05 February 2016 US Department of Labor provides interim guidance to state agencies on WOTC The US Department of Labor, Employment and Training Administration (ETA) has issued guidance to state workforce agencies (SWAs) regarding the processing of Work Opportunity Tax Credit (WOTC) applications now that the program is retroactively extended to January 1, 2015. The ETA's guidance expresses the understanding that the IRS is considering transition relief for the 28-day certification requirement for calendar year 2015, as it has for past retroactive extensions of the WOTC. As we reported in Tax Alert 2015-2413, the Protecting Americans from Tax Hikes Act of 2015 (PATH), signed into law by President Obama on December 18, 2015, retroactively reinstates WOTC for five years, from January 1, 2015 through December 31, 2019. The law also modifies the WOTC credit beginning in 2016 to apply to employers that hire qualified long-term unemployed individuals (i.e., those who have been unemployed for 27 weeks or more) and increases the credit with respect to such long-term unemployed individuals to 40% of the first $6,000 of wages. In the near future, the ETA, in conjunction with IRS, plans to issue formal guidance to SWAs that includes the new Long-term Unemployment Recipient target group. Until then, SWAs are instructed to process all timely filed certification requests filed by employers during the 2015 authorization lapse and issue all 2015 final determinations that were held pending the retroactive extension. SWAs are instructed to continue to process employers' timely filed certification requests using the current forms for individuals within all the reauthorized target groups. However, until the ETA and IRS modify Forms 9061/9062 and 8850 to include the new Long-term Unemployment Recipient target group, the ETA says that SWAs should encourage employers and their representatives to postpone certification requests for the new target group until the revised forms are available. Note: According to the ETA, to ensure receipt of the credit employers may choose to file Forms 9061/9062 (showing an expiration date of August 31, 2018) that indicate "Long-term unemployment recipient" in the top margin, right corner, under the expiration date. SWAs are instructed to accept employer applications for the new target group using the current ETA Forms 9061 or 9062, but postpone processing these certification requests until the ETA issues additional guidance. In the interim guidance, the ETA reminds SWAs that the IRS has in the past provided transition relief for the 28-day certification requirement when a retroactive WOTC extension has been approved. The ETA states that it understands that the IRS is considering offering similar relief regarding the current retroactive extension. A few states have already provided updated guidance on the WOTC extension. For example, the Texas Workforce Commission states that employers may file current Forms 9061/9062 indicating "Long-term unemployment recipient" in the top margin, right corner underneath the expiration date. The New York Department of Labor asks that employers not resubmit applications filed in 2015. The WOTC was thankfully extended to December 31, 2019, relieving employers of the complications of retroactive reinstatement for the next four years. In the meantime, the Obama Administration as well as some lawmakers are seeking to make the WOTC permanent.
Document ID: 2016-0263 | ||||||||||||||||||||
