Businesses

The Work Opportunity Tax Credit (WOTC)

WOTC is a federally funded program designed to encourage employers in the private sector to hire qualified job seekers (from nine target groups) who face barriers to gainful employment. The Small Business and Work Opportunity Tax Act of 2007 extended this program through August 31, 2011.

WOTC Brochure: The Work Opportunity Tax Credit (PDF - 2 pages / 256 KB). This brochure contains additional information on the program.

Detailed Program Information
For more information on the program, to include the qualifications for new hires to be eligible for each of the nine target groups, visit the U.S. Department of Labor, Employment and Training web site at http://www.doleta.gov/business/incentives/opptax/.

You can also visit the Internal Revenue Service web site for WOTC information: http://www.irs.gov/instructions/i8850.

Forms
Below are the current forms used in the WOTC program. Carefully read the instructions for each form as they provide detailed information on how to properly complete these forms, important timeframes, and items to submit along with these forms.

Where to Mail Your Completed Forms
Please download and print these forms, complete them, and mail them to Job Service North Dakota, ATTENTION: WOTC Coordinator, PO Box 5507, Bismarck, ND 58506-5507.

Form 8850 - Pre-Screening Notice and Certification Request (Revised August 2009)
(PDF: 2 pages/234 KB)
When submitting this form to JSND, it must contain an original signature of the employee AND a target group must be indicated by placing a checkmark in the appropriate box. Please note the Designated Community Resident target group (#4) and the Summer Youth Employee target group (#6) are listed on the back of this form (below the line asking for the city or town) and you are to indicate either of those target groups there. A photocopy of this form will not be accepted; it must contain an original signature of the employee. This form has a specific timeframe in which it must be received at JSND. The mailing envelope containing this form must have a postmark that is no later than the 28th day from the employee's "started job" date which is filled in on the back of this form by either the employer or the company representing the employer. Those submitted after this timeframe will be denied as being untimely (this is an Internal Revenue Service guideline).

Instructions for Form 8850 (Revised August 2009) (PDF: 4 pages/53 KB)

Form 9061 - Individual Characteristics Form (Revised August 2009) (PDF: 2 pages/33 KB)
Please pay special attention to the instructions (shown below) as they list specific items you should submit along with this form that are needed to prove target group eligibility for the employee. By the employer or the company representing the employer submitting these items along with the forms, it greatly reduces processing time from our end.

Instructions for Form 9061 (Revised August 2009) (PDF: 2 pages/42 KB)

JSND's Self-Attestation Form (PDF: 1 page/31 KB)
This is North Dakota's version of the self-attestation form which is to be used when processing the Disconnected Youth target group. This form is used in those instances when the August 2009 version of Form 9061 was not submitted (either the November 2008 or an older version was submitted). When submitting this form to JSND, it must contain an original signature; a photocopy will not be accepted.

Employer Certification
Once all the necessary WOTC paperwork and verification is received, reviewed, and approved, Job Service North Dakota will issue the employer an Employer Certification for the Work Opportunity Tax Credit (ETA Form 9063--a form from the U.S. Department of Labor, Employment and Training Administration). This form provides the employer with a record of the results of the action on the employer's certification request.

Tax Credit Calculations/Hours the Employee Must Work
In the WOTC program, a two-tiered system is used for calculating the tax credit. All target groups are calculated using Tier 1 or Tier 2 (depending upon the hours worked by the employee) with the exception of the three target groups listed below:

Tier 1:
For employees working at least 120 hours but less than 400 hours, the (total) tax credit is calculated at the rate of 25% of the qualified first-year wages up to $6,000 (the maximum credit is $1,500).

Tier 2:
For employees working at least 400 hours or more, the (total) tax credit is calculated at the rate of 40% of the qualified first year's wages up to $6,000 (the maximum credit is $2,400).

Exceptions:

• Qualified Veteran: The calculations in Tiers 1 and 2 as listed above apply; however, when the veteran is disabled, the qualified first-year wages are increased to $12,000.
• Summer Youth Employee: The calculation is as follows: The (total) tax credit is calculated at the rate of 25% of the qualified first-year wages up to $3,000 (maximum credit is $750). For employees working at least 400 hours or more, the (total) tax credit is calculated at the rate of 40% of the qualified first year's wages up to $3,000 (maximum credit is $1,200). NOTE: Qualified wages are limited to the wages paid for any 90-day period between May 1 and September 15--and the wages must only include wages paid or incurred for services performed while the summer youth lived inside the specified Federally Designated Areas. Also, a special rule is in place for continued employment. Please contact your local Job Service office for details.
• Long-Term Welfare Recipient: For the first year, the (total) tax credit is calculated at the rate of 40% of the qualified first-year wages up to $10,000 (maximum credit is $4,000). For the second year, the rate of 50% is applied to the qualified wages up to $10,000 (maximum credit is $5,000). This gives the employer a possible maximum 2-year tax credit of $9,000.

IRS Contact Information

For information on calculating the WOTC tax credit, please contact the Internal Revenue Service (IRS). To find local IRS office locations in all states, visit http://www.irs.gov/localcontacts/index.html.

Telephone assistance for businesses: 1-800-829-4933. Hours of operation are Monday through Friday, 7:00 a.m. to 10:00 p.m. (Central Time).

Telephone assistance for government entities: 1-877-829-5500. Hours of operation are Monday through Friday, 7:00 a.m. to 5:30 p.m. (Central Time).

Federally Designated Areas in North Dakota (EZ, EC, RC, and RCC)

General Information
Launched in 1993, the Empowerment Zone and Enterprise Community (EZ/EC) Initiative is an interagency effort focused on the creation of self-sustaining, long-term development in distressed urban and rural areas throughout the Nation.

The 2000 Community Renewal Tax Relief Act established the Renewal Community Initiative, which was set up to encourage public-private collaboration to generate economic development in distressed communities. Renewal communities are eligible to share in tax incentives to stimulate job growth, promote economic development, and create affordable housing.

Also part of stimulating rural renewal and economic development is the designation of rural renewal counties. Counties that fall under this category are defined as any county that is outside a metropolitan statistical area (as defined by the Office of Management and Budget) that, during the periods 1990-94 and 1995-99, had a net population loss.

How These Areas Relate to Target Groups
Two target groups (Designated Community Resident Aged 18-39 and Qualified Summer Youth Employee Aged 16-17) include as part of their qualifying requirements that individuals must have their principal residence within one of these specific areas (see WOTC Brochure for additional information). To qualify as a resident of one of the federally designated areas in North Dakota, individuals must reside in one of the following areas:

• Empowerment Zones (EZ): Includes all of Steele County and parts of Griggs County. For more information about, visit http://www.ezec.gov.
• Enterprise Communities (EC): There are none designated in North Dakota. For more information about, visit http://www.ezec.gov.
• Renewal Communities (RC): The Turtle Mountain Band of Chippewa. For more information, visit www.hud.gov/offices/cpd/economicdevelopment/programs/rc/.
• Rural Renewal Counties (RRC): To view the counties, visit the IRS web site at http://www.irs.gov/instructions/i8850 or contact your local Job Service office.

Information on the federally designated areas is also listed on the IRS Form 8850 Instructions, which can be viewed at www.doleta.gov/business/incentives/opptax/.

Need More Information?

Please review the WOTC brochure (PDF file listed above) for the phone numbers of the Job Service Customer Service Offices located across North Dakota and ask to speak with the WOTC Coordinator. You may also call the State WOTC Coordinator at (701) 328-2076.