The WOTC expanded.

• Author: Leggiero, Heather J.
• Position: Work opportunity tax credit

The work opportunity tax credit (WOTC) has been in existence for years; however, the Small Business and Work Opportunity Tax Act of 2007, P.L. 110-28 (SBWOTA), expanded the definition of some of the target groups, creating tax incentives that will affect more clients than originally thought. SBWOTA expanded the definition of "qualified veteran" to include certain disabled veterans and broadened the definition of a targeted group of high-risk youths, now referred to as designated community residents (DCRs).

These changes are effective for employees hired after May 25, 2007, SBWOTA's enactment date, and the WOTC now sunsets after August 31, 2011. SBWOTA also permits individuals and corporate taxpayers to claim the WOTC against the alternative minimum tax for tax years beginning after December 31,2006.

Under Sec. 51(d)(3)(A)(ii), a qualified veteran includes a person entitled to compensation for a service-connected disability and (1) having a hiring date that is not more than one year after having been discharged or released from active duty in the U.S. armed forces or (2) having aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months. Under Sec. 51(d)(5), a DCR is someone who (1) is at least 18 years of age, but not yet age 40, on the hiring date and (2) has qualified wages for services performed while his or her principal place of abode is within an empowerment zone, enterprise community, renewal community, or rural renewal county. The rural renewal county is a new qualifying area added to the WOTC. It is defined as any county outside a metropolitan statistical area that had a net population loss during the periods 1990-1994 and 1995-1999. This definition includes 408 counties, covering 32 states and...