The IRS recently issued Notice 2021-43, which provides a 28-day extension of the deadline for employers claiming the Work Opportunity Tax Credit (WOTC) and allows employers to retroactively apply for the federal credit.
WOTC is a federal income tax credit available to employers that hire certified members of certain groups specified in the Internal Revenue Code, who face significant barriers to employment, including Designated Community Residents or Qualified Summer Youth Employees.
The notice extends the deadline to November 8, 2021. Employers must submit a request to a designated local agency (DLA) to certify that an employee, hired between January 1 and October 8, 2021, is a designated community resident or a qualified summer youth employee. To be certified as a member of these groups, an employee must be between the ages of 16 and 40 and have a principal place of residence within an Empowerment Zone where the employee continuously resides.
Empowerment Zone designations terminated on December 31, 2020, but the Taxpayer Certainty and Disaster Tax Relief Act of 2020, part of the Consolidated Appropriations Act, permitted the designations to be extended until December 31, 2025. This transition relief allows employers to submit Form 8850 for these employees until November 8, 2021.
In addition to Empowerment Zones which are only available in specific locations across the nation, there are more opportunities within Rural Renewal Communities. We have listed communities in our geographic area that might qualify:
Virginia Rural Renewal Communities:
- Buchanan County
- Dickenson County
- Highland County
- Lee County
- City of Clifton Forge
- City of Covington
- City of Norton
- City of Staunton
West Virginia Rural Renewal Zones:
- Calhoun County
- Gilmer County
- Logan County
- McDowell County
- Mercer County
- Mingo County
- Summers County
- Tucker County
- Webster County
- Wetzel County
- Wyoming County
The notice also provides guidance to employers who were previously submitted Form 8850 and were denied due to the termination of Empowerment Zone designations on December 31, 2020, or who received a certification before Empowerment Zone designations were extended.
It is not too late to apply to receive this credit and only requires a two-page form with basic information. This relief is an opportunity for credits that could range from $1,200 to $2,400 per qualifying employee as well as assist you with credits for other qualifying new hires, such as veterans, which could yield a credit up to $9,600 per qualifying new hire. Contact our team or your state’s workforce agency for more information.