Vernoia, Enterline + Brewer, CPA LLC

The IRS has updated Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Tax Credit (WOTC), and its Instructions, to reflect the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). An employer must obtain certification that an individual is a member of a targeted group before the employer may claim the WOTC, the IRS explained. The WOTC rewards employers who hire individuals from certain targeted groups with a tax credit. Employers use Form 8850 to pre-screen and to make a written request to a designated local agency to certify an individual as a member of a targeted group.

The PATH Act extends the WOTC through December 31, 2019 for qualified employers that hire members of a targeted group. It also adds qualified long-term unemployment recipients to the roster of targeted groups, effective January 1, 2016. The IRS explained that a qualified long-term unemployment recipient is an individual who is certified by a designated local agency as being in a period of unemployment that is not less than 27 consecutive weeks and includes a period in which the individual was receiving unemployment compensation.

The IRS has granted employers claiming the WOTC for targeted group members hired from January 1, 2015 through May 31, 2016, an extension of time through June 30, 2016, to submit Form 8850 to certify targeted group members. This extension gives employers time to catch up on missed Forms 8850 since January 1, 2015 and go back and screen for the new Long Term Unemployed category for employees hired after December 31, 2015. In the future, for employees hired after May 31, 2016, employers must screen the new hires on or before their hire date and file the Form 8850 within 28 days.

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