Work Opportunity Tax Credit

Texas Winter Storm Transition Relief

The Internal Revenue Service (IRS) has issued two notices that provide Transition Relief (TR) due to the Texas Winter Storm (TWS) event that began on February 11, 2021. Notices TX-2021-02 and IR-2021-43 were issued on February 22, 2021, and provide a postmark extension from February 11 to June 15, 2021, that applies to ALL 254 Texas counties. Consultants and employers have until June 15, 2021, to postmark IRS Form 8850 submissions due during that period.

TX-2021-02, February 22, 2021

Following the recent disaster declaration issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers will receive tax relief.

Individuals and households affected by severe winter storms that reside or have a business in all 254 Texas counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after February 11, 2021, and before June 15, 2021, are postponed through June 15, 2021. 

IR-2021-43, February 22, 2021

TEXAS—Victims of winter storms that began February 11, 2021, now have until June 15, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

During the TWS TR period, all claims should be made using your standard submission method, with the exception of claims made using fax or postal mail. If fax or postal mail is your usual submission method, the WOTC Unit suggests you consider moving to scanning and emailing claims, if possible, to prevent delays in data entry.

If you are interested in the WOTC Unit bulk upload process, please send an email to the WOTC Unit email address for further information. The Texas WOTC Unit will suspend untimely denials during this relief period. If you receive an untimely denial while our IT Unit is working on suspending the process, please disregard. Any untimely denials that are issued during the suspension will be automatically reconsidered.

Please submit any questions to wotc@twc.texas.gov.

WOTC Reauthorized through December 31, 2025

The Consolidated Appropriations Act, 2021 (the Act) was passed by Congress on December 21, 2020, and signed by the president on December 27, 2020. The Act reauthorizes the Work Opportunity Tax Credit until December 31, 2025. Additionally, the Act extends empowerment zone designations from December 31, 2020, to December 31, 2025.

State workforce agencies (SWAs) are authorized to continue:

• processing employers’ timely filed certification requests;
• issuing determinations (certifications or denials) for individuals in currently reauthorized targeted groups that began work on or after January 1, 2021, and before January 1, 2026; and
• extending designated empowerment zones.

As a reminder, SWAs will continue processing certification requests for individuals eligible under IRS Notice 2020-78, WOTC Transition Relief, received by January 28, 2021. The transition relief applies to members of the designated community resident targeted group or qualified summer youth employee targeted group residing within an empowerment zone who began work on or after January 1, 2018, and before January 1, 2021. For additional information about IRS WOTC Transition Relief, refer to IRS Notice 2020-78. 

Please note that employers and consultants do not need to resubmit applications previously sent to TWC. We have begun reconsideration of previously submitted applications beginning with calendar year 2018 and will continue the process based on date of submission. 

If you have any questions, please contact the WOTC Help Desk at wotc@twc.texas.gov.

Qualified Wages for New Qualified Long-Term Unemployment Recipient Target Group

The 1996 legislative provisions that apply to qualified wages for most adult, non-veteran target groups and the amount of tax credit employers may claim for new hires certified under those target groups also apply to new target group employees hired after December 31, 2015. Qualified wages for certified new hires in the new qualified long-term unemployment recipient target group are capped at $6,000 during the first year of employment, for a maximum tax credit of up to $2,400 depending on the number of hours the new hire works and whether the new hire meets the provisions of the minimum employment or retention period.

Within 28 days of the employee’s start date, employers hiring individuals from one or more of the identified target groups must complete the following:

• IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit
• ETA Form 9061, Individual Characteristics Form (If the new hire has been given the ETA Form 9062, Conditional Certification, it may be used in lieu of the ETA Form 9061.)

TEGL Guidance
TEGL No. 25-15 Change 1 states that as a postmark date on/after April 12, 2017, SWAs may ONLY issue the ETA Form 9063- (OMB No. 12050371) Employer Certification Form for all WOTC target groups only if submitted on ETA forms (Revised May 2016) with OMB Control Number 1205-0371 and IRS Form 8850 (Revised March 2016) with OMB Control Number 1545-1500.

Mail, fax, or e-mail forms to:

Texas Workforce Commission
WOTC Unit
101 E 15th Street, Room 202T
Austin, Texas 78778-0001
Fax: 512-463-8819
wotc@twc.texas.gov

If you are filing the forms by e-mail, the attached forms must be password-protected, and the password must be sent in a separate e-mail to the same e-mail address. Employers and consultants submitting forms by fax or e-mail will be required to maintain the original forms for the required retention period (four years for certifications and one year for denials).

When an incomplete WOTC application is submitted by the employer, TWC's WOTC Unit will send a needs request letter to the employer. The employer must respond within 60 days or the application will be closed.

• View form field explanations for IRS Form 8850 and ETA Form 9061

The State of Texas Tax Refund for Employers of TANF or Medicaid Clients is another tax benefit for employers. To qualify, an employer must:

• Pay certain State of Texas taxes
• Have paid wages during the first year of employment to a Texas resident who received at least one month of TANF or Medicaid benefits within six months of the employee start date
• Have provided and paid part of a qualifying employee’s HMO health plan, self-funded or self-insured ERISA plan, or a health plan approved by the Texas Commissioner of Insurance

Under the State of Texas Tax Refund for Employers of TANF or Medicaid Clients program, an employer may receive a refund of up to $2,000 for each qualifying employee hired.

To apply, complete TWC Form 1098, Application for Refund of Taxes Paid to the State of Texas.

Mail form to:

Texas Workforce Commission
WOTC Unit
101 E 15th St, Rm 202T
Austin, TX 78778-0001

Forms must be mailed on or after January 1 and before April 1 of the calendar year following the year taxes and wages were paid.