IRS Releases Stimulus Package Employer Tax Credit Guidance

May 28, 2009 ( - The Internal Revenue Service (IRS) has issued guidance to employers about a Work Opportunity Tax Credit (WOTC) extended by the American Recovery and Reinvestment Tax Act (ARRTA) for hiring unemployed veterans and "disconnected youth(s)."

Notice 2009-28 presents a detailed definition of what constitutes an unemployed veteran for the purposes of the tax credit as well as explains how the agency is defining the targeted youths.  

According to the publication, the definition of targeted youths includes:

  • they have attained age 16 but not age 25 as of the hiring date;
  • they are not regularly attending any secondary, technical, or post-secondary school during the six-month period preceding the hiring date;
  • they are not regularly employed during such six-month period; and
  • they are not readily employable by reason of lacking a sufficient number of basic skills.

Tax agency officials said unemployed veterans and disconnected youth who begin work during 2009 or 2010 shall be treated as members of a targeted group for purposes of the employer’s WOTC.

The IRS also provided transition relief by stating that any employer who hires an unemployed veteran or a disconnected youth after December 31, 2008, and before July 17, 2009, will be considered to satisfy the deadline for the tax credit if the employer submits the pre-screening notice to the designated local agency to request certification not later than August 17, 2009.

The guidance is available  here .