This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Section references are to the Internal Revenue Code unless otherwise noted.
The Tax Relief and Health Care Act of 2006 extended the work opportunity and welfare-to-work credits to cover individuals
who begin work for the
employer before January 1, 2008. In addition, for individuals who begin work for the employer after December 31, 2006, the
Act provides that the
welfare-to-work credit will be combined with the work opportunity credit. To carry out these changes, section 51 was amended,
and section 51A was
repealed.
The Form 8850 that you are required to file with the work opportunity tax credit (WOTC) coordinator for your state workforce
agency (SWA) is now
due no later than the 28th day after the job applicant begins work for you.
For employees who begin work after December 31, 2006, the following changes pertaining to targeted group members apply.
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Ex-felons are no longer required to be a member of a low-income family.
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Food stamp recipients must be at least age 18 when hired, but not age 40 or older.
Note.
The February 2007 revision of Form 8850 and its instructions makes minor updates to the January 2007 revisions. Employers
may continue to use the
January 2007 revision of Form 8850.
Employers use Form 8850 to pre-screen and to make a written request to a SWA (unless the employee checks only the Hurricane
Katrina employee box)
to certify an individual as a member of a targeted group for purposes of qualifying for the work opportunity credit.
Submitting Form 8850 to the SWA (unless the employee checks only the Hurricane Katrina employee box) is but one step in the
process of qualifying
for the work opportunity credit. The state WOTC coordinator for the SWA must certify the job applicant is a member of a targeted
group. After starting
work, the employee must meet the minimum number-of-hours-worked requirement for the work opportunity credit. The employer
elects to take the credit by
filing Form 5884, Work Opportunity Credit.
The certification requirements described above do not apply to Hurricane Katrina employees. For an employer of a Hurricane
Katrina employee, this
form is used to accept reasonable evidence that the worker is a Hurricane Katrina employee. It is the employer's responsibility
to ascertain that the
place where the employee lived on August 28, 2005, (the address on line 1 of the form) is in fact in the core disaster area
(see pages 2 and 3 for a
list of these areas). The employer is not required to ask employees to furnish any documentary evidence.
Who Should Complete and Sign the Form
The job applicant gives information to the employer on or before the day a job offer is made. This information is entered
on Form 8850. Based on
the applicant's information, the employer determines whether or not he or she believes the applicant is a member of a targeted
group (as defined under
Members of Targeted Groups). If the employer believes the applicant is a member of a targeted group, the employer completes
the rest of the form no
later than the day the job offer is made. Both the job applicant and the employer must sign Form 8850 no later than the date
for submitting the form
to the SWA.
