Time is Running Out—IRS Notice Allows Employers Extended Time Period to Take Advantage of the Work Opportunity Tax Credit

On Friday, March 8, 2013, the Internal Revenue Service (IRS) announced that employers participating in, or planning to participate in, the Work Opportunity Tax Credit (WOTC) program shall be granted a temporary extension of the time allowed to file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit. The full text of the IRS bulletin can be found at IRS Notice 2013-14.

Companies usually are required to submit the IRS Form 8850 to the appropriate State Workforce Agency (SWA) no later than 28 days after an employee begins work. The retroactive extension of the WOTC program, with the passing of the American Taxpayer Relief Act of 2012 (“Act”) on January 2, 2013, had raised questions about how employers who hired eligible employees in 2012 and early 2013 would be able to timely file the form and certify those employees. This IRS notice answers those questions and presents a huge opportunity for employers.

Under the extension, employers who hire a member of a non-veteran target group on or after January 1, 2012, and up to and including March 31, 2013, will be considered to have filed Form 8850 on time, if it is filed with the SWA no later than April 29, 2013. Those employees eligible for veteran target groups hired on or after January 1, 2013 through March 31, 2013 will be considered to have been filed in a timely manner, if submitted no later than April 29, 2013 as well.

Before the Act was enacted, the WOTC had expired on December 31, 2011 for all but certain qualifying veterans. The Act retroactively extends the WOTC for certain employees [members of certain targeted groups as defined in Sec. 51(d)] who begin working for an employer through December 31, 2013. The Act also extends the provisions of the Veterans Opportunity to Work (VOW) to Hire Heroes Act of 2011, which made the WOTC available as a credit against the employer’s social security tax for certain tax exempt organizations that hire qualified veterans.

TECHNICAL INFORMATION CONTACT:

Allea Newbold
Principal
Ryan
813.228.7100
allea.newbold@ryan.com