The deadline to submit Work Opportunity Tax Credit Form 8850 was extended to April 30, 2015.
The Work Opportunity Tax Credit (“WOTC”), authorized by Section 51 of the Internal Revenue Code, is available to employers that hire individuals who are members of certain designated target groups and begin work before January 1, 2015. The designated target groups, generally, are economically or physically disadvantaged persons, including qualified veterans. The WOTC can provide a significant benefit for employers, with a credit equal to 40 percent of eligible wages, up to $6,000 per employee during the first year of employment for a maximum credit of $2,400 per employee.
The WOTC had technically expired on December 31, 2013, but the Tax Increase Prevention Act of 2014 (“TIPA”) extended the credit for hires made through December 31, 2014.
To claim the credit, the employer must obtain certification that the hired individual is a targeted group member. This certification is obtained from a Designated Local Agency by submitting a prescreening notice signed by the employee no later than the 28th day after the individual begins work. IRS Form 8850 is used for purposes of obtaining the certification. Because the WOTC was retroactively extended at the end of the year for anyone hired during 2014, the IRS granted employers additional time to comply with the certification requirements. IRS Notice 2015-13 provides transitional relief and extends the deadline to submit Form 8850 to April 30, 2015, for employees hired between January 1, 2014, and January 1, 2015, and who otherwise satisfy the WOTC requirements.
While the WOTC has again expired as of January 1, 2015, it is a perennial item reinstated with extender legislation. Therefore, employers may consider requesting newly hired employees to complete and sign Form 8850 in the event the WOTC is extended through 2015.