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Extension for meeting WOTC certification requirement

March 4, 2015

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The IRS recently released guidance that may affect many businesses regarding the Work Opportunity Tax Credit (WOTC). This guidance applies to 2014 income tax returns and can help certain employers save taxes.

The WOTC was among those provisions extended through Dec. 31, 2014, by the Tax Increase Prevention Act of 2014, which was passed last December. The credit is for employers that hire individuals who are members of targeted groups, including certain qualified veterans.

Taxable employers that hired targeted group members can claim the tax credit as a general business credit against their income tax. Before an employer can claim the credit, it must obtain certification from a “designated local agency” (DLA) that the hired individual is indeed a targeted group member. The employer normally must submit IRS Form 8850, “Pre-Screening Notice and Certification Request for the Work Opportunity Credit,” to the DLA no later than the 28th day after the individual begins work for the employer.

The retroactive extension of the WOTC for 2014 at the end of the year, however, meant that many employers would need additional time — the 28-day period had already expired for many of the covered employees hired in 2014. Thus, the IRS has given employers until April 30, 2015, to request certification from their DLAs for members of targeted groups hired in 2014.

A timely request for certification doesn’t eliminate the need for an employer to receive a certification before claiming the credit, though. So employers may need to file for a tax return extension.

Navigating turbulent tax waters

Tax planning requires ongoing navigation of constantly churning waters. Your tax advisors can help you comply with all the requirements for obtaining the WOTC credit and stay on top of additional tax developments.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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