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Notice 2021-43: Work Opportunity Tax Credit (WOTC) 28-Day Deadline Extension

Posted by BOOSCPA Strategic Tax Services Group Posted on Oct 15 2021

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Current Opportunity

Let’s talk about the Work Opportunity Tax Credit (WOTC). This is a Federal Tax Credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment. Currently, the WOTC can range between $1,200 and $9,600 (or more under certain circumstances) per qualified employee and the credit is available to all companies regardless of business location.

On August 10, 2021, the Department of the Treasury, and the Internal Revenue Service (IRS) issued Notice 2021-43. This notice provides transition relief by extending the 28-day deadline for employers hiring individuals who are Designated Community Residents or Qualified Summer Youth Employees who begin work on or after January 1, 2021, and before October 9, 2021, to submit a completed Form 8850 to the designated local agency (DLA) no later than November 8, 2021.

This means your business can now retroactively qualify employees that are a member of the designated community resident targeted group or the qualified summer youth employee targeted group who begin work on or after the beginning of the year until now.

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 opportunity to retroactively qualify employees ends November 8, 2021. If your business has not taken advantage of the WOTC and would like to start, now is the time. Get caught up today and let our team of experts assist you in claiming this potentially significant tax credit opportunity.

Future Opportunity

After you take advantage of this current opportunity, our team at Boos & Associates will help you make sure your business continues to claim the WOTC. After November 8, 2021, businesses will only have a 28-day window to submit a completed Form 8850 to the designated local agency after a new hire’s start date. Our team will work closely with your management group to make sure that as your business expands with every new hire, we proactively assist you in determining whether the new hire qualifies you to receive the WOTC.

Note: the Consolidated Appropriation Act, 2021 (Section 113 of Division EE P.L. 116-260) authorized the extension of the WOTC until December 31, 2025.

Additionally, on September 12, 2021, the Congressional Committee released some of its proposed legislative language that is to be included in Biden’s “Build Back Better Act,” a $3.5 trillion reconciliation bill. Among many of the proposals is Section 138513 “Enhancement of Work Opportunity Credit During COVID-19 Recovery Period.” This proposal would:

1) eliminate the restriction against claiming the WOTC for rehired employees,
2) increase the amount of tax credit from 40% of $6,000 in qualified wages to 50% of $10,000, and
3) provide a similar credit for the second year of employment of qualified employees

This bill has not yet been signed into law; however, stay tuned as we are focused on and current with opportunities coming out of Washington.

Need Help?

If you think your business can benefit from the WOTC, please contact