IRS Further Clarifies WOTC “Disconnected Youth” Definition

By Alistair M. Nevius, J.D.

In June, the IRS released a notice defining the terms “unemployed veteran” and “disconnected youth” for purposes of the Sec. 51 work opportunity tax credit (WOTC) (Notice 2009-28). (See News Notes, 40 The Tax Adviser 503 (August 2009).) Part of the definition of “disconnected youth” in that notice referred to such youth as “not readily employable by reason of lacking a sufficient number of basic skills.” The IRS has now issued Notice 2009-69 to clarify what that means.

According to the new notice, an individual is “not readily employable by reason of lacking a sufficient number of basic skills” if the individual (1) has not graduated from high school or received a GED certificate or (2) graduated from high school or received a GED certificate more than six months prior to being hired and has not held a job (other than occasionally) or been admitted to a technical or postsecondary school since then. The IRS says this clarifies that occasional employment will not disqualify an individual who received a high school diploma or GED certificate at least six months prior to the hiring date from being a disconnected youth. The notice does not define what will qualify as “occasional” employment, although Notice 2009-28 did define “not regularly employed.”

Under transition relief in Notice 2009-28, employers were given until August 17, 2009, to submit Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to the designated local agency in order to qualify for the credit for any unemployed veterans or disconnected youth who were hired between December 31, 2008, and July 17, 2009. Notice 2009-69 extends that hiring deadline to September 17, 2009, and the Form 8850 submission deadline to October 17, 2009.

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