Employers claiming the work opportunity credit for workers hired January 1, 2015, through May 31, 2016, have been granted an extension of time to submit Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to its Designated Local Agency (DLA). Generally, this form needs to be submitted no later than the 28th day after the day an individual who is a member of a targeted group begins work for the employer.
Due to the retroactive extension of the work opportunity credit to apply to targeted group members hired in 2015 by the Protecting Americans from Tax Hikes Act of 2015, the IRS will allow an employer that hired a member of a targeted group to begin work on or after January 1, 2015, and on or before May 31, 2016, to submit Form 8850 to its DLA no later than June 29, 2016. The credit will expire for employees hired after December 31, 2019.
The PATH Act added qualified long-term unemployment recipients to the list of targeted groups effective for individuals hired on or after January 1, 2016. The extension to file Form 8850 through June 29, 2016 applies to such individuals if hired on or after January 1, 2016, and on or before May 31, 2016.
It appears that the reason that the extension will apply to targeted group members hired in the first half of 2016, in addition to those hired during 2015, is that Form 8850 is being revised to reflect the addition of qualified long-term unemployment recipients as targeted group members. The IRS guidance, however, does not prohibit a taxpayer from using the current Form 8850 during the period that the form is under revision. Nevertheless, if an employer is certifying a qualified long-term unemployment recipient then the best practice is to delay filing until Form 8850 is updated.
According to the IRS guidance, the revised version of Form 8850 will require the long-term unemployment recipient to supply the information that must be provided on the forms for the employer to receive certification from the DLA that the individual is a qualified long-term unemployment recipient. The IRS anticipates that the modified form will include a requirement that the individual signing the form attest that he or she meets the requirements to be a qualified long-term unemployment recipient and a requirement that the individual attest to the period(s) during which the individual was unemployed and the period the individual received unemployment compensation.
An employer must submit a Department of Labor Employment and Training Administration (ETA) Form 9061, Individual Characteristics Form, or Form 9062, Conditional Certification, to the DLA as part of the certification process. Most employers choose to submit these forms as part of the Form 8850 submission. The IRS guidance indicates that Forms 9061 and 9062 are also being revised to reflect the addition of qualified long-term unemployment recipient to the list of targeted group members.
If you have any questions related to the work opportunity tax credit and this extension, please call our office. We are here to assist you.