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Notice 2020-78: Work Opportunity Tax Credit (WOTC) Transition Relief

Posted by BOOSCPA Strategic Tax Services Group Posted on Jan 14 2021
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Questions Can be Very Powerful

Here's a true story about a Fresno business owner making a routine delivery. Recently, an owner of a local restaurant delivered lunch to our office and commented on how busy we looked. At that time, our firm was working on a tax credit deadline and so we asked the owner a simple question: “Have you submitted all your work opportunity tax credits (WOTC)?” To our surprise, the owner told us that they just came from their accountant and this topic had not come up in the five years they’d been a client. Saving on taxes sparked the business owner’s interest. During a meeting with the owner the next day, we discussed the WOTC Federal tax credit. Based on their previous hires, this routine lunch delivery ultimately saved their business $25,000 in Federal taxes. Don't miss out on your opportunity to benefit from these powerful tax credits and incentives. Keep reading to find out more about how they may be able to work for you.

On December 11, 2020, the Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2020-78. This notice provided transition relief to employers that otherwise would be required to submit IRS Form 8850 to a State Workforce Agency no later than 28 days after an individual begins working for the employer. As a result, under this notice, employers that hired designated community resident(s) or summer youth employee(s) between January 1, 2018, and December 31, 2020, have until January 28, 2021, to submit a completed Form 8850 to a Designated Local Agency (DLA) to request certification.

About the Work Opportunity Tax Credit (WOTC)

The WOTC is a Federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.

 WOTC Federal tax credits can range between $1,200 and $9,600 (or more under certain circumstances) per qualified employee and credit is available to all companies regardless of their business location.


 Specifically, Notice 2020-78 provides transition relief by extending the 28-day deadline for employers to request certification from a DLA that an individual hired on or after January 1, 2018, and before January 1, 2021, and is a member of the designated community resident targeted group or the qualified summer youth employee targeted group.

 Designated Community Resident (DCR)

 A DCR is an individual who, on the date of hiring,

Is at least 18 years old and under 40, resides within one of the following:
• An Empowerment zone
• An Enterprise community
• A Renewal community

AND continues to reside at the locations after employment.

Summer Youth Employee

A “qualified summer youth employee” is one who:

Is at least 16 years old, but under 18 on the date of hire or on May 1, whichever is later, AND Is only employed between May 1 and September 15 (was not employed prior to May 1st) AND Resides in an Empowerment Zone (EZ), enterprise community or renewal community.


The IRS has given employers a unique opportunity to retroactively qualify employees that are a member of the designated community resident targeted group or the qualified summer youth employee targeted group. This opportunity ends on January 28, 2021! If your business has not taken advantage of claiming tax credits in the past, use this lifeline from the IRS to catch up and claim what your business is entitled to under the law.

Need Help?

If you think your business can benefit or is interested in claiming the WOTC Federal tax credit, BOOS & ASSOCIATES is here to help! For more information, please email us at