The IRS has issued Notice 2020-78, which provides transition relief of additional time for employers to file Forms 8850 for the Work Opportunity Tax Credit (WOTC) related to certain 2018, 2019, and 2020 hires.
Specifically, the Notice extends the 28-day deadline for employees hired between 1/1/18 and 12/31/20 who qualify for one of the designated community resident targeted groups (§ 51(d)(5)) or the qualified summer youth employee targeted groups (§ 51(d)(7)). Forms 8850 for these types of hires may be submitted through the newly created deadline of January 28, 2021.
In issuing this Notice, the IRS acknowledged the expiration of empowerment zone designations which occurred at the end of 2017 and their subsequent retroactive renewal by giving employers additional time to submit Forms 8850 for designated community residents or qualified summer youth employees hired in 2018, 2019, and 2020.
Importantly, previously denied 8850s that fall into these categories may be resubmitted under this transition relief, but in the event that an employer submitted Form 8850 and was not issued a denial, then the employer does not need to resubmit that Form 8850. Your First Advantage tax service team is managing the resubmittal process and will ensure that you maximize credit opportunities in light of this new allowance.
Please reach out to your First Advantage Tax Account Consultant, or your company’s tax advisor or legal counsel, to discuss this Notice, WOTC in general, or the ongoing tax-related impacts of coronavirus.