FY 2003 WOTC and welfare-to-work tax credit plans

Official HTML letter (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2003/TEGL1-03.html):

Employment and Training Administration Advisory System
U.S. Department of Labor
Washington, D.C. 20210
CLASSIFICATION: WOTC and WtWTC
CORRESPONDENCE SYMBOL: OWI
DATE: July 3, 2003

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 1-03

TO: ALL STATE WORKFORCE AGENCIES
ALL STATE WORKFORCE LIAISONS

/S/
FROM: EMILY STOVER DeROCCO, Assistant Secretary
SUBJECT: Planning Guidance for Work Opportunity Tax Credit and Welfare-to-Work Tax Credit Allotments for Fiscal Year 2003 and Transmittal of ETA Handbook No. 408 Third Edition, November 2002

1. Purpose. To provide planning guidance to State Workforce Agencies (SWAs) responsible for management of the Work Opportunity Tax Credit and Welfare-to-Work Tax Credit allotments announced in Training and Employment Guidance Letter (TEGL) No. 23-02, and to transmit ETA Handbook No. 408 Third Edition, November 2002 (Handbook).

2. References. The Wagner-Peyser (W-P) Act, Section 7(d); the Small Business Job Protection Act of 1996 (P.L. 104-188); the Taxpayer Relief Act of 1997 (P.L. 105-34); the Tax and Trade Relief Extension Act of 1998 (P.L. 105-277); the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170); the Job Creation and Worker Assistance Act of 2002, (P.L. 107-147); November 1998, Second Edition of ETA Handbook 408; 29 CFR Parts 93, 96, 97, 98, and 99; OMB Circular A-87 and the ETA WOTC/WtW Web site: http://www.uses.doleta.gov/tax.asp.

3. Background. On March 9, 2002, President Bush signed into law, the Job Creation and Worker Assistance Act of 2002, (P.L. 107-147) (herein referred to as the Act). It reauthorizes the Work Opportunity Tax Credit program and the Welfare-to-Work Tax Credit (WOTC and WtWTC) for a 24-month period, beginning January 1, 2002, and ending December 31, 2003. The reauthorization is retroactive to December 31, 2001, for both tax credits.

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RESCISSIONS: [none listed]
EXPIRATION DATE: Continuing
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4. Funding. The WOTC and WtWTC activities operated under Continuing Resolutions (CR) until the Consolidated Appropriations Resolution, 2003 (Public Law 108-7) was signed into law February 20, 2003. Attachment II-A contains information on advanced funds issued through CR Number 5 to support uninterrupted administration of WOTC and WtWTC activities. Attachment II-B contains the Fiscal Year (FY) 2003 funding allocations for the SWAs.
The total funding for FY 2003 is $20,863,500. This is a decrease of $135,500 from the FY 2002 appropriation due to a congressional across-the-board reduction of 0.65 percent to all FY 2003 discretionary programs. After reserving $584,200 for postage and $20,000 for the Virgin Islands, funds are distributed to the states by administrative formula with a $64,000 minimum allotment and a 95% stop-loss/120% stop-gain from the prior year allotment share percentage. The FY 2003 allotment formula is as follows:

- (1) 50% is allocated based on each state's relative share of total certifications issued for the WOTC and WtWTC program;
  (2) 30% is allocated based on each state's relative share of the Civilian Labor Force (CLF); and
  (3) 20% is allocated based on each state's relative share of the adult recipients of Temporary Assistance for Needy Families (TANF).

The data utilized for these factors reflect actual certifications reported for FY 2001, Calendar Year 2001 CLF averages, and adult recipients of TANF for FY 2001.

5. General Administration. SWAs are responsible for administering WOTC and WtWTC, including the certification process and reporting program data on a quarterly basis. SWAs should use the planning instructions and guidance in this TEGL to prepare the FY 2003 WOTC and WtWTC plan. Authorization for the cost reimbursable grant is provided in W-P Act, Section 7(d). Pursuant to Training and Employment Information Notice No. 24-99, the ETA National Office continues to be the grant office authority for the Employment Service Cost Reimbursable Grant.
Cost reimbursable grant funds are issued to SWAs for the administration and implementation of WOTC and WtWTC. ETA Regional Offices are responsible for conducting field level reviews of these cost reimbursable grants. This includes review and approval of state plans, analysis of expenditures and performance data, and on-site reviews. SWAs are expected to administer WOTC and WtWTC funds in accordance with the Act and applicable regulations, and the terms and conditions of the W-P Act Annual Funding Agreement, which includes administrative requirements and cost principles of Federal Regulations at 29 CFR Part 97 and OMB Circular A-87.
Further, WOTC and WtWTC must be administered in accordance with the policies and procedural guidance set forth in the Handbook at http://www.uses.doleta.gov/tax.asp. The third edition of the Handbook consolidates and updates information included in the first two editions. Also, it includes the new provisions in P.L. 107-147, the most current reauthorizing legislation and provides clarifications and interpretations regarding specific definitions of terms and other program related requirements.
The Handbook includes the following documents:

- Revised reporting forms and instructions: ETA Forms 9057, 9058 and 9059;
- Revised administrative/processing forms and instructions: ETA Forms 9061, 9062, 9063, and 9065;
- Addendum to ETA Form 9058, Report No. 2 and instructions;
- "Technical Assistance and Compliance Review Guide"-- a 17-page document with corresponding instructions for use by federal, regional and national coordinators in program oversight visits (Appendix VI);
- ETA Spanish versions of Form 8850 and ETA Form 9061. These forms are provided to assure that Spanish speaking customers understand the purpose of these forms.

Training on the Handbook, the new electronic ETA Enterprise Information Management System Tax Credits Reporting System (EIMS-TCRS), and the OMB approved Technical Assistance and Compliance Review Guide were provided at the WOTC and WtWTC National Training Conference held in October 2002. The Handbook, "Technical Assistance and Compliance Review Guide," and training materials are available electronically at http://www.uses.doleta.gov/tax.asp. (The EIMS-TCRS is an electronic system recently implemented for WOTC and WtWTC. See Reporting below for more details.)
Current Federal Regulations at 20 CFR 658.400 Subpart E cover the complaint procedures. Other applicable regulatory provisions are incorporated in the grant plan Statement of Work (See Attachment III).

6. Reporting. SWAs should plan to expend all funds within the year (exclusive of "carry in" funds) on a quarterly basis. Prior year fund balances will remain with the respective PY/FY annual grant and should be expended under such grant agreements, Notices of Obligation and state plans and/or plan guidance. No plans are required for the FY 2002 allocations. Further, FY 2002 extensions for carry-in funds are not needed as long as funds are expended within the maximum December 31, 2003, statutory limit. SWAs should report expenditures quarterly by direct data entry of Standard Form 269 (SF-269) into the Web-based EIMS-TCRS. Quarterly financial reports are due within 30 days following the end of each quarter per 29 CFR 97.41(b) (4). Timely submission of these reports is extremely important to ensure proper accounting of funds. Regional Offices will conduct a financial reconciliation at the end of the fiscal year. Questions regarding financial management and reporting for FY 2003 or for any existing prior year fund balances should be addressed to the appropriate Regional Office.
The Government Paperwork Elimination Act (GPEA) of 1998 (P.L. 105-277) requires that, when practicable, Federal agencies use electronic forms, electronic filing, and electronic signatures to conduct official business with the public by October 2003. During the period covered by this plan, quarterly program activity reports will be transferred to the EIMS-TCRS. The EIMS-TCRS is a Web-based system that will allow SWAs to meet the reporting responsibilities in a more efficient manner while reducing the reporting burden on the SWAs, regional and national offices. Initially, SWAs will manually enter the required quarterly data for Report No. 1, "Conditional Certifications Issued;" Report No. 2, "Certification Workload and Characteristics of Certified Individuals;" and Report No. 3, "Verification Results" to the TCRS. Instructions regarding operation of the TCRS and a User's Guide were provided to the SWAs at a national training conference held in Orlando, Florida, October 28-31, 2002. Reports are due 45 days after the end of the quarter for Reports No. 1 and 2. Report No. 3 is due 45 days after the third month following the close of the reporting period. A schedule of report due dates is at http://www.uses.doleta.gov/tax.asp.

7. OMB Approval. The Handbook and the data collection and reporting requirements contained in this TEGL were approved by OMB according to the Paperwork Reduction Act of 1995 under OMB approval No. 1205-0371, expiring December 31, 2004. The respondent's obligations to reply to these requirements are mandatory (P.L.104-188). Persons are not required to respond to this collection of information unless it displays a currently valid OMB control number.

8. Grant and Plan Effective Date. Plans should be developed for a 12-month period beginning October 1, 2002, through September 30, 2003. SWAs may request extensions through the ETA Regional Office.

9. Action Required. SWAs are requested to take the following action:

a.  Immediately transmit this issuance to the appropriate staff.
b.  Submit three (3) copies of the WOTC and WtWTC Plan for FY 2003 to the appropriate Regional Office. Plans should be prepared in accordance with Attachments I, II-A, II-B, and III, Grant Procedures, Allocation Lists, and Plan Narrative Instructions and be submitted to the appropriate Regional Office 30 days after the issuance date of this guidance letter. The plan must include:

- 1.  Transmittal Letter
    2.  Application for Federal Assistance (SF 424)
    3.  Budget Expenditure Plan (SF 424 A - Section D only)
    4.  Plan Narrative: These plans should include anticipated FY 2003 funded activities that will be for the period October 1, 2002, through September 30, 2003, based on the FY 2003 planning estimates (Attachment II-B).

10. Inquiries.Program questions may be directed to the Regional Office or to Carmen Ortiz (Office of Workforce Investment, Division of USES/ALMIS) at (202) 693-2786. All questions regarding grant and financial issues should be directed to Gwendolyn Baron-Simms at (202) 693-3309 or Fred Tello (202) 693-3333.

11. Attachments.

- 
  I.      Grant Procedures
  II-A.  Advanced Allocations through January 11, 2002, CR #5
  II-B.  Funding Allocation for FY 2003 Funds
  III.   WOTC and WtWTC Plan Narrative Instructions
  IV.   ETA Handbook No. 408 Third Edition November 2002 at http://www.uses.doleta.gov/tax.asp

Attachment I: Grant procedures (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2003/TEGL1-03_AttachI.html):

ATTACHMENT I:

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Grant Procedures

Grant Agreements. Funds are being provided to SWAs responsible for the Wagner-Peyser (W-P) Annual Funding Agreement Grantees for the provision of the Work Opportunity Tax Credit and Welfare-to-Work Tax Credit (WOTC and WtWTC). These services must be consistent with the instructions in this TEGL and ETA Handbook No. 408 Third Edition, November 2002 (Handbook). WOTC and WtWTC grant funds are provided on the basis of approved state plans for the program and are provided under separate W-P Annual Funding Agreements for each program year with the designated SWA. The Agreement includes Standard Assurances and Certifications that apply to all grant programs covered by the Agreement. Notice of Obligation authority documents will be issued upon receipt of an approved plan.

Annual Plan. The WOTC and WtWTC plan must include a transmittal letter, an Application for Federal Assistance (SF-424), a Budget Expenditure Plan (SF-424 A, Section D only), and a Plan Narrative. Negotiations between the Grantee and the Regional Office will determine the acceptability of the annual plan for FY 2003 funds.

Plans should cover a period of 12 months beginning October 1, 2002, through September 30, 2003. 

SWAs must submit three (3) copies of the FY 2003 WOTC and WtWTC annual plan to the appropriate Regional Office. Plans should be submitted 30 days after issuance of this TEGL. Please contact the Regional Office representative if there is a need for additional time.

Regional Offices will review and negotiate changes as required with the SWAs. 
Plans should be prepared in accordance with Attachments I, II-A, II-B, and III (Grant Procedures, Allocations, and Plan Narrative Instructions) and be submitted to the appropriate Regional Office.

Modifications. The SWA and the Regional Office, in consultation with the National Office, may jointly modify the annual plan during the program year subject to the approval of the Grant Officer in all cases involving funding actions. The plan modification must include a transmittal letter, a revised plan narrative, and a quarterly spending plan (SF-424 A, Section D only). Regional Offices are responsible for coordinating both funding adjustments and annual plan modifications. They have the authority to recommend fund adjustments where a state is not spending at an agreed upon level. When an adjustment is necessary, a bilateral modification may be issued by the Grant Officer.

Should the Secretary of Labor be required, by future legislation, to carry out other responsibilities not anticipated in the annual plan, SWAs will be requested to submit a modification to the annual plan in order to carry out these additional duties.

Financial Reconciliation. Financial reconciliation will be conducted by Regional Offices to reconcile accounting records maintained by the SWAs with the Department's original accounts.

Attachment II-A: FY 2003 funding balance (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2003/TEGL1-03_AttachII-A.html):

Attachment
II-A

U. S. Department of Labor

Employment and Training
Administration

Work Opportunity and Welfare-to-Work Tax Credits

FY 2003 Funding Balance

FY
2003 CR #5

Reg State Allotments Thru 1/11/03 Balance

Total 20,279,300 5,926,000 14,353,300

3 Alabama 321,489 92,327 229,162

6 Alaska 65,120 19,489 45,631

6 Arizona 301,854 86,688 215,166

4 Arkansas 350,806 100,746 250,060

6 California 2,264,101 775,017 1,489,084

4 Colorado 188,380 64,087 124,293

1 Connecticut 291,411 83,688 207,723

2 Delaware 65,120 20,125 44,995

2 Dist of Columbia 
77,206 23,068 54,138

3 Florida 694,927 199,572 495,355

3 Georgia 564,634 162,154 402,480

6 Hawaii 77,206 22,172 55,034

6 Idaho 65,120 19,489 45,631

5 Illinois 1,027,830 295,176 732,654

5 Indiana 479,670 131,034 348,636

5 Iowa 283,116 64,367 218,749

5 Kansas 144,164 41,402 102,762

3 Kentucky 292,922 84,122 208,800

4 Louisiana 491,813 141,240 350,573

1 Maine 89,474 20,342 69,132

2 Maryland 476,375 136,807 339,568

1 Massachusetts 
428,823 123,151 305,672

5 Michigan 700,467 201,163 499,304

5 Minnesota 398,828 90,675 308,153

3 Mississippi 210,820 53,417 157,403

5 Missouri 473,061 139,191 333,870

4 Montana 65,120 19,489 45,631

5 Nebraska 124,355 35,713 88,642

6 Nevada 132,713 30,173 102,540

1 New Hampshire 
77,206 23,124 54,082

1 New Jersey 578,944 166,263 412,681

4 New Mexico 199,205 45,290 153,915

1 New York 1,244,590 357,426 887,164

3 North Carolina 
518,391 148,873 369,518

4 North Dakota 65,120 19,489 45,631

5 Ohio 909,235 261,118 648,117

4 Oklahoma 198,893 45,836 153,057

6 Oregon 232,609 66,802 165,807

2 Pennsylvania 1,003,515 341,614 661,901

1 Puerto Rico 147,888 35,571 112,317

1 Rhode Island 97,524 28,007 69,517

3 South Carolina 
256,161 58,239 197,922

4 South Dakota 65,120 19,489 45,631

3 Tennessee 615,714 175,942 439,772

4 Texas 1,236,934 367,793 869,141

4 Utah 86,567 24,861 61,706

1 Vermont 65,120 19,489 45,631

2 Virginia 460,013 132,108 327,905

6 Washington 465,582 133,708 331,874

2 West Virginia 136,807 42,409 94,398

5 Wisconsin 386,117 110,886 275,231

4 Wyoming 65,120 19,489 45,631

Attachment II-B: FY 2003 state allotments (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2003/TEGL1-03_AttachII-B.html):

Attachment
II-B

U. S. Department of
Labor

Employment and Training
Administration

Work Opportunity and Welfare-to-Work Tax Credits

FY 2003 States Allotments

State FY 2003

Total: $20,863,500

Alabama 321,489

Alaska 65,120

Arizona 301,854

Arkansas 350,806

California 2,264,101

Colorado 188,380

Connecticut 291,411

Delaware 65,120

Dist of Columbia 77,206

Florida 694,927

Georgia 564,634

Hawaii 77,206

Idaho 65,120

Illinois 1,027,830

Indiana 479,670

Iowa 283,116

Kansas 144,164

Kentucky 292,922

Louisiana 491,813

Maine 89,474

Maryland 476,375

Massachusetts 428,823

Michigan 700,467

Minnesota 398,828

Mississippi 210,820

Missouri 473,061

Montana 65,120

Nebraska 124,355

Nevada 132,713

New Hampshire 77,206

New Jersey 578,944

New Mexico 199,205

New York 1,244,590

North Carolina 518,391

North Dakota 65,120

Ohio 909,235

Oklahoma 198,893

Oregon 232,609

Pennsylvania 1,003,515

Puerto Rico 147,888

Rhode Island 97,524

South Carolina 256,161

South Dakota 65,120

Tennessee 615,714

Texas 1,236,934

Utah 86,567

Vermont 65,120

Virginia 460,013

Washington 465,582

West Virginia 136,807

Wisconsin 386,117

Wyoming 65,120

State
Total 20,259,300

Virgin Islands 20,000

Postage 584,200

Attachment III: Plan narrative instructions (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2003/TEGL1-03_AttachIII.html):

ATTACHMENT III:

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Work Opportunity Tax Credit and

Welfare-to-Work Tax Credit

Plan Narrative Instructions

The reauthorization of the Work Opportunity Tax Credit and Welfare-to-Work Tax Credit (WOTC and WtWTC) for FY 2003 extends the availability of a highly successful business service tool to stimulate economic recovery and growth. Plan narratives should focus on how the tax credits will be integrated within the state's business outreach and employer service programs. 

Statement of Work. SWAs will submit detailed plan narrative descriptions for carrying out the following functions:

Determining eligibility of individuals as members of targeted groups, on a timely basis, and performing a quality review by a second staff person for each determination within 48 hours.

Issuing employer certifications, denials, or notices of invalidation for tax credits on a timely basis and in accordance with the policies and procedures set forth in the ETA Handbook No. 408 Third Edition, November 2002 (Handbook).

Developing working agreements with partner agencies in the One-Stop Service Delivery system and coordinating efforts to promote WOTC and WtWTC to employers and job seekers and other Workforce Investment Act (WIA) partners.

Establishing and implementing an Appeals Resolution and Policy Clarification System in accordance with the guidelines provided in the Handbook (Chapter VIII, Section F, pp VIII-5-8).

Establishing and maintaining appropriate forms review, record keeping, and reporting capability related to the orderly management of WOTC and WtWTC certification requests.

Establishing and maintaining an orderly system for regularly verifying the eligibility of a random sample of individuals certified under the WOTC and WtWTC and initiating effective corrective action when appropriate as indicated by results of such activities.

Negotiating formal cooperative agreements with local WIA areas, State Vocational Rehabilitation Agencies, and other state and local agencies and organizations for the purposes of issuing Conditional Certifications where appropriate, and/or augmenting WOTC and WtWTC outreach activities.

Negotiating formal cooperative agreements with appropriate state agencies, including the Departments of Health and Human Services, Agriculture and Housing and Urban Development to expedite verification of information provided to the SWA by participating target group members.

Training state and participating agency staff, and providing monitoring and technical assistance to these agencies, as appropriate, for conducting target group, preliminary eligibility determinations and issuing Conditional Certifications.

Cooperating with employment and training organizations already working with the private sector, such as veteran organizations, employer committees, and WIA Boards, to inform employers about the tax benefits to be derived from participation and the eligibility requirements under WOTC and WtWTC.

Grant Agreement Conditions:

By entering into this agreement, the SWA agrees to the following conditions:

Provisions of the Internal Revenue Code Section 51 and 51A, as amended, must be adhered to in conducting the program. By law, the SWAs are designated as the ONLY agencies that can issue a Certification. The SWAs can enter into cooperative agreements with certain participating agencies and together provide other WOTC and WtWTC related program services. 

The Handbook for the WOTC and WtWTC shall guide conditions and standards of performance for administration and operation of the program. The state shall maintain a verification and quality control process in accordance with guidance in the Handbook.

Fund utilization will be reviewed against the quarterly spending plan and when expenditures are substantially below plan, ETA may de-obligate funds for redistribution.

The letter also refers to ETA Handbook No. 408, Third Edition (November 2002); the ETA advisory listing does not supply that handbook as a file attachment.