Tax Credit Training and Employment Guidance Letter

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

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. XX-XX

TO: ALL STATE WORKFORCE AGENCIES

ALL STATE WORKFORCE LIAISONS

ALL REGIONAL WOTC COORDINATORS

FROM: BRENT R. ORELL

Deputy Assistant Secretary

SUBJECT: Extension of the Information Collection for the Consolidated Work Opportunity Tax Credit (WOTC) Program: Revised Reporting and Processing Forms

l. Purpose. The purpose of this guidance is to announce the receipt of Office of Management and Budget (OMB) approval of the reporting and administrative forms for the consolidated WOTC Program and transmit the newly revised forms and online reporting instructions.

2. References. The Small Business and Work Opportunity Tax Credit Act of 2007 (P.L. 110-28); Paperwork Reduction Act of 1995; the Tax Relief and Health Care Act of 2006 (P.L. 109-432); the Working Families Tax Relief Act of 2004 (P.L. 108-311); the Job Creation and Worker Assistance Act of 2002 (P.L. 107-147); Internal Revenue Code of 1986, Section 51, as amended; Training and Employment Guidance Letter (TEGL) No. 20-06, Reauthorization of the Work Opportunity Tax Credit and Other Program Changes, dated April 3, 2007; ETA Handbook No. 408, November 2002, Third Edition (the Handbook); and the Revised Version of the May 2005, Addendum to the Handbook.

3. Background. In late 2006 and early 2007, Congress passed two bills reauthorizing and expanding the WOTC Program. The new provisions required that the Individual Characteristics Form, all administrative and processing forms, and related program materials be revised to reflect the legislative changes.

RESCISSIONS

EXPIRATION DATE:

On December 20, 2006, the President signed into law Tax Relief and Health Care Act of 2006 (P.L. 109-432). This legislation extended the WOTC Program for a two-year period through December 31, 2007, effective retroactively to January 1, 2006, and merged the Welfare-to-Work Tax Credit (WtWTC) into WOTC. Specifically, this legislation introduced certain statutory amendments and new provisions with respect to individuals who begin work for an employer on or after January 1, 2007. For additional information, see TEGL No. 20-06, dated April 3, 2007.

On May 25, 2007, the President signed into law the Small Business and Work Opportunity Tax Act of 2007 (P.L. 110-28), which extends the WOTC Program through August 31, 2011. This Act and the Tax Relief and Health

Care Act of 2006 (P.L. 109-432) amend certain target groups and introduce new provisions that streamline the WOTC program and make it easier for the business sector to participate. For additional information, see TEGL No. 5-07, dated September 11, 2007.

To address the different changes and provisions introduced by these two pieces of legislations, ETA not only updated the WOTC administrative and processing forms and other program related materials, but also revised and developed a modified automated reporting system and procedures. On September 6 and 7, 2007, ETA provided to the regions and the states a two-session training webinar on the new reporting requirements. These sessions are archived and can be accessed at any time by visiting the Workforce3One website: at:

http://workdforce3one.org/public/webinars

The newly revised and updated forms and program materials have received Office of Management and Budget Approval through MM/DD/YY. The approval covers annual planning, reporting, and record-keeping burdens for Report 1–Certification Workload and Characteristics of Certified Individuals, ETA Form 9058. Also, OMB’s data collection approval includes ETA Forms 9061– 9063, 9065, 9057, and 9059. The revised forms incorporate the latest amendments and provisions introduced by P.L. 110-28 for new hires that begin to work for an employer after May 25, 2007.

4. Reporting Instructions and Clarifications. All four administrative and

reporting forms have been revised and updated to reflect the changes and

new provisions introduced by Public Laws 110-28 and 109-432. The

instructions to each form have also been updated. ETA Form 9061 –

Individual Characteristics Form (ICF), Work Opportunity Tax Credit Program

has not only been revised to accommodate all the changes and new

provisions but also reformatted in a user-friendly format and easy-to-use

style. Comments received during the Federal Register Notice invitation for

Public Comments, which expired on March 10, 2008, were considered and

incorporated.

Status of Previous Transition Period. Please note, that due to the legislative changes in 2006 and 2007, ETA Form 9061 was revised twice: first in December 2006 (expiration August 2009) and again in May 2007 (expiration April 2008). When the second revision received emergency OMB approval, ETA provided a transition period that allowed continued use of the December 2006 version of the ETA Form 9061 for the target categories it listed at that time. This transition period ends two weeks from the date of issuance of this TEGL. Employers are required to start using the OMB approved (date subject to final clearance) 2008, ETA Form 9061 on X, X, 2008 (date subject to the date of TEGL issuance). Other versions of ETA Form 9061 are not to be accepted. Previously filed requests for certification that are part of a state’s backlog do not have to be resubmitted on the new form.

Internal Revenue Service (IRS) Clarification for Use of Form W-4. Recently,

questions regarding the use of IRS Form W-4 as documentary evidence to

prove residential address for potential members of the Summer Youth and

Designated Community Resident target groups were brought to ETA’s

attention. To clarify, employers seeking certification requests for potential

members of these two WOTC target groups may continue to use IRS Form

W-4 as documentation to show that the applicant resides in an Empowerment

Zone, Enterprise or Renewal Community. SWAs are, hereby, instructed to:

1. continue to accept this form as valid documentation to prove the address

where these applicants reside and 2) revisit and honor any certification requests denied on the basis of a rejected IRS Form W-4.

5. Electronic Reporting Process. With the implementation of the Internet Tax

Credit Reporting System (TCRS), through ETA’s Enterprise Business

Support System (EBSS), in 2002, state workforce agencies (SWAs) have sole

control over data entry. Passwords have been assigned to each state

coordinator that permit them access to the appropriate screens for the quarterly TCRS report, ETA Form 9058 – Report 1. Personal Identification Numbers (PINs) have been assigned to the regional coordinators to access and review each state quarterly report and issue the final report certification. New regional and state coordinators in need of passwords and PINs should contact Carmen Ortiz at ortiz.carmen@dol.gov.

Since many states have backlogs and are expected to continue processing all

WOTC and WtWTC timely filed and eligible certification requests, the EBSS

WOTC TCRS just made available a modified ETA Form 9058 – Report 1 to

facilitate the reporting phase-out period of all WtWTC program data. The

modified report version permits states to, on a quarterly basis, report the

following: 1) WOTC and WtWTC program data for individuals who began

to work for an employer after December 31, 2005, and prior to January 1, 2007,

and 2) also report data for the consolidated WOTC for individuals who began

to work for an employer after December 31, 2006 in the same report. The

phase-out period during which WOTC and, specifically, all WtWTC program data

must have been be reported using the modified ETA Form 9058, ended on September 30, 2007.

The modified version of ETA Form 9058 and the updated User’s Guide for

the EBSS WOTC TCRS, which incorporates changes from PLs 110-28 and

109-432, all other administrative and processing forms, and all other updated

WOTC Program related materials will be available in the Internet at:

www.doleta.gov/business/Incentives/opptax.

5. Reporting Authority. Reporting, program administration and related

materials, and processing forms for the consolidated WOTC Program are

approved according to the Paperwork Reduction Act of 1995, under OMB No. 1205-0371. This authority is effective through MM/DD/YY.

5. Action Required. SWA administrators are requested to provide this TEGL

to all WOTC State Coordinators and ensure they comply with the revised

reporting requirements, the guidance provided, and share this information

with the private sector businesses and their representatives and all other

Federal and state partners.

5. Inquiries:  Direct all questions to the appropriate Regional WOTC

Coordinator.