Long Term Unemployment Recipient

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DOL Issues Revised Forms for Work Opportunity Tax Credit WOTC

Friday, March 3rd, 2017

The Department of Labor has issued revised and updated forms including the ETA 9061 Individual Characteristics Form and ETA 9175 Long Term Unemployment Recipient Self Attestation Form.

There are significant changes on both forms, simplifying and clarifying the requirements for Long Term Unemployment Recipients or LTURs. Number 23 on ETA 9061 has been reduced from a double-parted (2 check boxes) to a single-check box question. The new language is easier to understand and less likely to trip-up new hires.

The ETA 9175 Self Attestation Form or SAF, has been greatly simplified.  The employer’s tax ID line has been removed. The statement section has also been completely revised.  See pic below.

Revised SAF

These simplifications will be a great blessing to new hires and the state workforce agencies that evaluate their eligibility.  The changes, however, will require design-level changes to the computer-based software and databases used by agencies to manage the data provided on the forms.  The same is true for survey- and application-management systems used by employers and authorized agents.

A grace period for transitioning to the forms has been granted through April 11, 2017. That’s 39 days from today.  The race is on!

Good luck everyone!

Let’s Us Know! How Do You Handle Delayed WOTC Certifications?

Thursday, August 25th, 2016

Hello friends and readers, this is Vaughn Hromiko, here.  This post is meant as a question to employers and agents . . . and anyone involved with the Work Opportunity Tax Credit program.  I would love to hear from you.

The Question:  How do you (or your CPA, or your company, or others you have observed), handle the claiming of Work Opportunity Tax Credits for employees whose WOTC certifications are delayed until after the tax-return filing deadline?

Perhaps you would:

  • Lump the employee’s credit into the following tax year?
  • Claim the tax credit by amending the employer’s return?
  • Something else?

You can post a response in the comments or you are welcome to respond privately by email to response@WOTCPlanet.com.  I won’t share identifying information about anyone who responds privately.

Background. This problem is destined to be more significant than ever for WOTC employees hired in 2015. State workforce agencies nationwide are experiencing extended delays in issuing Work Opportunity Tax Credit (WOTC) certifications for 2015 hires. This problem stems from Congress’ long delay in passing legislation to reauthorize WOTC after it expired in 2014.

The reauthorization bill, which was finally passed on December 18, 2015 also created a new WOTC Target Group, the “Long Term Unemployment Recipient”.  While this program expansion was welcomed, it placed new demands on state workforce agencies. They now have to update their procedures, databases and management software to handle the new eligibility criteria.

As soon as the bill passed, agencies knew this work would be required.  However, before any substantial planning or development could happen, they would need updated forms and specific guidance from both the IRS and Department of Labor.

The IRS issued an updated Form 8850 at the end of March, 2016. The updated ETA Form 9061 and related guidance were then finally issued on June 17, 2016.  It was only then, with all requirements finally defined, that agencies could make substantial headway in updating their systems.

Given the uncertainties created by this elongated series of updates, the IRS has given employers until September 28, 2016 to submit WOTC applications for their 2015 hires.  As of this late date in August, many agencies are still working to update their information systems and can not yet process the new WOTC target group.

Lay this schedule over the basic tax-return requirements for companies on a calendar-year filing schedule. Original tax-return filing dates passed months ago in March and April. Businesses and individuals that have requested a filing extension from the IRS will hit their final deadlines in mid-September and October.

Many WOTC certifications for 2015 hires will still be pending, even at that late date.

IRS Issues Revised Form 8850 – Includes WOTC Target Group J

Wednesday, March 30th, 2016

irs8850_TOPThe IRS has issued a revision of IRS Form 8850 “Pre-Screening Notice and Certification Request for the Work Opportunity Credit.”  This revision was made necessary by the recent Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which added a new target group to the WOTC program. The form now includes a question to screen for Long Term Unemployment Recipients.

Question number 7 at the bottom reads:

“Check here if you are in a period of unemployment that is at least 27 consecutive weeks and for all or part of that period you received unemployment compensation.”

The form’s instructions include guidance that defines the new target group:

Qualified long-term unemployment recipient. An individual hired after 2015 who on the day before the individual begins work for the employer, or, if earlier, the day the individual completes Form 8850 as a prescreening notice, is in a period of unemployment that: Is not less than 27 consecutive weeks, and Includes a period (which may be less than 27 consecutive weeks) in which the individual received unemployment compensation under state or federal law.

Please share this news with your friends and business associates!

Thank you Kentucky WOTC for Today’s Update

Wednesday, March 16th, 2016

I received a system-generated update from the Kentucky Work Opportunity Tax Credit Office this morning.  If you have dealings with that office, perhaps you also received it.

It looks like the guidance provided in IRS Notice 2016-22 regarding the new WOTC Target Group (Long Term Unemployment Recipients) might be a little obsolete already.  Here’s the language I received this morning.

Notice the subject line says, “Waiting for IRS Guidance”.  Aren’t we all?

************** begin quote:
From: wotc.system@ky.gov
Sent: Wednesday, March 16, 2016 7:21 AM
Subject: Waiting for IRS Guidance

This is a message from Kentucky Work Opportunity Tax Credit office

Information Update:

03/15/2016

The U.S. Department of Labor, Employment and Training Administration, Office of Workforce Investment, Division of National Programs, Tools, and Technical Assistance has contacted us regrading WOTC and a meeting with IRS is planned to discuss precisely how the State Workforce Agencies are going to verify eligibility in the new Target Group – Long Term Unemployed  Recipient.  There has been a shift from the guidance IRS already published Notice 216-22 and what IRS seems to require in addition to the Self-Attestation Form.

Updated information on this target group will be provided as soon as we are informed.

***** end quote.

Thank you Kentucky!

IRS Notice 2016-22 – WOTC Transition Relief and Guidance

Tuesday, March 8th, 2016

IRS Notice 2016-22 can now be found on the IRS website through a Google search.  Click the link to get your copy.

In a nut shell, for employees hired from January 1, 2015 through May 31, 2016 (inclusive), the usual 28-day application deadline has been extended through June 29, 2016.  That’s good.

Disappointedly, however, Notice 2016-22 does not provide definitive guidance about qualifying employees under the new Long Term Unemployment Recipient target group.  Rather, it defers this to the yet-to-be revised Form 8850 and ETA 9061.

“Those modified forms and instructions will indicate the information that must be provided on the forms for the employer to receive certification from the DLA that the individual is a qualified long-term unemployment recipient.”

“The Treasury Department and the IRS anticipate that the modified forms will include a requirement that the individual signing the form attest that he or she meets the requirements to be a qualified long-term unemployment recipient and a requirement that the individual attest to the period(s) during which the individual was unemployed and the period the individual received unemployment compensation.”

A few years ago, the IRS developed similar requirements for the Disconnected Youth target group (now discontinued).  To document an employee’s status as a disconnected youth, the employee signed a statement form provided by the Department of Labor.  I’m guessing there will be something similar promulgated for the Long Term Unemployment Recipient group.

WOTC – Still Waiting for New Forms and Transition Relief

Thursday, March 3rd, 2016

A few friends of the blog have contacted me recently, asking if the IRS has issued its notice on transition relief for the re-authorized WOTC program.  Not yet.  Nor has the Department of Labor or IRS issued revised forms for 2016 to reflect the new Long Term Unemployment Recipient target group.

Here’s to continued patience and hoping we see something soon….

Department of Labor Issues Interim WOTC Instructions for State Workforce Agencies

Thursday, January 28th, 2016

This week, the Department of Labor’s Employment and Training Administration issued new instructions to State Workforce Agencies (SWA’s). Agencies needed instructions in the wake of the WOTC re-authorization provided by the Protecting Americans From Tax Hikes (PATH) Act of 2015. President Obama signed this bill on December 18, 2015.

The document summarizes the program changes and other effects created by the PATH Act.  It also guides SWA’s on what to do with applications that were submitted timely (within 28 days from start of employment) in 2015 during the 49-week WOTC authorization lap.  As a result, employers nationwide should now begin receiving certifications for their 2015 qualifying hires.

While these instructions are important and helpful, we are still awaiting further guidance about WOTC’s newest target group, dubbed “Long Term Unemployment Recipients.”

Also, the IRS has not yet issued a notice about the much anticipated transition relief. In prior years, transition relief has temporarily waived the 28-day application deadline for WOTC applications not submitted timely during the program’s authorization lap. For example, last year we were able to submit applications for 2014 hires, without penalty, all the way through April 30, 2015.

While these instructions do not tell us how to qualify or document employees eligible under the new target group, it does inform us that the Department of Labor and IRS are busy modifying WOTC forms to include the new target group.

Furthermore, employers are “encouraged to postpone certification requests for the New Target Group until the revised forms are available.”  If we just can’t wait, the SWA’s will accept applications for the new target group if employers write “Long-term Unemployment Recipient in the top margin [of the ETA 9061 or 9062], right corner underneath the expiration date.”

You can read the entire document for yourself.

DOL PATH Act 2015 – WOTC Interim Instructions (1.27.16)

 

(Thank you to Paul Suplizio, President of the WOTC Coalition, for sending us a copy of the ETA’s interim instructions.)

New WOTC Target Group – Long Term Unemployment Recipient

Wednesday, January 20th, 2016

The recent re-authorization and expansion of the Work Opportunity Tax Credit (WOTC) includes a new WOTC target group.  Reading from the statute, a “Long-term Unemployment Recipient” is defined as an individual “being in a period of unemployment which— (A) is not less than 27 consecutive weeks, and (B) includes a period in which the individual was receiving unemployment compensation under State or Federal law.’’

In plain English? To qualify, your new employee must (1) have been unemployed for at least the past 27 weeks; and (2) he or she must have received unemployment compensation at some point during that time period.

This new target group applies only to employees hired after December 31, 2015.  The IRS has not yet issued guidance or provided any further interpretation of the new law.  It’s not yet clear what if any documentation will be required to demonstrate an employee’s eligibility.