In the twilight amidst another government shutdown, Congress has signed and passed the budget for 2020. Amongst some of the provisions are an extension of the Work Opportunity Tax Credit (WOTC) program through December 31, 2020.
With the WOTC program renewed December 31, 2020, employers will be able to administer the program and earn up to $9,600 per qualified candidate. In addition, amongst some of the other provisions noted in the bill is the retroactive extension of the Empowerment Zone tax credit, also to December 31, 2020.
For the past two years that the credit had expired, in addition to the upcoming year, Employers will be able to receive tax credits for individuals that qualified under the Empowerment Zone criteria. Also known as Target Group D, these individuals ages 18-39 who when hired are residents of an empowerment zone will qualify for a tax credit.
Employers that were receiving denials or on-holds for WOTC submissions for Empowerment Zone eligible candidates through 2018 should seek certification approval notices. Review your records to make sure you’re getting all of the certifications to which you are entitled. Use IRS Form 8844 when filing with the IRS to obtain recognition of your tax credits for 2018.
This poses a significant refund potential for employers that applied for empowerment zone tax credits during the 2018 tax year. Under the new budget, employers will be able to claim 2018 empowerment zone tax credits and get refunded through their amended tax return.
Employers should recognize that permanence for the WOTC program is a real possibility. Both U.S. Senate bill S. 978 and House bill H.R. 2213 pushed this past year to make the program permanent. With bi-partisan support, 2020 may be the year to make it happen.
Employers that are not currently administering a WOTC program are missing out. According to the DOL, employers in 2018 obtained 2.2 million WOTC certifications, representing billions of dollars in federal tax credits.