|
WHAT IS THE WORK The
Work Opportunity Tax Credit (WOTC), authorized by the Small Business
Job Protection Act of 1996 (P.L. 104-188), is a Federal tax credit that
encourages employers to hire nine targeted groups of job seekers by
reducing employers' Federal income tax liability by as much as $2,400
per qualified new worker; $750 if working 120 hours, or $1,200 if working
400 hours or more, per qualified summer youth. The WOTC is one tool
in a diverse toolbox of flexible strategies designed to help people
move from welfare to work and gain on-the-job experience.
It joins other education and job training initiatives and targeted
tax credits that help American workers prepare for good jobs, ease the
transition from job to job, and create high performance workplaces.
On March 9, 2002, the President signed into law, P.L. 107-147, the "Job
Creation and Worker Assistance Act of 2002," for 24 additional
months through December 31, 2003, to encourage employers to hire members
of the targeted groups with barriers to employment. This reauthorization
is retroactive to the WOTC's expiration date of WHAT NEW HIRES CAN QUALIFY EMPLOYERS FOR WOTC? * WOTC applies only to new employees hired
after and
before * The new employee must belong to one of
nine target groups: 1. A person with a disability who completed
or is completing rehabilitative
services from a State or the U.S. Department of Veterans Affairs, 2. A recipient of Supplemental Security Income
(SSI) benefits, 3. A member of a family that is receiving
or recently received Temporary
Assistance to Needy Families (TANF) or Aid to Families with Dependent
Children (AFDC), 4. An 18- to 24- year-old member of a family
that is receiving or recently
received Food Stamps, 5. An 18- to 24- year-old resident of one
of the Federally-designated Empowerment
Zones (EZs), 6. A 16- to 17- year-old EZ/EC or RC resident
hired between May 1 and September
15 as a Summer Youth Employee, 7. A veteran who is a member of a family
that is receiving or recently received
Food Stamps, 8. An ex-felon who is a member of a low income
family, and/or 9. The certification). * All new adult employees must work a minimum
of 120 or 400 hours; Summer
Youth must work at least 90 days, between May 1 and September 15. HOW CAN EMPLOYERS PARTICIPATE IN THE WOTC? To
receive certification that a new employee qualifies the employer for
this tax credit, the employer must: 1. Complete the one page IRS Form 8850 by
the day the job offer is made. 2. Complete either the one page ETA Form
9061 or Form 9062 o If the new employee has already been
conditionally certified as belonging
to a WOTC target group, complete the bottom part of ETA Form 9062 (and
sign and date it), that state that he or she has been given by a State
Employment Security Agency or participating agency, e.g., a Job Corps
center. o If the new employee has not been conditionally
certified, the employer
and/or the new employee must fill out, sign, and date ETA Form 9061. 3. Mail the signed IRS and ETA forms to the
employer's State Workforce Agency. The IRS form must be mailed within 21 days of
the employee's employment-start date. To get IRS Form 8850, the Work
Opportunity and Welfare-to-Work Tax Credits Pre-Screening Notice and
Certification Request, and instructions, download from http://www.irs.ustreas.gov/, or call 1-800-829-1040.
To get ETA Form 9061, the WOTC "Individual Characteristics Form," a brochure, and directories of the State and Regional Coordinators, call the new FAX-ON-DEMAND number at 1-877-828-2050. You can also get this form and materials by visiting www.ows.doleta.gov/employ/tax.asp Source:
February 2003 EARN Provider E-Newsletter |