Employers who hired individuals who qualify for Work Opportunity Tax Credits have a little more time to request certification.
The WOTC is available to employers based on a percentage of wages paid to an individual certified as a member of a targeted group, such as a person who resides in a designated empowerment zone community or who is a qualified summer youth employee.
Normally, an employer has up to 28 days from the date the new hire begins work to obtain or request certification from a designated local agency (DLA). Form 8850 is the pre-screening notice that must be submitted to the DLA to request this certification.
Both the Work Opportunity Tax Credits and Empowerment Zone designations have been extended past the dates when they were set to expire. Currently, the WOTC is set to expire at the end of 2020. Likewise, the designation for empowerment zones is set to expire by December 31, 2020, unless a state or local government designated an earlier expiration date.
Due to uncertainty and some confusion by designated local agencies about the expiration of empowerment zone designations, the IRS has extended the deadline for employers to submit the request for WOTC certification.
According to the IRS, employers that hired individuals who are residents of a designated empowerment zone or who are qualified summer youth employees and who began work for that employer between January 1, 2018, and January 1, 2021, will be considered to have satisfied the certification requirement, whether or not the employer submitted the completed Form 8850 to the designated local agency within 28 days of employment, so long as the completed Form 8850 is submitted no later than January 28, 2021.
If you have any questions or need further information about whether you would qualify for WOTC in 2020, please call our office.
Rebecca Guthrie, CPA, is Co-Director of our Business & Tax Advisory Group. She can be reached at firstname.lastname@example.org.