Initial FY 2024 WOTC administration allotments

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION               WOTC
               ADVISORY SYSTEM
                                                        CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR
                                                        OWI DNPTTA
             Washington, D.C. 20210
                                                        DATE
                                                        November 14, 2023

ADVISORY:      TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 06-23

TO:            STATE WORKFORCE AGENCIES
               STATE WORKFORCE ADMINISTRATORS
               WORK OPPORTUNITY TAX CREDIT COORDINATORS

FROM:          BRENT PARTON
               Principal Deputy Assistant Secretary

SUBJECT:       Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal
               Year 2024

1. Purpose. To convey the Fiscal Year (FY) 2024 initial funding allotments for WOTC
   application requirements for State Workforce Agencies (SWA), based on funding
   appropriated through a continuing resolution through November 17, 2023.

2. Action Requested. Grantees must meet the application requirements detailed in section 4
   within 30 calendar days from the date of this Training and Employment Guidance Letter
   (TEGL) issuance.

3. Summary and Background.

   a. Summary – On September 30, 2023, the President signed into law H.R. 5860, a
      continuing resolution (CR) known as the Continuing Appropriations Act, 2024 and Other
      Extensions Act, which became Public Law 118-15. The CR provides for incremental FY
      2024 grant funding for states’ administration of the WOTC, prorated based on the CR’s
      expiration date of November 17, 2023. The appropriation for WOTC under this CR is
      $2,423,384. Once Congress authorizes final appropriations for FY 2024, or additional
      incremental funding under a subsequent CR, the Employment and Training
      Administration (ETA) will publish a change to this TEGL to announce the incremental or
      full-year allotments and state balances. If applicable, ETA will also announce any
      additional funding appropriated to reduce processing backlogs and assist states in
      adopting or modernizing information technology for processing of certification requests.
      ETA requests that SWAs submit applications for funding as allotted in Attachment I of
      this TEGL.

   b. Background – The WOTC is set forth under section 51 of the Internal Revenue Code of
      1986, as amended (26 U.S.C. § 51), and is authorized until December 31, 2025, under the

 RESCISSIONS                                           EXPIRATION DATE
 None                                                  Continuing

       Consolidated Appropriations Act, 2021 (Pub. L. 116-260), Division EE, Title 1, Section
       113. The U.S. Department of the Treasury, through the Internal Revenue Service (IRS),
       administers all tax-related provisions and requirements of the tax credit. The U.S.
       Department of Labor, through ETA, awards grants to states for administration of WOTC.

4. Details. States must enter their state-specific allotment amount (provided in Attachment I)
   on their SF-424 Form, Application for Federal Assistance (OMB Control No. 4040-0004), as
   their request for FY 2024 funding.

   Allotment Formula. In February 2023, ETA published a Request for Comment in the
   Federal Register (88 FR 10540), requesting public comment on proposed modifications to
   WOTC procedural guidance and the administrative formula used to calculate annual state
   allotments. The proposed formula changes included an inflation-adjusted increase to state
   minimum funding allotments and revised metrics used in the formula methodology. ETA
   will use the revised administrative formula to calculate states’ remaining balances for FY
   2024 allotments once Congress passes the FY 2024 full-year appropriation. ETA will
   announce the full-year FY 2024 allotments and revised administrative formula in a
   subsequent Change TEGL. ETA determined initial FY 2024 state allotments (provided in
   Attachment I) for normal WOTC operations by calculating each state’s relative share of FY
   2023 full-year funding, and multiplying each state’s relative share by the total FY 2024
   WOTC CR prorated funding amount through November 17, 2023.

   ETA determined FY 2023 state allotments for normal WOTC operations according to the
   following methodology: After allocating $20,000 to the U.S. Virgin Islands, ETA distributes
   the remaining funds to the SWAs by administrative formula with a $66,000 minimum
   allotment and a 95 percent stop-loss/120 percent stop-gain from the previous year allotment
   percentage. We calculate the administrative formula as follows:

   a. 50 percent is based on each state’s relative share of total WOTC certifications issued
      from October 1, 2021, through September 30, 2022;
   b. 30 percent is based on each state’s relative share of the Civilian Labor Force averages for
      the 12-month period from October 1, 2021, through September 30, 2022; and
   c. 20 percent is based on each state’s relative share of adult recipients of Temporary
      Assistance for Needy Families averages from October 1, 2020, through September 30,
      2021.

   Application Requirements for FY 2024 Funding. ETA requires grantees to submit an
   electronically signed copy of the SF-424 Form, Application for Federal Assistance (OMB
   Control No. 4040-0004), as their official request for funding opportunity number ‘ETA-
   WOTC-TEGL-06-23-2024’ at https://www.grants.gov, within 30 calendar days from the
   issuance date of this TEGL. The official, electronically signed SF-424 Form should be
   marked as a ‘new’ application for funding and must reflect the amount listed in Attachment I
   as the state’s requested estimated funding total in item #18. Grantees must enter the Catalog
   of Federal Domestic Assistance Number ‘17.271’ for item #11 and the grantee’s 12-character
   Unique Entity Identifier (UEI number) for item #8c. Each applicant must have a UEI

number available, and it must be registered in the System for Award Management
(SAM.gov) before submitting an SF-424 application.

Grantees should indicate the estimated amount of Indirect Costs to be claimed by the
recipient for FY 2024 expenditures, if any, as a sentence for item #15, ‘Descriptive Title of
Applicant's Project.’ Grantees may use the amount of indirect costs reported against their FY
2023 WOTC grant as an approximate for FY 2024 indirect cost expenditures. For example:
“Indirect Costs for this award are estimated at $19,000.” If there is no estimated Indirect
Costs, the following statement, must be entered: “Indirect Costs for this award are estimated
at $0.00.”

To submit the required documents, applicants must follow the “Apply for Grants” link on
Grants.gov and download the links for the grant application package. For this funding
opportunity, applicants should not follow the “Find Grants” link, as this is not a competitive
funding opportunity. If applicants encounter a problem with Grants.gov and do not find an
answer in available resources, they should call 1-800-518-4726 or 1-606-545-5035 to speak
to a Customer Support Representative, or send an email to [email protected].

Award Descriptions. As part of a Federal government-wide effort to describe grant
activities consistently and accurately, ETA uses standard grant award descriptions. States
may see the following text in the grant award or in online descriptions of the WOTC grants:
    • Purpose: The purpose of this grant is to allow SWAs to administer WOTC per ETA
        guidance and provisions set forth in the IRS Code of 1986, Section 51, as amended.
        Law designates the SWAs as the only agencies that can issue a Certification (26
        U.S.C. § 51(d)(12)). The statute refers to SWAs as State employment security
        agencies, established in accordance with the Wagner-Peyser Act, 29 U.S.C. § 49 et
        seq.
    • Activities to be performed: SWAs must use funds to implement the requirements set
        forth in the WOTC Statement of Work, including to: Designate a state coordinator
        who oversees the administration of WOTC for each state grant; Determine eligibility
        of individuals as members of targeted groups on a timely basis, and issue employer
        certifications, denials, or notices of invalidation for tax credits on a timely basis, and
        in accordance with the policies and procedures set forth by ETA; and Establish and
        maintain appropriate forms’ quality review process, record keeping, and reporting
        capability related to the orderly management of WOTC certification requests.
    • Expected Outcomes: For WOTC grants, SWAs will issue determinations
        (certifications or denials) for employers’ certification requests, which facilitate tax
        credits determined by the U.S. Department of the Treasury. SWAs will increase
        efficiency in processing employers’ certification requests and develop plans that
        include an estimated timeline to eliminate existing backlogs of certification requests.
    • Intended Beneficiaries: Job seekers who have access to a higher number of
        employment opportunities, and employers who seek to increase hiring of qualified job
        applicants. Other beneficiaries include state and local partner agencies in the
        American Job Center network that coordinate efforts to promote WOTC to
        employers, job seekers, and other Workforce Innovation and Opportunity Act
        (WIOA) partners.

       •   Subrecipient Activities: SWAs, as WOTC grant recipients, do not typically
           subaward funds. States that wish to subaward funds should seek approval from their
           Grant Officer.

   General Administration. With their FY 2024 grant award, SWAs are responsible for
   conducting the WOTC activities outlined in the WOTC Statement of Work (Attachment II).
   As noted above, this TEGL provides incremental funding proportional to funds appropriated
   through the November 17, 2023 expiration date in the Continuing Resolution; the timing and
   amount(s) of subsequent incremental funding depends on future appropriations.

   Reporting Requirements.

   a. Quarterly Financial Report – SWAs must report fiscal expenditures quarterly using
      ETA Form 9130. Financial reports are due no later than 45 days f ollowing the end of
      each quarter. Timely submission of these reports is important to ensure proper
      accounting of funds.
   b. Quarterly Performance Report – SWAs must use the web-based Enterprise Business
      Support System (EBSS) Tax Credit Reporting System to report quarterly activities and
      outcomes using ETA Form 9058. Performance reports are due no later than 45 days
      following the end of each quarter. Timely submission of these reports is important for
      administration purposes.

5. Inquiries. Please direct inquiries to the appropriate Regional WOTC Coordinator listed on
   the WOTC website at https://www.dol.gov/agencies/eta/wotc/contact/regional-offices.

6. References.
   • Section 51 of the Internal Revenue Code of 1986, as amended (26 U.S.C. § 51)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapt
      erA/part4/subpartF&edition=prelim);
   •  Chapter 4B of Title 29 of the United States Code (Labor)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter4B&edition=prelim);
   •  Pub. L. 116-260, Consolidated Appropriations Act, 2021,which authorizes WOTC
      (https://www.congress.gov/116/plaws/publ260/PLAW-116publ260.pdf);
   •  Pub. L. 117-328, Consolidated Appropriations Act, 2023
      (https://www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf);
   • Pub. L. 118-15, Continuing Appropriations Act, 2024 and Other Extensions Act
      (https://www.congress.gov/118/plaws/publ15/PLAW-118publ15.pdf); and
   •  Federal Register: Work Opportunity Tax Credit, Request for Comments Regarding
      Proposed Modifications to Procedural Guidance and Administrative Formula (88 FR
      10540).

7. Attachment(s).
   •  Attachment I: Work Opportunity Tax Credit Fiscal Year 2024 Initial State Allotments
   •  Attachment II: Work Opportunity Tax Credit Statement of Work

                               Work Opportunity Tax Credit                 Attachment I
                       FY 2024 Funding under Continuing Resolution
                                          CR #1
                              10/1/23 thru 11/17/23 (13.11%)

State                                                                   Total

                                                                     $2,423,384

Alabama                                                                 36,168
Alaska                                                                   8,653
Arizona                                                                 45,145
Arkansas                                                                16,956
California                                                             322,953
Colorado                                                                39,250
Connecticut                                                             22,290
Delaware                                                                10,615
District of Columbia                                                     8,653
Florida                                                                130,594
Georgia                                                                 63,177
Hawaii                                                                  10,935
Idaho                                                                    9,799
Illinois                                                                92,574
Indiana                                                                 35,823
Iowa                                                                    28,682
Kansas                                                                  19,259
Kentucky                                                                46,390
Louisiana                                                               37,757
Maine                                                                    8,653
Maryland                                                                52,270
Massachusetts                                                           49,884
Michigan                                                                75,334
Minnesota                                                               37,759
Mississippi                                                             27,189
Missouri                                                                49,637
Montana                                                                  8,653
Nebraska                                                                17,485
Nevada                                                                  21,806
New Hampshire                                                            8,653
New Jersey                                                              42,846
New Mexico                                                              22,270
New York                                                               164,355
North Carolina                                                          66,967
North Dakota                                                             8,653
Ohio                                                                    94,433
Oklahoma                                                                34,128
Oregon                                                                  34,147
Pennsylvania                                                            93,160
Puerto Rico                                                             10,687
Rhode Island                                                             9,371
South Carolina                                                          32,836
South Dakota                                                             8,653
Tennessee                                                               85,708
Texas                                                                  171,750
Utah                                                                    14,219
Vermont                                                                  8,653
Virginia                                                                54,275
Washington                                                              54,526
West Virginia                                                           15,518
Wisconsin                                                               41,958
Wyoming                                                                  8,653
Virgin Islands                                                           2,622

                                                                                  Attachment II

                           Work Opportunity Tax Credit (WOTC)
                                      Statement of Work
State Workforce Development Agencies, also known as State Workforce Agencies (SWA), must
use funds for the Fiscal Year to conduct the following mandatory activities:

1. Adhere to Employment and Training Administration (ETA) guidance, and provisions of the
   Internal Revenue Code of 1986, Section 51, as amended, in administering the Work
   Opportunity Tax Credit (WOTC) certification process. Law designates the SWA as the only
   agency that can issue a Certification (26 U.S.C § 51(d)(12)). (That statute refers to SWAs as
   State employment security agencies, established in accordance with 29 U.S.C. § 49 et seq.).
2. Designate a State Coordinator who oversees the WOTC administration for each state grant
   and attends monthly technical assistance grantee calls hosted by ETA’s National and/or
   Regional Offices.
3. Determine eligibility of individuals as members of targeted groups, on a timely basis, and
   issue determinations (certifications, denials, or notices of invalidation for invalid
   certifications that were previously issued) on a timely basis, and in accordance with the
   policies and procedures set forth by ETA.
4. Establish and implement an appeals resolution process in accordance with the guidelines
   provided by ETA.
5. Develop a backlog reduction plan that includes an estimated timeline to eliminate the state’s
   existing backlog based on current policies and procedures and notify their ETA Regional
   Coordinator prior to plan implementation.
6. Establish and maintain appropriate quality review processes, record keeping procedures, and
   reporting capability related to the orderly management of WOTC certification requests in
   accordance with the policies and procedures set forth by ETA.
7. Establish and maintain an orderly system for regularly verifying the eligibility of a random
   sample of individuals certified under WOTC on a quarterly basis, and initiating effective
   corrective action when appropriate, as indicated by results of such quality control activities.
Additionally, SWAs are strongly encouraged to use the funds to conduct the following activities:
 •   Adopt information technology (i.e., systems applications, software, etc.) to process
     certification requests more efficiently, or make modernization improvements to their
     existing systems or procedures to increase efficiency and reduce any processing backlog.
 •   Develop working agreements, such as Memoranda of Understanding (MOU) or other
     formal agreements, with partner agencies in the American Job Center network (also known
     as the One-Stop Career Center system) to coordinate efforts to promote WOTC to
     employers, job seekers and other Workforce Innovation and Opportunity Act partners.
 •   Develop working agreements such as MOUs or other formal agreements with other SWAs
     for the timely and orderly processing of “out of state” certification requests requiring
     SWAs to provide available documentation and/or records for WOTC potentially eligible
     applicants (new hires) relocating and working in another state.

                                                                                     Attachment II

    •    Develop working agreements, such as MOUs or other formal agreements, with state or
         local partnering agencies (i.e., state Vocational Rehabilitation Agencies, Veterans Affairs
         Administration and related organizations, Employment Networks, and other local
         workforce areas), for the purposes of expediting verification of targeted group eligibility
         information submitted in certification requests, and issuing Conditional Certifications,
         where appropriate. SWAs are expected to train state and participating agency staff, and
         provide monitoring and technical assistance to these agencies, as appropriate, for
         conducting targeted group preliminary eligibility determinations and issuing Conditional
         Certifications.

Other Grant Agreement Conditions
By entering into this agreement, the SWA agrees to the following conditions:
•       SWAs must assure that all data exchanges conducted through or during the course of
        performance of this grant will be conducted in a manner consistent with applicable Federal
        law and TEGL No. 39-11, issued on June 28, 2012. All such activity conducted by ETA
        and/or recipients will be performed in a manner consistent with applicable state and Federal
        laws.

•       SWAs must fulfill performance and financial reporting requirements under the grant
        agreement.