What is it? The Work Opportunity Tax Credit (WOTC), which replaces the Targeted
Jobs Tax Credit (TJTC) program, provides a tax credit for employers who hire certain
targeted low-income groups, including vocational rehabilitation referrals, former AFDC
recipients, veterans, ex-felons, food stamp recipients, summer youth employees, and SSI
recipients.
How does it apply to persons with disabilities? Employers that hire individuals
who are SSI recipients or certified vocational rehabilitation (VR) referrals and meet all
of the criteria described below may claim the WOTC.
A VR referral is certified by the State Employment Security Agency (SESA) as:
having a physical or mental disability resulting in a hindrance to employment, and
referred to an employer upon completion of or while receiving rehabilitative services,
pursuant to the Vocational Rehabilitation Act of 1973, as amended.
What is the amount? An employer may take a tax credit of up to 40 percent of the
first $6,000, or up to $2,400, in wages paid during the first 12 months for each new hire.
What are the effective dates? June 1999 through December 1, 2001. This program
is subject to yearly Congressional renewal.
What are the Minimum Employment Requirements? Eligible employees must work 180
days or 400 hours; summer youth must work 20 days or 120 hours. A partial credit of 25
percent for certified employees who worked at least 120, but less than 400 hours may be
claimed by the employer.
What agency provides the WOTC certification? The local State Employment Security
Agency (SESA).
How do I file for this credit? Complete and submit IRS Form 8850, Pre-Screening
Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits, to
your local SESA.
How does it work?
The employer determines likely eligibility by including the WOTC Pre-Screening Notice
as part of the application process.
On or before the day employment is offered, the Pre-Screening Notice must be signed by
the employer and employee and mailed to the SESA within 21 days after the employee begins
work.
The employer documents eligibility (based on information received from the employee)
and submits documentation to the SESA.
SESA certifies which individuals are eligible for WOTC, and notifies the employer in
writing for purposes of filing the tax credit.
Where can I obtain IRS Form 8850? Call 800-829- 1040 (voice) or 800-829-4059 TTY
or visit the IRS Website at http://www.irs.ustreas.gov/prod
Where can I obtain additional information?
U.S. Department of Labor
Employment & Training, Public Affairs
(202) 219-6871
or your local SESA
Contact Robert Wheeler, Staff Attorney
Office of the Associate Chief Council
Employee Benefits and Exempt Organizations
IRS, (202) 622-6060
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