Work Opportunity Tax Credit Transition Relief

March 10, 2015 — The IRS recently released Notice 2015-13, which provides transition relief for employers to comply with the paperwork requirements necessary to claim the Work Opportunity Tax Credit (WOTC).

Background

The WOTC provides incentives for employers to hire individuals that are members of certain targeted groups.  Prior to claiming the tax credit, employers must obtain certification that the hired individual is a member of the claimed targeted group.  This certification is obtained by submitting Form 8850 to designated state workforce agencies no later than the 28th day after the individual begins work for the employer.  The credit had previously expired for employees hired after December 31, 2013.

The Tax Increase Prevention Act of 2014, which was enacted on December 19, 2014, provided a retroactive extension of the WOTC through December 31, 2014.  As a result, many employers did not submit the applications necessary to obtain the credit.

What To Do

All employers who hired employees on or after January 1, 2014 and before January 1, 2015 will be considered to satisfy the certification requirements if Form 8850 is submitted to the appropriate state workforce agencies no later than April 30, 2015.

Employers should review the employees hired during 2014 and submit Form 8850 to the designated state workforce agencies necessary to claim the credit.