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.