Time Running Out For US Firms To Claim Stimulus Credit

by Leroy Baker, Tax-News.com, New York

09 October 2009

Businesses planning to claim the recently-expanded work opportunity tax credit (WOTC) for eligible unemployed veterans and 'disconnected youth' hired before mid-September now have until October 17 to request the certification required for these workers, according to the Internal Revenue Service (IRS).

In Notice 2009-69, released in August, the IRS extended the certification deadline from August 17, 2009, to October 17, 2009, and clarified the definition of “disconnected youth.”

The American Recovery and Reinvestment Act, enacted in February, added unemployed veterans returning to civilian life and certain younger workers, referred to as disconnected youth, to the list of groups covered by the credit.

Normally, a business must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But under a special rule, businesses have until October 17, 2009, to file this form for unemployed veterans and disconnected youth who begin work on or after January 1, 2009 and before September 17, 2009.

Under US tax law, businesses are allowed to claim a work opportunity tax credit equal to 40% of the first USD6,000 of wages paid to employees of one of nine targeted groups. The ARRA expanded this provision by creating the two new groups.

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