On Oct. 10, 2019, the Large Business & International and Small Business/Self-Employed divisions of the IRS issued a joint directive on the Work Opportunity Tax Credit under Internal Revenue Code Section 51 (IRC § 51) to field auditors. The directive instructs auditors not to challenge the timing of WOTC claims when taxpayers consistently claim their credit in the tax year in which certifications were received.
The IRS notes that this new directive will reduce taxpayer burden, promote consistency, and decrease examination time to most effectively use IRS resources.
This directive addresses the consequences associated with the delays of the WOTC certification process. The delays often result in a burdensome requirement for tax payers to amend multiple returns to claim the WOTC in the year that the WOTC qualified wages were paid. For taxpayers who have amended returns in the past to claim the credit in the years in which qualified wages were paid, the directive allows a transition year to adopt the certification receipt methodology.
The full text of the directive can be found here: