Work Opportunity Tax Credit

 

Greetings from the Seth and Alexander Team,

New Release from the IRS:

The Internal Revenue Service announced it is providing transition relief to certain employers claiming the Work Opportunity Tax Credit (WOTC).

What is WOTC?

The WOTC is a federal income tax credit available to employers that hire certified members of certain groups specified in the Internal Revenue Code who face significant barriers to employment, including Designated Community Residents or Qualified Summer Youth Employees. 

Notice 2021 - 43 

The IRS today issued Notice 2021 - 43, which extends the 28-day deadline for employers to submit a request to a designated local agency (DLA) to certify that an employee hired between January 1 and October 8 of this year is a Designated Community Resident or a Qualified Summer Youth Employee. Te be certified as a Designated Community Resident or a Qualified Summer Youth Employee under the WOTC, an employee must have a principal place of residence with an Empowerment Zone where the employee continuously resides.

 

Form 8850

The transition relief under this notice allows employers to submit Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) for these employees until November 8, 2021.

 

Guidance for the Employer

The notice also provides guidance to certain employers who submitted a Form 8850 to a DLA for these employees during the period of transition relief and received a denial due to termination of Empowerment Zone designations on December 31, 2020, or who received a certification before Empowerment Zone designations were extended. 

The amount of the tax credit under WOTC equals a percentage of qualified wages paid in a given tax year to an employee certified by the DLA as being a member of one of the groups specified in the law. 

 

 

For more information on claiming the Work Opportunity Tax Credit please contact your Seth & Alexander Team: 

(713) 965-7572