On Friday, December 11, 2020, IRS issued Notice 20-78 granting transition relief for WOTC applications where the qualified employee was a resident of an Empowerment Zone. Designated Community Residents (DCR) are one of many target groups within the WOTC program, and residents of Empowerment Zones are considered qualified Designated Community Residents.
The Empowerment Zone program previously expired at the end of 2017 and was retroactively renewed by Congress in December 2019 for the years 2018-2020. Since the program’s renewal at the end of 2019, IRS has delayed in providing this guidance. Consequently, the Department of Labor, which oversees WOTC, has not authorized states to issue certifications for the DCR target group for employees with hire dates after 2017. This Notice now enables DOL to provide that authorization to states.
The Notice furthermore provides transition relief for any taxpayers who did not previously submit WOTC applications for this target group due to the Empowerment Zone program expiration. Employers have until January 28, 2021 to submit WOTC applications with the Empowerment Zone qualification for employees hired on or after January 1, 2018 and on or before December 31, 2020.