Work opportunity tax credits (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.
On August 10, 2021, the IRS issued Notice 2021-43, which extends the 28-day deadline for employers to submit a request (Form 8850) to a designated local agency 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. To be certified as either of these for WOTC, an employee must have a principal place of residence within an Empowerment Zone where the employee continuously resides.
On May 26, 2021, all Empowerment Zones were extended through December 2025. The transition relief under the new notice allows employers to submit Form 8850 for these employees until November 8, 2021. The transition relief under this notice allows employers to submit Form 8850 for these employees until November 8, 2021. It also provides guidance to certain employers who submitted Form 8850 and received denial notices due to the zone terminations.
As just a reminder, the wages can only be used for one federal credit. Either Employee Retention Tax Credit, Work Opportunity Tax Credit or Empowerment Zone Tax Credit.
We recommend getting with your tax credit provider to make sure all Form 8850s have been submitted to the designated local agency.
If you do not already have a credit provider, please contact us here at Antares. We will provide you with several options.
Tamra Newman, CPA, is a Senior Manager with our Business & Tax Advisory Group. She can be reached at firstname.lastname@example.org.