WOTC and Welfare-to-Work Tax Credit requests during the 2004 authorization lapse

Official letter (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2004/TEGL18-03.html):

Employment and Training Administration Advisory System
U.S. Department of Labor
Washington, D.C. 20210
CLASSIFICATION: WOTC/WTWTC
CORRESPONDENCE SYMBOL: OWI
DATE: February 24, 2004

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 18-03

TO: ALL STATE WORKFORCE AGENCIES
ALL STATE WORKFORCE LIAISONS

FROM: EMILY STOVER DeROCCO
Assistant Secretary

SUBJECT: Work Opportunity Tax Credit and Welfare-to-Work Tax Credit Program Planning Guidance for Period of Authorization Lapse

1. Purpose. To provide procedural guidance to State Workforce Agencies (SWAs) on processing of requests for certification under the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtWTC) after these tax credits expired on December 31, 2003. This guidance covers the period January 1 - September 30, 2004. If the WOTC and WtWTC program has not been reauthorized by September 30, 2004, additional guidance will be issued.

2. References. The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147); Internal Revenue Code of 1986, Sections 51 and 51A, as amended; and ETA Handbook No. 408, Third Edition, November 2002.

3. Background. The legislative authority for the WOTC and WtWTC program expired on December 31, 2003. Even though Congress introduced bills to reauthorize these tax credits, the lack of reauthorization has caused a lapse of continuity or hiatus. A hiatus is not new to the WOTC and WtWTC program. In the past, when the tax credits lapsed and Congress subsequently reauthorized the program, legislative provisions allowed for retroactive certification of eligibility for the period between the expiration date and the reauthorization date. However, to have been eligible for the tax credits during the hiatus period, employers were required to have filed requests for certification in a timely manner, and states needed to receive and log them in for subsequent approval or denial after legislative provisions reauthorizing the tax credits took effect. Employers that did not file for WOTC/WtWTC certification during the hiatus were denied the credit.

Although Congress has retroactively covered authorization lapses in the past, there is no guarantee that this will happen again or that employers' new hires during this hiatus will be certified for these tax credits. However, in the event that these tax credits are reauthorized with retroactive provisions, proper management of employer certification requests may help prevent large backlogs.

4. Action Required. SWA Administrators are requested to increase employer awareness regarding the WOTC and WtWTC authorization lapse and the conditions for employer certification requests of new hires during this period should the program be reauthorized. Employers should be notified, however, that although Congress has provided for retroactive eligibility certification in the past, certifications for an employer's new hires during this hiatus are not guaranteed.

SWAs are also requested to adhere to the following:

Mandatory Procedures:

* SWAs must accept and fully process WOTC and WtWTC certification requests for employer hires made prior to January 1, 2004.
* SWAs must accept, date stamp, log, and retain certification requests for employer new hires made between January 1 and September 30, 2004. However, states may not issue eligibility certifications until the program is reauthorized.
* SWAs and Participating Agencies (PAs) should continue to issue Conditional Certifications. States should notify all PAs of this guidance upon receipt of this advisory.

Voluntary Procedures:

* Since funds are not available after December 31, 2003, states may conduct all steps necessary to process certification requests up to, but not including, issuance of the actual certification or denial.
* Those states that run out of FY 2004 funds to administer the WOTC and WtWTC program during the hiatus can utilize Wagner-Peyser Act Section 7(a) and (b) funds, as well as general funding sources, to process any existing backlogs. States, however, must modify their annual plan to reflect such activities and send the modification to the Regional Coordinator. Regions will approve the modification and forward it to the Office of Grants and Contracts, Room S-4307, in the National Office.

5. Inquiries. Direct all questions to the appropriate Regional WOTC/WtWTC Coordinator.

RESCISSIONS: [none listed]
EXPIRATION DATE: Continuing