Employers Have More Time to Claim Work Opportunity Tax Credit

On Thursday, the IRS announced that it was extending the time employers that want to claim the work opportunity tax credit (WOTC) have to file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, for 2014 hires (Notice 2015-13).

Form 8850 is usually due no later than 28 days after an employee begins work. Timely filing of the form by the employer is a prerequisite to claiming the WOTC for hiring the employee. When the credit was extended retroactively to the beginning of 2014 by the Tax Increase Prevention Act of 2014 (TIPA), P.L. 113-295, it was unclear how employers who hired eligible employees in 2014 would be able to timely file the form and certify those employees. Notice 2015-13 answers those questions.

Under the extension, employers who hire a member of a targeted group on or after Jan. 1, 2014, and before Jan. 1, 2015, will be considered to have timely filed Form 8850 if it is filed with the designated local agency (a state employment security agency established under 29 U.S.C. Sections 49–49n) by April 30, 2015.

Before TIPA was enacted, the WOTC credit had expired on Dec. 31, 2013, for all but certain qualifying veterans. TIPA retroactively extended the WOTC for certain employees (members of certain targeted groups as defined in Sec. 51(d)) who began work for an employer through Dec. 31, 2014. It also extended the provisions of the VOW to Hire Heroes Act of 2011, P.L 112-56, which made the WOTC credit available as a credit against the employer’s Social Security tax for tax-exempt organizations that hire qualified veterans.