The Department of Labor’s Request for Extension of WOTC Forms is Approved by President Obama
The Department of Labor’s Request for Extension of WOTC Forms is Approved by President ObamaWhat is WOTC?
The Work Opportunity Tax Credit (WOTC) program is a federal tax credit available to employers who hire and retain veterans and individuals from other target groups with significant barriers to employment. These groups include Veterans of War (VOW), ex-felons, welfare and food stamp recipients, Empowerment Zone residents and others. There is no limit to the number of people that an employer can hire to qualify to claim the WOTC tax credit and employers currently claim around $1 billion in tax credits each year using the program.
What is new with WOTC?
President Obama signed the PATH Act (Protecting Americans from Tax Hikes Act of 2015) and the Omnibus Spending Bill H.R. 2029 into law on December 18th, 2015. These actions provide the WOTC program with a five-year extension. WOTC has also added a “long-term unemployed” category to the groups that they cover. People who qualify as long-term unemployed individuals are those who are unemployed for more than twenty seven consecutive weeks and qualified and received state or federal unemployment compensation. This new category goes into effect for employees who start working after December 31st, 2015.
How does this affect employers?
Many employers are unaware that they have the opportunity to qualify for a credit that can be up to $9,600 per eligible employee throughout the first year of employment through the WOTC program. And now with the addition of the long-term unemployed category, there is even more potential for employers to receive tax credits.
To ensure that employers are getting the full benefits out of the WOTC program we encourage them to add WOTC screening to their job application process. Employers need to submit the Form 9061 or ETA Form 9062 to the Department of Labor’s Employment and Training Administration (ETA) for any WOTC certified employees designated as belonging to a WOTC target group by a vocational rehabilitation agency, or other qualifying agency. Further, employers should submit Form 8850 for job applicants hired after December 31, 2015. The Office of Management and Budget (OMB) extended the expiration of these forms in August 2015, so they are now valid through August 31, 2018. The Department of Labor hosts the updated expiration dated forms, but employers are allowed to submit expired 2015 forms because the extension didn’t include any major edits beyond the extension date.
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