The Department of Treasury and the Internal Revenue Service (IRS) released new guidelines and provisions under NOTICE 2020-23 in response to the COVID-19 pandemic. These measures were intended to provide relief to taxpayers in the form of extensions to time-sensitive acts. Most notably under these provisions was the extension of the tax filing deadline to July 15, 2020.
These new provisions state that a time-sensitive act due to be performed on or after April 1, 2020, and before July 15, 2020, can be performed by July 15, 2020. These extensions impact tax credit programs as well, including the Work Opportunity Tax Credit (WOTC). Under this new guidance, the processing time of applications for the WOTC has been given a grace period.
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Typically, the submission requirement for the IRS form 8850 which is completed by employers who are seeking to qualify for the WOTC and accepted by the State Workforce Agencies is done within 28 days after the individual begins work for the employer. Under this new guidance, employers have been given an extension to submit the IRS form 8850. This extension is in effect beginning April 1, 2020, through July 15, 2020, and applies to employment start dates beginning March 4, 2020, through June 17, 2020.
The WOTC program is a federal initiative designed to increase opportunities for people who have certain barriers to employment. The employer receives a tax credit that reduces federal income tax liability. Be sure to consult with your tax professional to determine if your company has been impacted and can benefit in the form of additional tax credits.