The Work Opportunity Tax Credit (WOTC) provides tax credits for employers hiring employees from certain targeted groups. The PATH Act extended WOTC through 2019, including 2015 retroactively, and added a new category of qualified hires targeting the long-term unemployed, starting in January 2016.
Generally, the rules require that applications for new employees under the WOTC program must be submitted within 28 days of the hiring date or the potential credit will be lost. However, the IRS has recognized that applying the 28-day rule to 2015 would be impossible for most employers.
Therefore, the IRS has decided to suspend the 28-day rule for 2015, and has also extended the grace period through the first half of 2016! This means that for-profit employers will be able to take advantage of the WOTC program for employees hired between January 1, 2015 and May 31, 2016 even though they are outside the 28-day deadline window. Several thousand dollars per employee are available to be claimed.
Employers should strongly consider putting a WOTC plan in place to capture any retroactive credits and to maintain an ongoing program through 2019.
To assist with filling out initial applications, as well as tracking their progress through the IRS, HCTR recommends using a consultant or service bureau with WOTC experience. Check with your financial advisor or tax attorney. Or contact the service bureau we are most familiar with, TC Services USA. Their WOTC Software makes it easy for employers to capture the WOTC Credits retroactively, even for employees who may no longer be with the company.
212-994-2714 ext. 205