TEGL_25-15-Change2_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 February 16 2018 RESCISSIONS TEGL 25 -15 Change 1 EXPIRATION DATE Continuing ADVISORY TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 25-15 Change 2 TO STATE WORKFORCE ADMINISTRATORS STATE WORKFORCE DEVELOPMENT AGENCIES STATE WORKFORCE LIAISONS STATE AND LOCAL WORKFORCE BOARDS AND CHAIRS STATE WORKFORCE OPPORTUNITY TAX CREDIT COORDINATORS AMERICAN JOB CENTERS FROM ROSEMARY LAHASKY s Deputy Assistant Secretary SUBJECT Work Opportunity Tax Credit 2015 Reauthorization Training and Employment Guidance Letter 25-15 Change 2 1.Purpose. This Training and Employment Guidance Letter TEGL 25-15 Change 2 makes a technical correction to the eligibility determination instructions for the Qualified Long-term Recipient LTUR target group by replacing the text the date the job applicant signed the IRS Form 8850 with the day before the job applicant started the job employment start date minus one day or if earlier the date the job applicant provided the information on the IRS Form 8850 in Section 6 a. and Section 12. AdditionallyI this guidance removes the text revised May 2016 for the Work lpportunity Tax Credit WOTC Forms in Section 10 and Section 13. Shortly after the Employment and Training Administration ETA issued TEGL 2R-15 Change 1 the Office of Management and Budget OMB under the Paperwork Reduction Act PRAF approved the WOTC Forms through January 31 2020 as noted in Section 11. Lastly this guidance updates pection 15 to reflect the technical correction for the eligibility determinations instructions for LTUR target group and provide instructions for reprocessing LTUR applications. 2.References. Work Opportunity Tax Credit 2015 Reauthorization Training and Employment Guidance Letter 25-15 Change 1 Sections 142 and 171 of the Protecting Americans from Tax Hikes PATH Act of 2015 Pub. L 114-113 Internal Revenue Code of 1986 Section 51 as amended the Code Internal Revenue Service IRS Notice 2013-14 2 IRS Notice 2012 -13 IRS Notice 2016 -22 IRS Notice 2016 -28 IRS Notice 2016 -40 and PATH Act - WOTC Interim Instructions for the State Workforce Agencies . 3. Background and Overview . The Protecting Americans from Tax Hikes Act of 2015 the PATH Act extends and modifies the WOTC Program Section 142 and the Empowerment Zones E Zs Section 171 . In summary the PATH Act Retroactively reauthorizes the following WOTC program target groups for a five -year period from January 1 2015 to December 31 2019 o a qualified IV -A TANF recipient o a qualified veteran o a qualified ex -felon o a designated community resident o a vocational rehabilitation referral o a qualified summer youth employee o a qualified supplemental nu trition assistance program SNAP benefits recipient o a qualified SSI recipient and o a long -term family assistance TANF recipient . Provides for an extension of the Empowerment Zones for a two -year period from December 31 2014 to December 31 20 16 . Introduces a new target group LTUR for new hires that begin to work for an employer on or after January 1 2016 through December 31 2019 . 4. Procedural Guidance for 2015 Hiatus New Hires . a. For State Workforce Development Agencies also known as St ate Workforce Agencies SWA that processed all certification requests received during the 2015 hiatus. SWAs that processed all certification requests received during the 2015 hiatus and filed but did not issue those determinations should now issue tho se final determinations certifications and denials to employers or their representatives. b. For SWAs that did not process all certification requests received during the 2015 hiatus. SWAs that received and filed but did not process or conduct all requi red eligibility determination activities for certification requests received during the 2015 hiatus should conduct all required eligibility determination activities for certification requests received during the hiatus and issue all final determinations certifications and denials to employers or their representativ es. Please see Section 5 of this TEGL for more detailed information on the status of the Empowerment Zones. 3 5. Empowerment Zones . The PATH Act provides an extension of the Empowerment Zones designations for two - years through December 31 2016. Therefore termination dates in State and Local Government Empowerment Zones designations must be extended from December 31 2014 to December 31 2016 . Please see IRS Notice 2016 -28 for additional gu idance on the extension of Empowerment Zone designations at https www.irs.gov pub irs -drop n - 16 -28.pdf . 6. Eligibility Determinations for Qualified Long -Term Unemployment Recipient . A qualif ied long -term unemployment recipient is any individual who on the day before the individual begins wor k or if earlier the day the individual completes the IRS Form 8850 as a prescreening notice in accordance with the certification provisions described i n 51 d 13 A ii of the Code is in a period of unemployment that is i not less than 27 consecutive weeks and ii includes a period which may be less than 27 weeks in which the individual received unemployment compensation under State or Federal law see IRS Notice 2016 -22 and IRS Notice 2016 -40 . a. To determine whether the individual has been in a period of unemployment for at least 27 weeks as described above State Workforce Development Agencies also called State Workforce Agencies SWA will need to use unemployment insurance UI wage records . To verify that the individual has been in a period of unemployment for at least 27 weeks SWAs must verify that the individual has had zero UI wages for the two most recent completed quarters prior to the day before the job applicant started the job emplo yment start date minus one day or if earlier the date the job applicant provided the information on the IRS Form 8850 . SWAs are required to use the employment start date minus one day or the date the applicant provided information on the IRS Form 8850 based upon which is more favorable to the applicant in determining eligibility. b. To determine whether the individual has received unemployment compensation under State or Federal law during a period of unemployment SWAs will need to use UI claims records to verify that the individual has received unemployment compensation for all or part of the period of unemployment that is at least 27 weeks. Note An individual is not required to be receiving unemp loyment compensation at the time they are hired. ETA recognizes that many individuals may have an unemployment period that is longer than 27 weeks and in such cases will have exhausted their unemployment compensation prior to the date the job applicant signed the IRS Form 8850. In such cases the State UI agency will have records either in the current database or in archives of the individual s claim series. If the individual filed a claim and was denied benefits the State UI agency will have that record too. When the UI data UI wage records and or UI claim records are available SWAs should issue those final determinations certifications and denials to employers or their representatives based on the available data. 4 When there is an absence of U I wage records and or UI claims records in other words if the UI data is not available to determine whether the individual has had zero UI wages and has received unemployment compensation SWAs may use the ETA Form 9175 Long -Term Unemployment Recipient Self -Attestation Form SAF pr ovided by the new hire to make final determinations certifications and denials . Further technical assistance will be provided on this topic. Note To facilitate the SWAs eligibility determination and verification proc ess es for this target group ETA created a national SAF. A completed and signed SAF must be filed with a SWA as part of each certification request accompanying IRS Form 8850 and ETA Forms 9061 or 9062 for this group or if filed separately within a rea sonable period of time as determined by the SWA . 7. Accessing Unemployment Insurance Claims and Wage Records. SWAs that have not already done so must negotiate with their State UI agency to determine the most efficient and effective way to access the UI claims records and wage data. Claim and wage information is required to be kept confidential by the State UI agency and may only be disclosed under certain circumstances. Regulations at 20 CFR 603.5 e permit the disclosure of unemployment compensation information to a public official for use in the performance of his or her official duties. Since the SWA is a public official informed consent is not necessary. Note Each SWA will have to enter into an agreement with its State s UI agency that inclu des a provision for protecting the data from unauthorized access 20 CFR 603.9 and provides for reimbursement for costs 20 CFR 603.8 except as set out below. The agreement must meet the terms and conditions set forth in 20 CFR 603.10 b . To obtain inf ormation from the State UI agency SWAs must provide a Social Security Number for each participant of whom a claim or wage data is sought. In those instances where the SWAs anticipate a large volume of requests for data the State UI agency may require t hat the request be made electronically. State UI agencies are not required to obtain reimbursement for providing the requested information if the amount of staff time in responding to the request is incidental and only nominal processing costs are involv ed in making the disclosure. SWAs that choose to use informed consent releases from individuals will need to work with employers to ensure that informed consent releases are collected at the time of hire. Because confidentiality laws vary by State SWAs should work with their State UI agencies to determine the necessary form and content of the informed consent release. 8. Qualified Wages and Tax Credit Cap s Applicable to the Long -Term Unemployment Recipient Grou p. The 1996 legislative qualified wages provisions that apply to most adult non -veteran target groups also apply to the new target group as do the amount s of the tax credit employers can claim for certified new hires. Qualified wages for certified new hires under the Long -Term Unemployment R ecipient target group are capped at 6 000 during 5 the first year of employment for a maximum tax credit of up to 2 400 depending on the number of hours the new hire works i.e. how new hires meet the provisions of the Minimum Employment or Retention Per iod . Specifically a. For WOTC certified new hires working at least 120 hours employers can claim 25 of first year wages paid up to 6 000 for a maximum tax credit of up to 1 500 or for WOTC certified new hires working 400 hours or more employers can c laim 40 of first year wages up to 6 000 for a maximum tax credit of up to 2 40 0. b. Employers or their representatives may request certifications for individuals who start to work for an employer on or after January 1 2016. 9. Transition Relief for Emplo yer Submission of Form 8850 . Section IV.A page 4 of IRS Notice 2016 -22 available at https www.irs.gov pub irs - drop n -16 -22.pdf and IRS Notice 2016 -40 available at https www.irs.gov pub irs - drop n -16 -40.pdf provide employers including qualified tax -exempt organizations with transition relief from the 28 -day timely filing requirement by providing additional time to file the pre -screening notice IRS Form 8850 with SWAs. a. Additional time for employers that hire d members of targeted groups other than qualified long -term unemployment recipients between January 1 2015 and August 31 2016. An employer that hire d a member of a targeted group described in 51 d 1 A through d 1 I of the Code who began work for that employer on or after January 1 2015 and on or before August 31 2016 will be considered to have satisfied the requirements of 51 d 13 A ii of the Code if the employer submit ted the completed IRS Form 8850 to the SWA to request certification no later than September 28 2016 . Additional time for employers that hire d or hire long -term unemployment recipients between January 1 2016 and August 31 201 6. An employer that hire d or hire s an individual who is a long -term unemployment recipient described in 51 d 1 J of the Code and who began or begins work for that employer on or after January 1 2016 and on or before August 31 2016 will be consi dered to have satisfied the requirements of 51 d 13 A ii of the Code if the employer submits the completed IRS Form 8850 to the SWA to request certification no later than September 28 2016 . b. Application of 28 -day requirement to individuals hired on or after September 1 2016. An employer that hires a member of a targeted group described in 51 d 1 A through d 1 J of the Code including a long -term unemployment recipient who begins work for that employer on or after September 1 2016 is n ot eligible for the transition relief described in this notice. 10. WOTC ETA Forms . To help facilitate the eligibility determination and verification process ETA issued the SAF and made minimal changes that reflect statutory requirements authorized under t he PATH Act to the following Forms 6 ETA Form 9175 Long -Term Unemployment Recipient Self -Attestation Form ETA Form 9058 Report -1 - Certification Workload and Characteristics of Certified Individuals Form ETA Form 9061 Individual Ch aracteristics Form ETA Form Spanish 9061 Individual Characteristics Form ETA Form 9062 Conditional Certification Form ETA Form 9063 Employer Certification Form and ETA Form 9065 Agency Declaration of Verification Results Worksheet . 11. Paperwork Reduction Act of 1995 Notice of Action and Reporting Authority. The SAF and ETA Forms 9058 9061 9062 9063 and 9065 were approved by OMB under the PRA and approved for use through January 31 2020 . The currently OMB approved forms are available at https www.doleta.gov business incentives opptax forms.cfm . According to PRA no persons are required to respond to a collection of information unless such collection displays a valid OMB Control Number 1205 -0371. The U.S. Department of Labor notes tha t a Federal agency may not conduct or sponsor a collection of information nor is the public required to respond to a collection of information unless it is approved by OMB under the PRA and displays a currently valid OMB Control Number 44 U.S.C. 3507 . Also notwithstanding any other provision of law no person shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB Control Number 44 U.S.C. 3512 . 12. Guida nce f or SWAs and Employers Following ETA s Interim Instructions . SWAs that received certification requests for the LTUR new target group on previously OMB approved forms between January 1 2016 and the day prior to January 11 2017 can process those ce rtification requests if they can access the required UI wage and claims records as described in Section 6 of this TEGL to make eligibility determinations . SWAs should continue to issue final determinations certifications or denials to the respective emp loyers or representatives . However i f t he SWA is not able to issue final determinations certifications or denials based on UI wage records and UI claims records to determine that the individual has been in a period of unemployment for at least 27 w eeks prior the day before the job applicant started the job employment start date minus one day or if earlier the date the job applicant provided the information on the IRS Form 8850 SWAs must send Needs Letters to those employers and request that they file a signed a nd dated SAF within 90 days of the receipt date of the letter so the SWAs can proce ss those requests and issue final determinations. 13. Grace Period for States and Employers for Automated Systems and WOTC Forms . Extended Grace Period t o Modify Automated Systems To allow States and the employer community additional time to conform their automated systems for use modify their automated systems with the revised IRS and ETA Forms 7 ETA grants an additional 90 -day grace period . The grace period begins on Janua ry 11 2017 Change 1 and ends 90 calendar days later . During this extended grace period employers and their authorized representatives may file certification request s using other filing methods e.g. via email fax scanned mail and using ETA Forms with OMB Control Number 1205 -0371 and IRS Form 8850 with OMB Control Number 1545 -1500 for all WOTC eligible groups . If you are not sure how your State accepts applications contact the WOTC Coordinator in your State. A directory of State WOTC Coordinator s is available at https www.doleta.gov business incentives opptax State Contacts.cfm . Grace Period for Use of Previously OMB Approved ETA Forms and IRS Form All Target Groups Additionally to ensure SWAs continue an uninterrupted processing of employer s timely filed certification requests and issuance of determinations certification or denials for individuals who are members of reauthorized WOTC Target Groups other than the new target g roup LTUR ETA grants a 90 -day grace period that allows employers and their representatives to continue to file certification requests with the SWAs using either 1 the previously 2012 OMB approved ETA Forms and IRS Form or 2 the currently OMB approved ETA Forms with OMB Control Number 1205 -0371 and IRS Form 8850 with OMB Control Number 1545 -1500 . The 90 -day grace period begins on January 11 2017 Change 1 and end s 90 calendar days later April 11 2017 . For certificat ion requests for the new target group LTUR received on the 2012 OMB approved forms SWAs should follow the guidance under Section 12 until the 90 -day grace period ends. SWAs should continue to issue final determinations certifications or denials to th e respective employers or representatives. After the grace period ends SWAs should accept certification requests for all WOTC target groups only if submitted on currently OMB approved ETA Forms with OMB Control Number 1205 -0371 and IRS Form 8850 with OMB Control Number 1545 -1500. 14. Program Administration. The SWA certification and program operation responsibilities will remain the same under the PATH Act. These responsibilities include a determining targeted group eligibility by con ducting eligibility determinations and verification activities and issuing certifications and denials b establishing working partnerships with different participating agencies at the State and Local levels for issuing Conditional Cer tifications c complying with quarterly reporting requirements and d complying with requirements for record s retention time periods. 15. Action Requested . SWA administrators are requested to Provide this information to all appropriate State WOTC coordinators and related program staff employers and their representatives participating agencies and other interested partners 8 Ensure that the SWAs and participating agencies administer the requirements outlined in this TEGL and continue to proc ess certifications requests for all WOTC target groups including LTUR Use the currently OMB approved ETA WOTC Forms and IRS Form 8850 and share them with related program staff employers and their representatives participating agencies and other inte rested partners State Coordinators employers and their representatives and other partners are required to update their process and or systems to reflect this technical correction to the eligibility determination instructions for the LTUR target group a nd SWAs must reprocess previously denied LTUR certification requests using th e updated guidance in this TEGL. If the SWA finds that it must reverse its determination on a previously denied certification request the SWA must issue a certification . However if the SWA finds that its original denial determination is still valid under this updated guidance the SWA is not required to issue a second denial. As noted above SWAs are required to use the employment start date minus one day or the date the applica nt provided information on the IRS Form 8850 based upon which is more favorable to the applicant in determining eligibility. 16. Inquir ies. Questions regarding this guidance should be directed to the appropriate WOTC Regional Coordinator listed on the WOTC program website at https www.doleta.gov business incentives opptax Regional Contacts.cfm .