FY 2014 Work Opportunity Tax Credit funding and reporting

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL_22-13_acc.pdf

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                WOTC
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OWI
             Washington, D.C. 20210
                                                         DATE
                                                          April 17, 2014


ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 22-13

TO:             STATE WORKFORCE AGENCIES
                STATE WORKFORCE LIAISONS

FROM:           ERIC M. SELEZNOW /s/
                ACTING ASSISTANT SECRETARY

SUBJECT:        Work Opportunity Tax Credit (WOTC) Funding Allotments for Fiscal Year
                (FY) 2014

1. Purpose. To provide the State Workforce Agencies (SWAs) with final funding allotments
   for the administration of the WOTC program through September 30, 2014, and reporting
   instructions during the current authorization lapse.

2. References.
   • Consolidated Appropriations Act of 2014 (Pub. L. 113-76)
   • Sections 309 and 327 of the American Taxpayer Relief Act of 2012 (Title II of Pub. L.
      112-240)
   • Section 261 of the VOW to Hire Heroes Act of 2011 (Title II of Pub. L. 112-56)
   • Section 51 of the Internal Revenue Code of 1986, as amended, 26 U.S.C. Section 51
   • Wagner-Peyser Act, Section 7(d)
   • Training and Employment Guidance Letter (TEGL) No. 8-13, Work Opportunity Tax
      Credit (WOTC) Procedural Guidance During Authorization Lapse (January 2, 2014)
   • ETA Handbook No. 408, November 2002, Third Edition (the Handbook)
   • August 2009 Addendum to the Handbook

3. Background. In November 2013, the Employment and Training Administration (ETA)
   issued to SWAs the program funds provided by Congress for the Continuing Resolution for
   FY 2014. On January 17, 2014, President Obama signed into law the Consolidated
   Appropriations Act of 2014 (Pub. L. 113-76) (the Act). Division H, Title I of this Act
   provides Department of Labor funding appropriations for the remainder of FY 2014,
   including funding for the WOTC program. While the Act appropriated funds for
   administration of the WOTC, it did not extend the legislative authority for any of the WOTC
   target groups, which expired on December 31, 2013 (the lapse in authority is discussed in
   TEGL 8-13). At this time, we have no indication whether Congress may pass legislation
   extending authority for the expired program and target groups beyond December 31, 2013. In
   the past, when Congress has reauthorized the program, it permitted retroactive certifications

 RESCISSIONS                                             EXPIRATION DATE
 None                                                    Continuing

   of eligibility for the period between the expiration date and the reauthorization date. We
   interpret Congress’s decision to appropriate new funds for WOTC administration during an
   authorization lapse to reflect Congressional intent that the SWAs continue to accept
   applications for the expired target populations and to report to ETA as discussed in Section 7
   of this TEGL, pending possible reauthorization at a later date. However, as provided in
   further detail in TEGL 8-13, SWAs may not issue eligibility certifications or denials for
   employers’ new hires made on or after January 1, 2014, unless and until Congress
   reauthorizes the program and ETA issues further guidance.

4. Funding. ETA is now issuing the balance of FY 2014 funding to the SWAs for the
   implementation of WOTC program activities through September 30, 2014. The appropriated
   level for FY 2014 totals $18,485,000.

   After allocating $20,000 for the Virgin Islands, ETA distributes the remaining funds to states
   by administrative formula with a $66,000 minimum allotment. No state receives an
   allotment below 95 percent or more than 120 percent of the allotment percentage it received
   in FY 2013. For FY 2014, the formula allotment data factors and percentages are as follows:

       1) Fifty percent is based on each state’s relative share of total certifications issued from
          October 1, 2012 through September 30, 2013 for the WOTC program;

       2) Thirty percent is based on each state’s relative share of the Civilian Labor Force
          averages for the 12-month period from October 1, 2012 through September 30, 2013;
          and

       3) Twenty percent is based on each state’s relative share of adult recipients of
          Temporary of Assistance to Needy Families averages from October 1, 2011 through
          September 30, 2012.

   Attachment I shows the distribution of full FY 2014 WOTC funding allocations by state,
   according to this formula.

5. General Administration. SWAs are responsible for administering the WOTC program,
   including the certification process, promoting the program to employers, reducing and
   eliminating existing backlogs, and reporting program data on a quarterly basis. In addition,
   SWAs must administer the WOTC in accordance with the policies and procedural guidance
   set forth in the November 2002, Third Edition of ETA Handbook 408 (the Handbook); the
   August 2009 Addendum to the Handbook; Section 51 of the Internal Revenue Code of 1986
   (26 U.S.C. Section 51), as amended; and 20 CFR 658 Subpart E, the current Federal
   regulations, which cover the complaint procedure. Attachment II, the Statement of Work,
   lists other applicable requirements.

6. Reporting Requirements. SWAs must report expenditures quarterly using the ETA
   Financial Report (ETA Form 9130). These reports should cover all WOTC grant funds.
   Quarterly financial reports are due within 45 days following the end of each quarter. Timely


   submission of these reports is extremely important to ensure proper accounting of funds.
   ETA’s regional offices will conduct a financial reconciliation at the end of the fiscal year.
   SWAs must use the Web-based Enterprise Business Service System (EBSS), Tax Credit
   Reporting System to report quarterly program activities and outcomes using ETA Form 9058.
   Quarterly performance reports are due within 45 days following the end of each quarter.
   Timely submission of these reports is very important for program management purposes. In
   addition, the report enables ETA to respond to inquiries on program activities.

7. Reporting Instructions During Lapse in Program Authorization. ETA is providing the
   following instructions for states to report quarterly workload on the EBSS Web-based ETA
   Form 9058 during the current lapse in legislative authorization for the WOTC program,
   which began on January 1, 2014. In anticipation of a possible retroactive reauthorization of
   WOTC, SWAs are required to include in their quarterly reports the number of certification
   requests (IRS Form 8850s) received for hires made on or after January 1, 2014. Beginning
   with the report for the quarter ending March 31, 2014, SWAs are to enter the total number of
   certification requests received under Part I. CERTIFICATION WORKLOAD as “(C) New
   Requests” for each reporting quarter until Congressional action ends the hiatus and/or ETA
   provides additional reporting guidance. The requests reported in “(C)” will serve, in part, as
   a record of the certification requests (IRS Form 8850s) received for 2014 hires during the
   hiatus.

   Certification requests for hires made on or after January 1, 2014, and entered as New
   Requests, will then be calculated within the quarterly report as any other certification request
   – i.e. New Requests are included in the auto-calculation for “(D) Total Requests to be
   Processed” field. In the quarterly report, these certification requests would then be included
   in the auto-calculation for “(H) Requests Needing Action.” Since SWAs are not permitted to
   issue certifications or denials for hires made on or after January 1, 2014, during the
   authorization lapse (as outlined in TEGL No. 8-13), these certification requests would not be
   reflected in (E) Certified Requests, (F) Denied Requests, or (G) Incomplete Requests.

8. Action Requested. ETA requests that SWA administrators provide this TEGL to all WOTC
   State Coordinators and related program staff, participating agencies and all other interested
   partners.

9. Inquiries. Direct all questions to the appropriate regional WOTC coordinator. A directory
   with complete contact information for the six regional WOTC coordinators is available on
   the WOTC program Web site at:
   http://www.doleta.gov/business/incentives/opptax/Regional_Contacts.cfm.

10. Attachments.
    I. FY 2014 WOTC State Allotments
    II. WOTC Statement of Work

Attachment 1: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL_22-13_Attachment_I_Acc.pdf

U. S. Department of Labor                   Attachment I
          Employment and Training Administration
Work Opportunity Tax Credit - FY 2014 State Allotments
                State                      Amount

Total                                         $18,485,000
Alabama                                           355,296
Alaska                                             66,000
Arizona                                           399,767
Arkansas                                          189,993
California                                      2,016,965
Colorado                                          222,735
Connecticut                                       160,637
Delaware                                           66,000
District of Columbia                               66,000
Florida                                         1,018,153
Georgia                                           562,504
Hawaii                                             66,000
Idaho                                              78,803
Illinois                                          687,242
Indiana                                           408,653
Iowa                                              240,035
Kansas                                            177,425
Kentucky                                          360,133
Louisiana                                         345,075
Maine                                             103,428
Maryland                                          285,200
Massachusetts                                     280,924
Michigan                                          597,723
Minnesota                                         254,184
Mississippi                                       185,050
Missouri                                          393,909
Montana                                            66,000
Nebraska                                          132,631
Nevada                                            111,841
New Hampshire                                      66,000
New Jersey                                        372,106
New Mexico                                        121,742
New York                                          889,769
North Carolina                                    509,649
North Dakota                                       66,000
Ohio                                              973,693
Oklahoma                                          257,114
Oregon                                            217,812
Pennsylvania                                      803,027
Puerto Rico                                        84,359
Rhode Island                                       66,000
South Carolina                                    329,056
South Dakota                                       66,000
Tennessee                                         728,810
Texas                                           1,434,944
Utah                                              152,226
Vermont                                            66,000
Virginia                                          403,475
Washington                                        408,292
West Virginia                                     165,231
Wisconsin                                         319,389
Wyoming                                            66,000
    State Total                                18,465,000
Virgin Islands                                     20,000

Attachment 2: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2014/TEGL_22-13_Attachment_II_Acc.pdf

Attachment II

                      Work Opportunity Tax Credit (WOTC) Program
                                  Statement of Work


State Workforce Agencies (SWAs) are to use Fiscal Year 2014 funds announced herein for:

    1. 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 of receipt.

    2. 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 (the Handbook) and the August 2009
      Addendum to the Handbook, once the program is reauthorized by Congress and ETA
      issues guidance.

    3. Developing working agreements with partner agencies in the American Job Center
      network (also known as the One-Stop Career Center system) and coordinating efforts to
      promote WOTC to employers and job seekers and other Workforce Investment Act
      (WIA) partners.

    4. 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).

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

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

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

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

    9. 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.

    10. Cooperating with employment and training organizations already working with the
       private sector such as: veteran organizations, employer committees, and workforce

       investment boards to inform employers about the tax benefits to be derived from
       participation and the eligibility requirements under the WOTC Program.

Grant Agreement Conditions.

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

    1. The SWA must adhere to provisions of the Internal Revenue Code of 1986, Section 51, as
      amended, in conducting the program. The law designates the SWAs 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 related program services
      (e.g., issuing Conditional Certifications, outreach activities).

    2. The most current edition of the WOTC program Handbook and its updated August 2009
      Addendum shall guide conditions and standards of performance for administration and
      operation of the program. The SWA shall maintain a verification and quality control
      process in accordance with guidance in this Handbook.