§ 51. Amount of credit
(a)
Determination of amount
For purposes of section
38, the amount of the work opportunity credit determined under this section for the taxable year shall be equal to 40 percent of the qualified first-year wages for such year.
(b)
Qualified wages defined
For purposes of this subpart—
(1)
In general
The term “qualified wages” means the wages paid or incurred by the employer during the taxable year to individuals who are members of a targeted group.
(2)
Qualified first-year wages
The term “qualified first-year wages” means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer.
(3)
Limitation on wages per year taken into account
The amount of the qualified first-year wages which may be taken into account with respect to any individual shall not exceed $6,000 per year ($12,000 per year in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)).
(c)
Wages defined
For purposes of this subpart—
(1)
In general
Except as otherwise provided in this subsection and subsection (h)(2), the term “wages” has the meaning given to such term by subsection (b) of section
3306 (determined without regard to any dollar limitation contained in such section).
(2)
On-the-job training and work supplementation payments
(A)
Exclusion for employers receiving on-the-job training payments
The term “wages” shall not include any amounts paid or incurred by an employer for any period to any individual for whom the employer receives federally funded payments for on-the-job training of such individual for such period.
(B)
Reduction for work supplementation payments to employers
The amount of wages which would (but for this subparagraph) be qualified wages under this section for an employer with respect to an individual for a taxable year shall be reduced by an amount equal to the amount of the payments made to such employer (however utilized by such employer) with respect to such individual for such taxable year under a program established under section 482(e) [1] of the Social Security Act.
(3)
Payments for services during labor disputes
If—
(A)
the principal place of employment of an individual with the employer is at a plant or facility, and
the term “wages” shall not include any amount paid or incurred by the employer to such individual for services which are the same as, or substantially similar to, those services performed by employees participating in, or affected by, the strike or lockout during the period of such strike or lockout.
(4)
Termination
The term “wages” shall not include any amount paid or incurred to an individual who begins work for the employer—
(5)
Coordination with payroll tax forgiveness
The term “wages” shall not include any amount paid or incurred to a qualified individual (as defined in section
3111
(d)(3)) during the 1-year period beginning on the hiring date of such individual by a qualified employer (as defined in section
3111
(d)) unless such qualified employer makes an election not to have section
3111
(d) apply.
(d)
Members of targeted groups
For purposes of this subpart—
(2)
Qualified IV–A recipient
(3)
Qualified veteran
(A)
In general
The term “qualified veteran” means any veteran who is certified by the designated local agency as—
(i)
being a member of a family receiving assistance under a supplemental nutrition assistance program under the Food and Nutrition Act of 2008 for at least a 3-month period ending during the 12-month period ending on the hiring date, or
(B)
Veteran
For purposes of subparagraph (A), the term “veteran” means any individual who is certified by the designated local agency as—
(i)
(ii)
not having any day during the 60-day period ending on the hiring date which was a day of extended active duty in the Armed Forces of the United States.
For purposes of clause (ii), the term “extended active duty” means a period of more than 90 days during which the individual was on active duty (other than active duty for training).
(4)
Qualified ex-felon
The term “qualified ex-felon” means any individual who is certified by the designated local agency—
(5)
Designated community residents
(A)
In general
The term “designated community resident” means any individual who is certified by the designated local agency—
(B)
Individual must continue to reside in zone, community, or county
In the case of a designated community resident, the term “qualified wages” shall not include wages paid or incurred for services performed while the individual’s principal place of abode is outside an empowerment zone, enterprise community, renewal community, or rural renewal county.
(6)
Vocational rehabilitation referral
The term “vocational rehabilitation referral” means any individual who is certified by the designated local agency as—
(A)
having a physical or mental disability which, for such individual, constitutes or results in a substantial handicap to employment, and
(B)
having been referred to the employer upon completion of (or while receiving) rehabilitative services pursuant to—
(i)
an individualized written plan for employment under a State plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973,
(7)
Qualified summer youth employee
(A)
In general
The term “qualified summer youth employee” means any individual—
(ii)
who is certified by the designated local agency as having attained age 16 but not 18 on the hiring date (or if later, on May 1 of the calendar year involved),
(B)
Special rules for determining amount of credit
For purposes of applying this subpart to wages paid or incurred to any qualified summer youth employee—
(i)
subsection (b)(2) shall be applied by substituting “any 90-day period between May 1 and September 15” for “the 1-year period beginning with the day the individual begins work for the employer”, and
The preceding sentence shall not apply to an individual who, with respect to the same employer, is certified as a member of another targeted group after such individual has been a qualified summer youth employee.
(8)
Qualified food stamp recipient 2
(A)
In general
The term “qualified supplemental nutrition assistance program benefits recipient” means any individual who is certified by the designated local agency—
(9)
Qualified SSI recipient
The term “qualified SSI recipient” means any individual who is certified by the designated local agency as receiving supplemental security income benefits under title XVI of the Social Security Act (including supplemental security income benefits of the type described in section 1616 of such Act or section 212 of Public Law 93–66) for any month ending within the 60-day period ending on the hiring date.
(10)
Long-term family assistance recipient
The term “long-term family assistance recipient” means any individual who is certified by the designated local agency—
(A)
as being a member of a family receiving assistance under a IV–A program (as defined in paragraph (2)(B)) for at least the 18-month period ending on the hiring date,
(B)
(12)
Designated local agency
The term “designated local agency” means a State employment security agency established in accordance with the Act of June 6, 1933, as amended (29 U.S.C. 49–49n).
(13)
Special rules for certifications
(A)
In general
An individual shall not be treated as a member of a targeted group unless—
(i)
on or before the day on which such individual begins work for the employer, the employer has received a certification from a designated local agency that such individual is a member of a targeted group, or
(ii)
For purposes of this paragraph, the term “pre-screening notice” means a document (in such form as the Secretary shall prescribe) which contains information provided by the individual on the basis of which the employer believes that the individual is a member of a targeted group.
(B)
Incorrect certifications
If—
(i)
an individual has been certified by a designated local agency as a member of a targeted group, and
(ii)
such certification is incorrect because it was based on false information provided by such individual,
the certification shall be revoked and wages paid by the employer after the date on which notice of revocation is received by the employer shall not be treated as qualified wages.
(14)
Credit allowed for unemployed veterans and disconnected youth hired in 2009 or 2010
(A)
In general
Any unemployed veteran or disconnected youth who begins work for the employer during 2009 or 2010 shall be treated as a member of a targeted group for purposes of this subpart.
(B)
Definitions
For purposes of this paragraph—
(i)
Unemployed veteran
The term “unemployed veteran” means any veteran (as defined in paragraph (3)(B), determined without regard to clause (ii) thereof) who is certified by the designated local agency as—
(e)
Credit for second-year wages for employment of long-term family assistance recipients
(1)
In general
With respect to the employment of a long-term family assistance recipient—
(2)
Qualified second-year wages
For purposes of this subsection, the term “qualified second-year wages” means qualified wages—
(f)
Remuneration must be for trade or business employment
(1)
In general
For purposes of this subpart, remuneration paid by an employer to an employee during any taxable year shall be taken into account only if more than one-half of the remuneration so paid is for services performed in a trade or business of the employer.
(2)
Special rule for certain determination
Any determination as to whether paragraph (1), or subparagraph (A) or (B) of subsection (h)(1), applies with respect to any employee for any taxable year shall be made without regard to subsections (a) and (b) of section
52.
(g)
United States Employment Service to notify employers of availability of credit
The United States Employment Service, in consultation with the Internal Revenue Service, shall take such steps as may be necessary or appropriate to keep employers apprised of the availability of the work opportunity credit determined under this subpart.
(h)
Special rules for agricultural labor and railway labor
For purposes of this subpart—
(1)
Unemployment insurance wages
(A)
Agricultural labor
If the services performed by any employee for an employer during more than one-half of any pay period (within the meaning of section
3306
(d)) taken into account with respect to any year constitute agricultural labor (within the meaning of section
3306
(k)), the term “unemployment insurance wages” means, with respect to the remuneration paid by the employer to such employee for such year, an amount equal to so much of such remuneration as constitutes “wages” within the meaning of section
3121
(a), except that the contribution and benefit base for each calendar year shall be deemed to be $6,000.
(B)
Railway labor
If more than one-half of remuneration paid by an employer to an employee during any year is remuneration for service described in section
3306
(c)(9), the term “unemployment insurance wages” means, with respect to such employee for such year, an amount equal to so much of the remuneration paid to such employee during such year which would be subject to contributions under section 8(a) of the Railroad Unemployment Insurance Act (45 U.S.C. 358
(a)) if the maximum amount subject to such contributions were $500 per month.
(i)
Certain individuals ineligible
(1)
Related individuals
No wages shall be taken into account under subsection (a) with respect to an individual who—
(A)
bears any of the relationships described in subparagraphs (A) through (G) of section
152
(d)(2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests in the entity,[3] (determined with the application of section
267
(c)),
(2)
Nonqualifying rehires
No wages shall be taken into account under subsection (a) with respect to any individual if, prior to the hiring date of such individual, such individual had been employed by the employer at any time.
(3)
Individuals not meeting minimum employment periods
(j)
Election to have work opportunity credit not apply
(k)
Treatment of successor employers; treatment of employees performing services for other persons
(1)
Treatment of successor employers
Under regulations prescribed by the Secretary, in the case of a successor employer referred to in section
3306
(b)(1), the determination of the amount of the credit under this section with respect to wages paid by such successor employer shall be made in the same manner as if such wages were paid by the predecessor employer referred to in such section.
(2)
Treatment of employees performing services for other persons
No credit shall be determined under this section with respect to remuneration paid by an employer to an employee for services performed by such employee for another person unless the amount reasonably expected to be received by the employer for such services from such other person exceeds the remuneration paid by the employer to such employee for such services.
[1] See References in Text note below.
[2] So in original. Probably should be “Qualified supplemental nutrition assistance program benefits recipient”.
[3] So in original. The comma probably should not appear.