Forms 9061 and 9062 to allow for submittal of that category.
  • Important items to note:
    • It is anticipated that the WOTC forms will include a requirement that the individual signing the form attest that he or she meets the requirements to be a qualified Long Term Unemployed recipient and
    • A requirement that the individual attest to the period(s) during which the individual was unemployed and the period the individual received unemployment compensation.
    • Long-term unemployed is an individual who on the day before the individual begins work for the employer, or, if earlier, the day the individual completes the IRS Form 8850 is in a period of unemployment that is:
      • Not less than 27 consecutive weeks, &
      • Includes a period (which may be less than 27 weeks) in which the individual received unemployment compensation under State or Federal Law.

HIREtech systems are fully updated and compliant with all WOTC regulations and will continue to identify, process and calculate WOTC credits for all categories available, including the new Long Term Unemployed category. HIREtech government relations team is working closely with each state to ensure that our clients’ forms are processed accurately and expeditiously to maximize WOTC credit capture. For more information about how the WOTC credit can impact your business contact us!