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Potential Changes to WOTC in 2016

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WOTC News Update: WOTC Extension Approved By Congress, President Signs Bill into Law

Savvy HR professionals know that the Work Opportunity Tax Credit (WOTC) can be a great way to receive tax benefits while offering valuable employment opportunities to target groups in the community. Earlier this year, we highlighted four easy steps to help employers get the most out of WOTC. Brush up on those tips here and read on to help prepare for possible changes on the horizon.

On December 7, 2015, Representative Kevin Brady of Texas (also Chair of the Ways and Means Committee) proposed an amendment to Senate Amendment H.R. 34 which would extend the WOTC program. The WOTC program expired on December 31, 2014, but the proposed amendment would extend WOTC through December 31, 2016. In addition to extending the time frame, the proposed amendment would also significantly expand the pool of potential eligible job applicants.

Currently, the Department of Labor (DOL), which administers the WOTC program, defines qualifying individuals as unemployed veterans (including disabled veterans), Temporary Assistance for Needy Families (TANF) recipients, food stamp (SNAP) recipients, designated community residents (living in Empowerment Zones or Rural Renewal Counties), vocational rehabilitation referred individuals, ex-felons, supplemental security income recipients and summer youth employees (living in Empowerment Zones), although it's important to note different timing requirements exist for each group. However, the proposed amendment contains a provision that would add long-term unemployed recipients to that list. A "long-term unemployed recipient" is defined as an individual who has been unemployed for not less than 27 consecutive weeks and received unemployment compensation for a period of time under state or federal law. This proposed change would apply to individuals beginning work after December 31, 2015, according to the amendment.

One piece of WOTC news won't change: the paperwork. In addition to Form 8850, employers need to submit ETA Form 9061 or ETA Form 9062 for any applicants conditionally certified as "belonging to a WOTC target group by a state workforce agency, Vocational Rehabilitation agency, or another participating agency," according to the DOL. In August 2015, the Office of Management and Budget (OMB) extended the expiration of these forms through August 31, 2018. The forms with updated expiration dates can be found here, or employers are allowed to submit expired 2015 forms, as the extension did not include any edits.

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.