New PATH Legislation – The Extender Bill and Effect on WOTC

As noted in the December 21 Marcum Tax Flash, the Protecting Americans from Tax Hikes of 2015 Act (PATH), also referred to as the “Tax Extenders Bill,” was signed into law last week. One of the business provisions extended within this legislation included modifications to the Work Opportunity Tax Credit (WOTC.)

The WOTC, while not made permanent, has been extended for five years, through 2019, and is applicable to any qualified new hire who began working after December 31, 2014.

The WOTC provides generous employment tax credits for employers hiring members of certain targeted groups, including:

• Unemployed veterans.
• TANF recipients.
• Food Stamp recipients.
• Empowerment Zone residents.
• Ex-Felons.
• SSI recipients.
• Summer youth employees residing in certain economic development zones.

Because the extension was not enacted until December 18, 2015, we anticipate the IRS will issue a notice providing transition relief for employers who did not timely submit the WOTC application since the prior expiration date. (In previous years, when WOTC provisions expired, the IRS approved a 60-day window for companies to submit the full year’s new hires’ forms.)

Beginning, January 1, 2016, all new hires/employees must complete the WOTC forms, and these must be submitted to the agencies within 28 days of hire. Generally, if the 28-day period is missed, the credit is foregone.

Should you have any questions how the credit may affect your business, please contact Paul Graney to discuss this opportunity.