Chuck Swenson

Bye-Bye GO (Gulf Opportunity): Hello Rural Renewal Counties (RRC)

Although federal hiring credits for companies affected by Hurricane Katrina are about to expire, new hiring credits have just been issued. Here’s how to take advantage of them.

August 9, 2007
by Chuck Swenson, CPA/PhD

Federal hiring credits for companies affected by Hurricane Katrina are about to expire on August 28. But, new Federal hiring credits for hiring 18- to 39-year-olds in 408 counties have just come on line. This article tells you how to take advantage of them.

New Rural Renewal Counties (RRCs)

In June, the IRS announced 408 counties which are considered Rural Renewal Counties. Spanning 33 states they account for approximately 13 percent of all U.S. counties. If a company hires any 18- to 39-year-old who is a resident of one of these counties, the company automatically qualifies for a Work Opportunity Tax Credit (WOTC). The credit is 20 percent of qualified wages, with a maximum credit of $2,400 per employee.

Can My Clients Benefit From RRCs?

Right away, if the client hires someone who lives in one of these counties. You can check the list of counties from the IRS publication or use the software, which allows you to type in any U.S. address to find RRC, Gulf Opportunity (GO) and numerous other tax zone locations.

To obtain the RRC/WOTC credit for your client, just follow the WOTC filing requirements for Form 8850. It’s important to know that the forms must be filed with the appropriate state employment agency within 28 days of hire. Since the WOTC has been expanded to cover any veteran who is disabled, it may be worth checking to see if any of your clients have hired a veteran who has returned from the Gulf who may qualify.

Bye-Bye GO Hiring Credits

WOTC credits for Katrina employees are due to expire on August 28. A Hurricane Katrina employee is a person who, on August 28, 2005, had a main home in the Gulf Opportunity (GO) zone (core disaster area) and, during a two-year period beginning on this date, is hired to perform services principally in the GO zone. Certification does not apply to this group; that is, the company simply claims the credit on its Federal return without having to apply to the State Employment Security Agency (SESA) coordinator for certification. New employees hired in a GO zone after August 28 will not be eligible for the credit.

Additional information can be found at the above link to Form 8850 instructions. Or, you can type in an address on the software mentioned above, which has all GO zone locations programmed.

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Charles Swenson, CPA, MBT, PhD is Professor and Leventhal Research Fellow at the University of Southern California. He has authored over 50 articles and two textbooks on taxation, and is editor of a treatise on state and local taxation forthcoming by LexisNexis.