The Tax Increase Prevention Act of 2014 (TIPA) retroactively extended to Dec. 31, 2014, the expiration date of the work opportunity tax credit (WOTC), which otherwise would have expired on Dec. 31, 2013. The WOTC now is available for 2014 for businesses that hired employees in one of the following targeted groups:
- Qualified Temporary Assistance to Needy Families recipients, including certain long-term family assistance recipients
- Qualified veterans
- Qualified ex-felons
- Designated community residents
- Qualified summer youth employees
- Vocational rehabilitation referrals
- Qualified Supplemental Nutrition Assistance Program (SNAP) recipients
- Qualified supplemental security income (SSI) recipients
In order to claim the WOTC for a new employee, an employer must either:
- Obtain certification from a designated local agency (DLA) that the employee is a member of a targeted group on or before the day the individual begins work
- Complete IRS Form 8850, "Pre-Screening Notice and Certification Request for the Work Opportunity Credit,” on or before the day the individual is offered employment and submit the form to the DLA to request certification no later than 28 days after the individual begins work
IRS Notice 2015-13 gives employers that did not obtain certification from a DLA prior to qualified employees starting work in 2014 until April 30, 2015, to submit Form 8850 to a DLA. Employers that already have filed their tax returns will need to file amended tax returns to claim the WOTC for any newly certified employees.
It remains to be seen if the WOTC will be extended again by Congress. The Department of Labor has issued guidance stating that DLAs can accept Forms 8850 filed for qualifying hires during 2015, but the claims will not be processed unless the WOTC is extended. Employers should continue to obtain and submit certifications for 2015 in case the WOTC again is extended retroactively.