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IRS and DOL extend transition relief for WOTC through September 29, 2016

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On June 17, 2016, the IRS released Notice 2016-40 and the Department of Labor (DOL) released Training and Employment Guidance Letter (TEGL) 25-15, further extending Work Opportunity Tax Credit (WOTC) transitional relief and detailing procedures for the new Long Term Unemployed (LTU) target group.

Employers now have until September 29, 2016, to submit forms for all WOTC target groups except LTU for any new employees hired between January 1, 2015, and August 31, 2016. For the LTU group, employers have until September 29, 2016, to submit WOTC forms for new employees hired between January 1, 2016 and August 31, 2016.

Stacey May, HKP’s director of tax credits, states, “This provides an excellent opportunity for employers to capture credits for any new hires within this period. If you have not submitted WOTC forms for any new hires in the date ranges listed above, now is the time to do so.”

The IRS Form 8850 and DOL/ETA Form 9061 have both been updated to reflect the new LTU group, and the DOL/ETA also released Form 9175 – Long Term Unemployment Recipient Self Attestation Form.

Furthermore, the DOL/ETA instructed State Workforce Agencies (SWA) to contact their individual state unemployment insurance agencies to negotiate a means to access claim records and wage data so that applicants for the LTU group can easily be verified. If there is an absence of UI wage records, Form 9175 will be used.

After August 31, 2016, the usual 28-day rule for submitting WOTC forms will apply, and all target groups are valid through December 31, 2019.

Contact your tax credit processing provider to learn more details about these procedures and capture these valuable incentives.