The Internal Revenue Service has issued a notice offering additional transition relief for employers claiming the Work Opportunity Tax Credit.

Notice 2016-40 provides additional transition relief for employers claiming the WOTC under Sections 51 and 3111(e) of the Tax Code as extended and amended by the Protecting Americans from Tax Hikes Act of 2015, also known as the PATH Act. In March the IRS issued Notice 2016-22, providing guidance and transition relief for employers claiming the WOTC (see IRS Provides Relief for Work Opportunity Tax Credit).

The PATH Act, which Congress passed last December, amended the Tax Code to extend the WOTC through Dec. 31, 2019. The PATH Act also amended the Tax Code to expand the “targeted groups” of individuals, the employment of whom may qualify the employer for a credit listed in the statute, to include qualified long-term unemployment recipients, people who have remained unemployed for 27 weeks or more.

Notice 2016-40 expands and extends by three months the transition relief provided in Notice 2016-22 for meeting the 28-day deadline in Section 51(d)(13)(A)(ii) of the Tax Code. The notice applies to employers that (1) hire members of targeted groups (other than qualified long-term unemployment recipients) on or after Jan. 1, 2015, and on or before Aug. 31, 2016, or (2) hire members of the new targeted group of qualified long-term unemployment recipients on or after Jan. 1, 2016, and on or before Aug. 31, 2016.  This notice does not otherwise modify or add to the guidance provided under Notice 2016-22.

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