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Extended Deadlines for the Work Opportunity Tax Credit

Saul Brenner, CPA, J.D., LL.M. 04.14.2016 | eVisor

The IRS has extended the time for employers to claim the work opportunity tax credit (WOTC) to May 31, 2016, for employees hired from January 1, 2015.  For employees hired from January 1, 2016, the deadline is also extended to May 31, 2016, under a new category for the long-term unemployed established under the PATH Act1.

Employers qualify for the credit by filing Form 8850 which is usually due no later than 28 days after an employee begins work. Timely filing is essential to claiming the WOTC. When the credit was extended retroactively to the beginning of 2015 by PATH Act, it was uncertain how employers who hired eligible employees in 2015 would be able to file the form in a timely way and certify those employees. 

IRS Notice 2016-22 clears up the uncertainty. Under the notice, employers hiring members of a targeted group -except the long-term unemployed - on or after January 1, 2015 and before May 31, 2016, will be considered to have filed Form 8850 in a timely way.  The form must be filed with the designated local agency (DLA) by June 29, 2016.

The notice also extends the time to obtain the certification for qualified long-term unemployment recipients - the new category created under the PATH Act.  A qualified long-term unemployment recipient is anyone certified by a DLA as being unemployed for not less than 27 consecutive weeks and includes a period where the individual was receiving unemployment compensation under state or federal law.

Long-term unemployed employees only qualify for the credit if they are hired beginning January 1, 2016, through Dec. 31, 2019. For those who began work on or after January 1, 2016, and on or before May 31, 2016, the employer has until June 29, 2016, to submit the completed Form 8850 to the DLA to request certification.

For employees hired after May 31, 2016, the IRS has not extended the due date of Form 8850 which must still be filed within 28 days.

1 Protecting Americans from Tax Hikes Act of 2015. Also see IRS Notice 2016-22.

Questions? Contact your advisor or Saul Brenner, CPA, J.D., LL.M. Berdon LLP, New York Accountant.  



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