TEGL_24_12_Acc.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION WOTC CORRESPONDENCE SYMBOL OWI DATE May 1 2013 ADVISORY TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 24-13 TO STATE WORKFORCE ADMINISTRATORS STATE WORKFORCE AGENCIES STATE WORKFORCE LIAISONS FROM JANE OATES s Assistant Secretary SUBJECT Reauthorization of the Work Opportunity Tax Credit Program and Continuation of the VOW to Hire Heroes Act Veteran Groups and Provisions 1. Purpose . To inform the State Workforce Agencies SWAs of the retroactive legislative reauthorization of the Work Opportunity Tax Credit WOTC for non-veteran target groups and the Empowerment Zones that expired on December 31 2011 and continuation of the WOTC for veteran groups including the VOW to Hire Heroes Act of 2011 VOW Act expanded veteran groups. To provide guidance to SWAs participating agencies and other Federal and State partners for processing WOTC certification applications. 2. References . Sections 309 and 327 of the American Taxpayer Relief Act of 2012 Pub. L. 112-240 Section 261 of the VOW to Hire Heroes Act of 2011 Pub. L. 112-56 VOW Act The American Recovery and Reinvestment Act of 2009 Pub. L. 111-5 Recovery Act Internal Revenue Code of 1986 Section 51 as amended Internal Revenue Service IRS Notice 2013-14 March 7 2013 IRS Notice 2012-13 February 27 2012 Training and Employment Guidance Letter 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 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 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 12 2012 ETA Handbook No. 408 November 2002 Third Edition the Handbook and August 2009 Addendum to the Handbook. RESCISSIONS EXPIRATION DATE None Continuing 2 3. Background . The VOW Act amended and expanded the definition of the qualified veteran target group. Specifically the VOW Act extended the availability of existing veteran categories and amended the definition of qualified veteran by adding two new unemployed veteran categories a veterans certified as having aggregate periods of unemployment of at least 4 weeks but less than 6 months in the year prior to being hired and b veterans certified as having aggregate periods of unemployment of 6 months or more in the year prior to being hired. The VOW Act also significantly increased the amount of qualified wages taken into account for purposes of calculating the credit for certain veteran groups which resulted in certain increased tax credits available to employers that hired individuals from this group. Finally the VOW Act also made a reduced WOTC available to certain tax-exempt organizations for hiring qualified veterans. The Employment and Training Administration ETA provided guidance in TEGL No. 30-11 regarding eligibility for the amended and expanded veteran target group and for the tax-exempt organizations permitted to claim the WOTC for hiring veterans. The provisions in the VOW Act applied to new employees who began working for an employer on or after November 22 2011 and before January 1 2013. On December 31 2011 the legislative authority for all WOTC non-veteran target groups expired. 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. This 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. 4. Overview of New Legislative Provisions . On January 2 2013 President Obama signed the American Taxpayer Relief Act of 2012. Section 327 reauthorizes the Empowerment Zones and Section 309 reauthorizes the extension of the WOTC program. In summary this legislation Continues the uninterrupted implementation of all veteran target groups including those implemented under the VOW Act through December 31 2013. Retroactively reauthorizes all WOTC non-veteran target groups from December 31 2011 through December 31 2013. Provides legislative authorization for Empowerment Zones from December 31 2011 through December 31 2013. See Section 10 of this TEGL for more detailed information on the status of Empowerment Zones . Does not reauthorize the Recovery Act disconnected youth and Recovery Act unemployed veteran target groups that expired at the end of 2010. 5. Veteran Target Groups . The following WOTC veteran groups and categories were extended expanded or created under the VOW Act and are now extended through the American Taxpayer Relief Act. The VOW Act s provisions apply to individuals who begin to work for an employer on or after November 22 2011 and before January 1 2014. The groups are 3 Veterans receiving Supplemental Nutritional Assistance Program SNAP formerly food stamps benefits Veterans with a service-connected disability hired within 1 year of leaving active duty Veterans with a service-connected disability unemployed for at least 6 months Veterans unemployed for at least 4 weeks and Veterans unemployed for at least 6 months. Note. For additional information on the eligibility requirements for these veteran groups visit the following page on the WOTC Website http www.doleta.gov business incentives opptax eligible.cfm . 6. Tax-Exempt Organizations . The VOW Act made WOTC available to qualified tax-exempt organizations. Specifically the Act amended the Internal Revenue Code to provide that qualified tax-exempt organizations that hired qualified veterans could claim a credit against the employer s share of social security tax. This provision remains in effect and the reauthorization of WOTC means that qualified tax-exempt organizations may continue to claim WOTC for qualified veterans that begin work for the organization before January 1 2014. This provision only pertains to qualified veterans and the tax credit is not available for tax-exempt organizations for the hiring of non-veteran target groups. More information on tax-exempt organizations is available in TEGL No. 30-11 and IRS Notice 2012-13. 7. Transition Relief for Employer Submission of Form 8850 for Qualified Veterans . Section IV 2 of IRS Notice 2013-14 provides employers including qualified tax-exempt organizations with transition relief from the 28-day filing requirement by providing additional time to file IRS Form 8850 with the SWAs. Under the Notice an employer who hires a qualified veteran on or after January 1 2013 and on or before March 31 2013 is deemed to satisfy the 28-day filing requirement if the employer submits IRS Form 8850 to the SWA to request certification not later than April 29 2013. The transition relief is not available to employers that hire qualified veterans after March 31 2013 and before January 1 2014 in which case the regular 28-day rules applies. 8. Non-Veteran Target Groups . The following WOTC non-veteran target groups were reauthorized retroactively through December 31 2013. ETA provided interim instructions to SWAs in early January to indicate that they may finish processing and begin issuing determinations on applications for non-veteran groups received during the legislative hiatus those instructions are available on the following page on the WOTC Web site http www.doleta.gov business incentives opptax documents interimInstructions2013.pdf . The retroactive extension applies to individuals who began to work for an employer on or after December 31 2011 and before January 1 2014. The eight non-veteran target groups are Long-term Temporary Assistance for Needy Families TANF recipients Short-term TANF recipients 18-39 year-old SNAP formerly food stamps recipients 4 18-39 year-old designated community residents residing in EZs See Section 10 of this TEGL for more detailed information on the status of Empowerment Zones Vocational Rehabilitation referrals Ex-felons Supplemental Security Income recipients and Summer youth employees See Section 10 of this TEGL for more detailed information on the status of Empowerment Zones . Note. For additional information on the eligibility requirements for these non-veteran groups visit the following page on the WOTC Web site http www.doleta.gov business incentives opptax eligible.cfm . 9. Transition Relief for Employer Submission of Form 8850 for Non-Veteran Groups . Section IV 1 of IRS Notice 2013-14 provides taxable employers with transition relief from the 28-day filing requirement by providing additional time to file IRS Form 8850 with the SWAs. Under the Notice a taxable employer who hires a qualified member of any of the eight non-veteran target groups on or after January 1 2012 and on or before March 31 2013 is deemed to satisfy the 28-day filing requirement if the employer submits IRS Form 8850 to the SWA to request certification not later than April 29 2013. The transition relief is not available to an employer that hires a qualified non-veteran target group member after March 31 2013 and before January 1 2014 in which case the regular 28-day rule applies. 10. Empowerment Zones . According to the current instructions to IRS Form 8850 while the American Taxpayer Relief Act of 2012 did provide legislative reauthorization for the Empowerment Zone 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. These designations expired at the end of 2011. The IRS is currently working with the U.S. Departments of Agriculture and Housing and Urban Development to provide guidance on amending nominations for designation. SWAs are instructed to continue to accept certification requests for the Summer Youth and Designated Community Resident DCR groups which require residence in the expired EZs but to hold off on processing those requests pending further guidance from ETA. It is expected that SWAs will be able to process the pending applications as soon as state and local governments amend their nominations for designation to change the termination date to December 31 2013. SWAs may continue to process timely filed certification requests for eligible members of the DCR target group who reside in Rural Renewal Counties. 11. ETA Program Forms . Through separate guidance ETA will issue revised versions of the following three processing forms 1 ETA Form 9061 Individual Characteristics Form 2 ETA Form 9062 Conditional Certification Form and its Spanish version and 3 ETA Form 9058 Certification Workload and Characteristics of Certified Individuals Form. These forms and their instructions are being revised to reflect the reauthorization of the WOTC program and to add the summer youth target group. SWAs can continue to use the current versions of these forms until this guidance is issued. 5 12. IRS Form 8850 . On April 1 2013 the IRS released a substantively unchanged Form 8850 and revised instructions for that form. The form and instructions are available at www.irs.gov form8850 . 13. Action Requested . SWA administrators are requested to Provide this information to all appropriate WOTC program staff employers and their representatives participating agencies and other interested partners and Ensure that the WOTC State Coordinators and participating agencies implement the requirements outlined in this TEGL effective the date the guidance is issued. 14. Inquiries . Questions regarding this guidance should be directed to the appropriate WOTC Regional Coordinator listed on the WOTC program Web site at http www.doleta.gov wotc . 15. Attachment . IRS Notice 2013-14 March 7 2013