Extenders and Funding Bills Passed by House and Senate

Written by Vaughn Hromiko on December 18th, 2015

The tax extenders and government funding legislation passed the House and Senate today and is now on its way to the President for his pen.  Of primary interest to WOTC Planet readers is the 5-year extension of the Work Opportunity Tax Credit (WOTC) with Vow to Hire Heroes Act.  These will become law upon receiving the President’s signature.

From USA Today, “Senate clears massive spending bill, tax measures“.

You can read the bill here, at least until they move the file.  For the WOTC extension and revision, scroll to page 38 of the PDF.

Under the 5-year extension, WOTC will be expanded to include a new target group, “Long Term Unemployment Recipients.”  Here’s the language from the bill:

The term ‘qualified long-term unemployment recipient’ means any individual who is certified by the designated local agency as being in a period of unemployment which is not less than 27 consecutive weeks, and includes a period in which the individual was receiving unemployment compensation under State or Federal law.

Based on this language alone (no IRS interpretation available yet), my understanding is that a new employee must be unemployed at the time of hire and the condition of unemployment must have existed for at least the last 27 weeks (which equals one week more than 6 months).  At some point during that 27-week period, the new hire must have received unemployment insurance compensation.

I won’t be surprised if the IRS interprets this to permit one or more short periods of inconsequential employment during the 27-week period (similar to the HIRE Act which required 60 consecutive days of unemployment but still allowed up to 40 hours of work during that period). BUT, that’s just me hoping out loud.

After the President signs this legislation, we anticipate the IRS will issue a notice providing transition relief for employers that did not file timely WOTC application during the program’s 12-month hiatus.

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