Employers, we have some good news for you. Recent legislation is allowing employers to retroactively apply for the Work Opportunity Tax Credit (WOTC) for employees from targeted groups who were hired on or after January 1, 2015. Employers will be able to apply for the WOTC for employees from these groups until December 31, 2019.
The new legislation also added qualified long-term unemployment recipients to the list of targeted groups. A qualified long-term unemployment recipient is an individual who is certified by an agency as being unemployed for more than 27 consecutive weeks, and who received unemployment pay for a period of time.
Other targeted groups include:
- Unemployed veterans
- Food-stamp recipients
For a complete list of targeted groups, see here.
What is the WOTC?
The WOTC is a federal tax credit that is offered to employers for hiring individuals from targeted groups. The goal is to give employers an incentive to diversify the workplace; it also gives these individuals a better chance of being hired.
The maximum credit an employer can receive for the WOTC ranges between $1,200 to $9,600, depending on the employees and their targeted group. In order for employers to receive the WOTC, they must provide certification that the employee hired is part of a targeted group. Certification can be obtained through an IRS form filled out by the employee and filed by the employer. Employers must also complete an ETA Form 9061 for employees who have received certification as belong to a targeted group, or ETA Form 9062 for employees who have been conditionally certified.
Forms must be submitted to each employer’s state workforce agency within 28 days of the employee’s start date (not including the new legislation that allows employers to file for WOTC retroactively from January 2015).
Another recent development in this arena is that the Office of Management and Budget has officially approved the Department of Labor’s request to extend WOTC forms without revisions for three years, which means that if an employer fills out the required forms today, he won’t have to fill them out again until August 2018.
If you have any questions regarding whether your company can apply for WOTC or how to go about hiring employees from targeted groups in order to be eligible for WOTC, contact Corporate Financial today.