The IRS today released an advance version of Notice 2020-78 providing transition relief for certain employers claiming the work opportunity tax credit (WOTC) under section 51.
The transition relief provided by Notice 2020-78 [PDF 122 KB] extends the 28-day deadline for certain employers to request certification from a “designated local agency” (DLA) that an individual hired on or after January 1, 2018, and before January 1, 2021, is a member of the designated community resident targeted group or the qualified summer youth employee targeted group.
Legislation enacted at the end of 2019 extended the WOTC through December 31, 2020, and retroactively extended the period for which an empowerment zone designation is in effect to December 31, 2020 (from December 31, 2017).
Notice 2020-78 explains that because of these extensions, employers may need additional time to comply with the DLA certification requirements.
Further, because of the expiration of empowerment zone designations at the end of 2017 and the uncertainty as to whether empowerment zone designations would be extended, some employers that hired members of targeted groups may not have submitted Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to the DLA within 28 days of the individual beginning work.
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