Work Opportunity Tax Credit Certification Deadline Is Extended

The IRS is providing transition relief to certain employers claiming the Work Opportunity Tax Credit (WOTC) by extending the certification deadline. The WOTC is available to employers that hire individuals from certain targeted groups who have consistently faced significant barriers to employment.

tax cpaNotice 2021-43 extends the 28-day deadline for employers to submit a request to a designated local agency to certify that an employee hired between Jan. 1 and Oct. 8, 2021, should be considered a Designated Community Resident or a Qualified Summer Youth Employee. The transition relief under this notice allows employers to submit Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) for these employees until November 8, 2021.

To be certified as a Designated Community Resident or a Qualified Summer Youth Employee under the WOTC, an employee is required to have a principal place of residence within an Empowerment Zone where the employee continuously resides.

Empowerment Zone designations were extended from Dec. 31, 2020, to December 31, 2025, under the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

The notice also provides guidance to certain employers who submitted a Form 8850 to a designated local agency for these employees during the period of transition relief and received a denial due to the termination of Empowerment Zone designations on December 31, 2020, or who received certification before Empowerment Zone designations were extended.

The amount of the tax credit under WOTC equals a percentage of qualified wages paid in a given tax year to an employee certified by the DLA as being a member of one of the groups specified in the law.

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