WOTC requests for Empowerment Zone residents

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2013/TEGL_24_12_Acc_ch1.pdf

CLASSIFICATION
  EMPLOYMENT AND TRAINING ADMINISTRATION              WOTC
              ADVISORY SYSTEM                         CORRESPONDENCE SYMBOL
         U.S. DEPARTMENT OF LABOR                     OWI
            Washington, D.C. 20210                    DATE
                                                      September 12, 2013


ADVISORY:      TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 24-12,
               CHANGE 1

TO:            STATE WORKFORCE ADMINISTRATORS
               STATE WORKFORCE AGENCIES
               STATE WORKFORCE LIAISONS

FROM:          ERIC M. SELEZNOW /s/
               Acting Assistant Secretary

SUBJECT:       Processing of Work Opportunity Tax Credit (WOTC) Certification Requests for
               Target Group Members Residing in Empowerment Zones (EZs)

1. Purpose. To provide the State Workforce Agencies (SWAs) information on the nomination
   extension process for EZs, and the date when SWAs can start processing certification
   requests for the two target groups, which require its members to reside in EZs.

2. References.
   • Sections 309 and 327 of the American Taxpayer Relief Act of 2012 (Pub. L. 112-240);
   • Title II, Section 261 of the VOW to Hire Heroes Act of 2011 (Pub. L. 112-56);
   • The American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5);
   • Internal Revenue Code of 1986, Section 51, as amended;
   • Internal Revenue Service (IRS) Notice 2013-38 (June 17, 2013);
   • IRS Notice 2013-14 (March 7, 2013);
   • IRS Notice 2012-13 (February 27, 2012);
   • Training and Employment Guidance Letter (TEGL) Change 1 to TEGL No. 34-12, Non-
      Substantive Changes to Work Opportunity Tax Credit (WOTC) ETA Form 9061 (August
      6, 2013);
   • TEGL No. 34-12, Work Opportunity Tax Credit (WOTC) Information collection Revised
      Reporting and Processing Forms (June 14, 2013);
   • TEGL No. 24-12, Reauthorization of the Work Opportunity Tax Credit Program and
      Continuation of the VOW to Hire Heroes Act Veteran Groups and Provisions (May 1,
      2013);
   • TEGL No. 10-12, Guidance for Work Opportunity Tax Credit (WOTC) American
      Recovery and Reinvestment Act of 2009 (Recovery Act) Two Expired Target Groups'
      Applications (December 7, 2012);


 RESCISSIONS                                         EXPIRATION DATE
 None                                                Continuing

   •   TEGL No. 4-12, Revised Forms for the WOTC Program for Implementation of the
       Veterans Opportunity to Work to Hire Heroes Act of 2011 (VOW Act) Provisions and
       Other Program Changes (July 31, 2012);
   •   TEGL No. 30-11, Information and Guidance on the Work Opportunity Tax Credit
       Provisions Introduced by the Veterans Opportunity to Work (VOW) to Hire Heroes Act of
       2011, and IRS Guidance on Submission of Form 8850 (May 24, 2012);
   •   TEGL No. 15-11, Work Opportunity Tax Credit (WOTC) Procedural Guidance During
       Authorization Lapse for Non-veteran WOTC Target Groups (January 24, 2012);
   •   ETA Handbook No. 408, November 2002, Third Edition (the Handbook); and
   •   August 2009 Addendum to the Handbook.

3. Background. On December 31, 2011, the legislative authority for all WOTC non-veteran
   target groups and EZs expired. The Employment and Training Administration (ETA)
   provided guidance in TEGL No. 15-11 regarding requests for certifications for the non-
   veteran target groups submitted to SWAs during the authorization lapse. The guidance
   directed states to continue accepting applications for employees in these groups hired on or
   after January 1, 2012, but to postpone final processing of those certification requests pending
   further legislative action and guidance.

   On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012
   (Act). Section 327 reauthorized retroactively the EZs and Section 309 retroactively extended
   the WOTC program for non-veteran target groups, both through December 31, 2013. The
   retroactive extension applies to individuals who began to work for an employer on or after
   December 31, 2011, and before January 1, 2014. Section 309 also extended the WOTC
   veterans target groups through December 31, 2013.

   TEGL No. 24-12, Section 10 (available at:
   http://www.doleta.gov/business/incentives/opptax/guidance.cfm) explained that while the
   Act did provide legislative reauthorization for the EZ designation, to extend the designations,
   state and local governments must amend their nominations for designation to change the
   termination date to December 31, 2013, because they had earlier terminations dates. As a
   result, ETA instructed the SWAs to continue to accept timely filed certification requests for
   the Summer Youth and Designated Community Resident target groups (since both groups
   require residence in EZs) but to hold off on processing those requests pending further
   guidance from ETA.

4. Empowerment Zone Designation Extension. IRS worked with the U.S. Departments of
   Agriculture and Housing and Urban Development (HUD) to provide guidance to state and
   local governments on how to amend the nomination of an EZ designation to provide for a
   new termination date of December 31, 2013. According to IRS Notice 2013-38 (available at
   http://www.irs.gov/irb/2013-25_IRB/ar06.html), any nomination for an EZ that was in effect
   on December 31, 2009, is deemed to be amended to provide for a new termination date of
   December 31, 2013, unless the nominating entity sent written notification to the IRS by July
   29, 2013. The written notification must have affirmatively declined extension of the EZ
   nomination through December 31, 2013.


5. Processing Guidance for State Workforce Agencies. Effective the date of issuance of this
   TEGL, SWAs are instructed to start processing all timely filed certification requests for the
   two target groups which require its eligible members to reside in EZs: 1) Summer Youth and
   2) Designated Community Residents.

   IRS received no notifications from state and local governments declining the extension. The
   list of active EZs, those that have a new termination date of December 31, 2013, is available
   on the HUD’s EZ/Renewal Communities Address Locator at www.hud.gov/crlocator.

   The EZ for the District of Columbia was not reauthorized by the Act, and as such is no longer
   an EZ-designated area for the two WOTC target groups (see instructions on EZs in the
   January 2013 revised IRS Form 8850).

6. Action Requested. SWA administrators are requested to:

   •   Provide this information to all appropriate WOTC program State Coordinators, related
       staff, employers and their representatives, participating agencies and other interested
       partners; and

   •   Ensure that the WOTC State Coordinators and participating agencies implement
       immediately the requirements outlined in this TEGL.

7. Inquiries. Please direct questions regarding this guidance to the appropriate WOTC
   Regional Coordinator listed on the WOTC program Web site at:
   http://www.doleta.gov/wotc.