Notice 2009-69 Revises Statutory Definition for Work Opportunity Tax Credit Eligibility

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IRS Guidance Revises Statutory Definition for Work Opportunity Tax Credit Eligibility

The Internal Revenue Service Aug. 12 issued Notice 2009-69 to revise one of the statutory definitions from earlier guidance of persons now qualified for the Work Opportunity Tax Credit (WOTC) due to the 2009 economic recovery legislation.

The notice clarified the tax code Section 51 definition of "not readily employable by reason of lacking a sufficient number of basic skills" that originally appeared in Notice 2009-28 (101 DTR G-3, 5/29/09). The definition now says a person who received a high school diploma or a General Educational Development certificate at least six months before the hiring date, and who otherwise meets the requirements for a "disconnected youth," will not fail to qualify as such if the person has been employed since graduation "as long as that employment was no more than occasional," IRS said.

The notice provides transitional relief, stating that an individual shall not be regarded as a member of a targeted group unless the employer gets certification from a designated local agency on or before the date the person starts working that he or she is such a member, IRS said. The employer could also complete a pre-screening notice, Form 8850, on or before the individual's offer date and submit the notice to the designated local agency to ask for certification not later than 28 days after the individual starts working, it said.

The transitional relief provided in Notice 2009-28 for employers who hire workers from the two new targeted groups--"unemployed veterans" and "disconnected youth"--has been extended in the new notice. IRS will consider employers who hire individuals from these groups after Dec. 31, 2008, and before Sept. 17, 2009, to have satisfied the deadline under Section 51 if he or she submits the pre-screening notice to request certification no later than Oct. 17, 2009, it said.

Notice 2009-69 is scheduled to be published in Internal Revenue Bulletin 2009-35, dated Aug. 31.