Protecting Americans from Tax Hikes Act of 2015

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IRS Notice 2016-40 – Extends WOTC Transition Relief 3 Additional Months

Friday, June 17th, 2016

Today, the IRS formally recognized that employers (and state workforce agencies) need more time to adjust to the WOTC-program changes initiated by the Protecting Americans from Tax Hikes Act of 2015.

This morning, the IRS issued Notice 2016-40, which extends transition relief for another three months. At about the same time, the Department of Labor also issued Training and Employment Guidance Letter Number 25-15, dealing with the same issues.

Background:

Back in March, the IRS issued Notice 2016-22, which temporarily modified the normal 28-day application deadline for WOTC applications.  That notice established June 29th as the grand-deadline to submit applications for all employees hired from January 1, 2015 through May 31, 2016.

Built into that schedule, however, was anticipation that the Department of Labor would issue updated WOTC forms in a timely manner.  Employers and state workforce agencies would need time to adjust their procedures and technology to handle all the changes.

This morning, however, we found ourselves just 12 days away from that original deadline, still waiting for the updated forms.  Happily, the new ETA forms are referenced in this mornings Guidance Letter. So I anticipate having them soon — probably later today.

Nevertheless, 12 days is not enough time to make this work.  We now collectively have been granted until September 28th to get our systems into working order and to submit all outstanding applications.

This deadline extension applies to employees hired January 1, 2015 through August 31, 2016.  Other than extending the time frames of transition relief, the recent notice does not otherwise modify the terms of the original IRS Notice 2016-22.

 

 

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!

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.)