TEGL 06-23.pdf

EMPLOYMENT AND TRAINING ADMINISTRATION

ADVISORY SYSTEM

U.S. DEPARTMENT OF LABOR

Washington, D.C. 20210

CLASSIFICATION

WOTC

CORRESPONDENCE SYMBOL

OWI DNPTTA

DATE

November 14, 2023

RESCISSIONS

None

EXPIRATION DATE

Continuing

ADVISORY: TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 06-23

TO: STATE WORKFORCE AGENCIES

STATE WORKFORCE ADMINISTRATORS

WORK OPPORTUNITY TAX CREDIT COORDINATORS

FROM: BRENT PARTON

Principal Deputy Assistant Secretary

SUBJECT: Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal Year 2024

1. Purpose. To convey the Fiscal Year (FY) 2024 initial funding allotments for WOTC application requirements for State Workforce Agencies (SWA), based on funding appropriated through a continuing resolution through November 17, 2023.

2. Action Requested. Grantees must meet the application requirements detailed in section 4 within 30 calendar days from the date of this Training and Employment Guidance Letter (TEGL) issuance.

3. Summary and Background.

a. Summary – On September 30, 2023, the President signed into law H.R. 5860, a continuing resolution (CR) known as the Continuing Appropriations Act, 2024 and Other

Extensions Act, which became Public Law 118-15. The CR provides for incremental FY 2024 grant funding for states’ administration of the WOTC, prorated based on the CR’s expiration date of November 17, 2023. The appropriation for WOTC under this CR is $2,423,384. Once Congress authorizes final appropriations for FY 2024, or additional incremental funding under a subsequent CR, the Employment and Training Administration (ETA) will publish a change to this TEGL to announce the incremental or full-year allotments and state balances. If applicable, ETA will also announce any additional funding appropriated to reduce processing backlogs and assist states in adopting or modernizing information technology for processing of certification requests.

ETA requests that SWAs submit applications for funding as allotted in Attachment I of this TEGL.

b. Background – The WOTC is set forth under section 51 of the Internal Revenue Code of 1986, as amended (26 U.S.C. § 51), and is authorized until December 31, 2025, under the

Consolidated Appropriations Act, 2021 (Pub. L. 116-260), Division EE, Title 1, Section

113. The U.S. Department of the Treasury, through the Internal Revenue Service (IRS), administers all tax-related provisions and requirements of the tax credit. The U.S.

Department of Labor, through ETA, awards grants to states for administration of WOTC.

4. Details. States must enter their state-specific allotment amount (provided in Attachment I) on their SF-424 Form, Application for Federal Assistance (OMB Control No. 4040-0004), as their request for FY 2024 funding.

Allotment Formula. In February 2023, ETA published a Request for Comment in the Federal Register (88 FR 10540), requesting public comment on proposed modifications to

WOTC procedural guidance and the administrative formula used to calculate annual state allotments. The proposed formula changes included an inflation-adjusted increase to state minimum funding allotments and revised metrics used in the formula methodology. ETA will use the revised administrative formula to calculate states’ remaining balances for FY

2024 allotments once Congress passes the FY 2024 full-year appropriation. ETA will announce the full-year FY 2024 allotments and revised administrative formula in a subsequent Change TEGL. ETA determined initial FY 2024 state allotments (provided in Attachment I) for normal WOTC operations by calculating each state’s relative share of FY

2023 full-year funding, and multiplying each state’s relative share by the total FY 2024 WOTC CR prorated funding amount through November 17, 2023.

ETA determined FY 2023 state allotments for normal WOTC operations according to the following methodology: After allocating $20,000 to the U.S. Virgin Islands, ETA distributes the remaining funds to the SWAs by administrative formula with a $66,000 minimum allotment and a 95 percent stop-loss/120 percent stop-gain from the previous year allotment percentage. We calculate the administrative formula as follows:

a. 50 percent is based on each state’s relative share of total WOTC certifications issued from October 1, 2021, through September 30, 2022;

b. 30 percent is based on each state’s relative share of the Civilian Labor Force averages for the 12-month period from October 1, 2021, through September 30, 2022; and

c. 20 percent is based on each state’s relative share of adult recipients of Temporary

Assistance for Needy Families averages from October 1, 2020, through September 30, 2021.

Application Requirements for FY 2024 Funding. ETA requires grantees to submit an electronically signed copy of the SF-424 Form, Application for Federal Assistance (OMB

Control No. 4040-0004), as their official request for funding opportunity number ‘ETA-

WOTC-TEGL-06-23-2024’ at https://www.grants.gov, within 30 calendar days from the issuance date of this TEGL. The official, electronically signed SF-424 Form should be marked as a ‘new’ application for funding and must reflect the amount listed in Attachment I as the state’s requested estimated funding total in item #18. Grantees must enter the Catalog of Federal Domestic Assistance Number ‘17.271’ for item #11 and the grantee’s 12-character

Unique Entity Identifier (UEI number) for item #8c. Each applicant must have a UEI https://www.grants.gov/ number available, and it must be registered in the System for Award Management (SAM.gov) before submitting an SF-424 application.

Grantees should indicate the estimated amount of Indirect Costs to be claimed by the recipient for FY 2024 expenditures, if any, as a sentence for item #15, ‘Descriptive Title of Applicant's Project.’ Grantees may use the amount of indirect costs reported against their FY 2023 WOTC grant as an approximate for FY 2024 indirect cost expenditures. For example:

“Indirect Costs for this award are estimated at $19,000.” If there is no estimated Indirect Costs, the following statement, must be entered: “Indirect Costs for this award are estimated at $0.00.”

To submit the required documents, applicants must follow the “Apply for Grants” link on Grants.gov and download the links for the grant application package. For this funding opportunity, applicants should not follow the “Find Grants” link, as this is not a competitive funding opportunity. If applicants encounter a problem with Grants.gov and do not find an answer in available resources, they should call 1-800-518-4726 or 1-606-545-5035 to speak to a Customer Support Representative, or send an email to support@grants.gov.

Award Descriptions. As part of a Federal government-wide effort to describe grant activities consistently and accurately, ETA uses standard grant award descriptions. States may see the following text in the grant award or in online descriptions of the WOTC grants:

• Purpose: The purpose of this grant is to allow SWAs to administer WOTC per ETA guidance and provisions set forth in the IRS Code of 1986, Section 51, as amended.

Law designates the SWAs as the only agencies that can issue a Certification (26 U.S.C. § 51(d)(12)). The statute refers to SWAs as State employment security agencies, established in accordance with the Wagner-Peyser Act, 29 U.S.C. § 49 et seq.

• Activities to be performed: SWAs must use funds to implement the requirements set forth in the WOTC Statement of Work, including to: Designate a state coordinator who oversees the administration of WOTC for each state grant; Determine eligibility of individuals as members of targeted groups on a timely basis, and issue employer certifications, denials, or notices of invalidation for tax credits on a timely basis, and in accordance with the policies and procedures set forth by ETA; and Establish and maintain appropriate forms’ quality review process, record keeping, and reporting capability related to the orderly management of WOTC certification requests.

• Expected Outcomes: For WOTC grants, SWAs will issue determinations (certifications or denials) for employers’ certification requests, which facilitate tax credits determined by the U.S. Department of the Treasury. SWAs will increase efficiency in processing employers’ certification requests and develop plans that include an estimated timeline to eliminate existing backlogs of certification requests.

• Intended Beneficiaries: Job seekers who have access to a higher number of employment opportunities, and employers who seek to increase hiring of qualified job applicants. Other beneficiaries include state and local partner agencies in the American Job Center network that coordinate efforts to promote WOTC to employers, job seekers, and other Workforce Innovation and Opportunity Act (WIOA) partners.

https://www.sam.gov/ https://www.grants.gov/web/grants/applicants/apply-for-grants.html https://www.grants.gov/ mailto:support@grants.gov

• Subrecipient Activities: SWAs, as WOTC grant recipients, do not typically subaward funds. States that wish to subaward funds should seek approval from their

Grant Officer.

General Administration. With their FY 2024 grant award, SWAs are responsible for conducting the WOTC activities outlined in the WOTC Statement of Work (Attachment II).

As noted above, this TEGL provides incremental funding proportional to funds appropriated through the November 17, 2023 expiration date in the Continuing Resolution; the timing and amount(s) of subsequent incremental funding depends on future appropriations.

Reporting Requirements.

a. Quarterly Financial Report – SWAs must report fiscal expenditures quarterly using ETA Form 9130. Financial reports are due no later than 45 days following the end of each quarter. Timely submission of these reports is important to ensure proper accounting of funds.

b. Quarterly Performance Report – SWAs must use the web-based Enterprise Business Support System (EBSS) Tax Credit Reporting System to report quarterly activities and outcomes using ETA Form 9058. Performance reports are due no later than 45 days following the end of each quarter. Timely submission of these reports is important for administration purposes.

5. Inquiries. Please direct inquiries to the appropriate Regional WOTC Coordinator listed on the WOTC website at https://www.dol.gov/agencies/eta/wotc/contact/regional-offices.

6. References.

• Section 51 of the Internal Revenue Code of 1986, as amended (26 U.S.C. § 51) (https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapt erA/part4/subpartF&edition=prelim);

• Chapter 4B of Title 29 of the United States Code (Labor)

(https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter4B&edition=prelim);

• Pub. L. 116-260, Consolidated Appropriations Act, 2021,which authorizes WOTC

(https://www.congress.gov/116/plaws/publ260/PLAW-116publ260.pdf);

• Pub. L. 117-328, Consolidated Appropriations Act, 2023

(https://www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf);

• Pub. L. 118-15, Continuing Appropriations Act, 2024 and Other Extensions Act

(https://www.congress.gov/118/plaws/publ15/PLAW-118publ15.pdf); and

• Federal Register: Work Opportunity Tax Credit, Request for Comments Regarding

Proposed Modifications to Procedural Guidance and Administrative Formula (88 FR 10540).

7. Attachment(s).

• Attachment I: Work Opportunity Tax Credit Fiscal Year 2024 Initial State Allotments

• Attachment II: Work Opportunity Tax Credit Statement of Work https://www.dol.gov/agencies/eta/wotc/contact/regional-offices https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapterA/part4/subpartF&edition=prelim https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapterA/part4/subpartF&edition=prelim https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter4B&edition=prelim https://www.congress.gov/116/plaws/publ260/PLAW-116publ260.pdf https://www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf https://www.congress.gov/118/plaws/publ15/PLAW-118publ15.pdf https://www.federalregister.gov/documents/2023/02/21/2023-03470/work-opportunity-tax-credit-request-for-comments-regarding-proposed-modifications-to-procedural https://www.federalregister.gov/documents/2023/02/21/2023-03470/work-opportunity-tax-credit-request-for-comments-regarding-proposed-modifications-to-procedural

Attachment I

Work Opportunity Tax Credit

FY 2024 Funding under Continuing Resolution

CR #1

10/1/23 thru 11/17/23 (13.11%)

State Total

$2,423,384

Alabama 36,168

Alaska 8,653

Arizona 45,145

Arkansas 16,956

California 322,953

Colorado 39,250

Connecticut 22,290

Delaware 10,615

District of Columbia 8,653

Florida 130,594

Georgia 63,177

Hawaii 10,935

Idaho 9,799

Illinois 92,574

Indiana 35,823

Iowa 28,682

Kansas 19,259

Kentucky 46,390

Louisiana 37,757

Maine 8,653

Maryland 52,270

Massachusetts 49,884

Michigan 75,334

Minnesota 37,759

Mississippi 27,189

Missouri 49,637

Montana 8,653

Nebraska 17,485

Nevada 21,806

New Hampshire 8,653

New Jersey 42,846

New Mexico 22,270

New York 164,355

North Carolina 66,967

North Dakota 8,653

Ohio 94,433

Oklahoma 34,128

Oregon 34,147

Pennsylvania 93,160

Puerto Rico 10,687

Rhode Island 9,371

South Carolina 32,836

South Dakota 8,653

Tennessee 85,708

Texas 171,750

Utah 14,219

Vermont 8,653

Virginia 54,275

Washington 54,526

West Virginia 15,518

Wisconsin 41,958

Wyoming 8,653

Virgin Islands 2,622

I-1

Attachment II

II-1

Work Opportunity Tax Credit (WOTC)

Statement of Work

State Workforce Development Agencies, also known as State Workforce Agencies (SWA), must use funds for the Fiscal Year to conduct the following mandatory activities:

1. Adhere to Employment and Training Administration (ETA) guidance, and provisions of the

Internal Revenue Code of 1986, Section 51, as amended, in administering the Work

Opportunity Tax Credit (WOTC) certification process. Law designates the SWA as the only agency that can issue a Certification (26 U.S.C § 51(d)(12)). (That statute refers to SWAs as

State employment security agencies, established in accordance with 29 U.S.C. § 49 et seq.).

2. Designate a State Coordinator who oversees the WOTC administration for each state grant and attends monthly technical assistance grantee calls hosted by ETA’s National and/or

Regional Offices.

3. Determine eligibility of individuals as members of targeted groups, on a timely basis, and issue determinations (certifications, denials, or notices of invalidation for invalid certifications that were previously issued) on a timely basis, and in accordance with the policies and procedures set forth by ETA.

4. Establish and implement an appeals resolution process in accordance with the guidelines provided by ETA.

5. Develop a backlog reduction plan that includes an estimated timeline to eliminate the state’s existing backlog based on current policies and procedures and notify their ETA Regional

Coordinator prior to plan implementation.

6. Establish and maintain appropriate quality review processes, record keeping procedures, and reporting capability related to the orderly management of WOTC certification requests in accordance with the policies and procedures set forth by ETA.

7. Establish and maintain an orderly system for regularly verifying the eligibility of a random sample of individuals certified under WOTC on a quarterly basis, and initiating effective corrective action when appropriate, as indicated by results of such quality control activities.

Additionally, SWAs are strongly encouraged to use the funds to conduct the following activities:

• Adopt information technology (i.e., systems applications, software, etc.) to process certification requests more efficiently, or make modernization improvements to their existing systems or procedures to increase efficiency and reduce any processing backlog.

• Develop working agreements, such as Memoranda of Understanding (MOU) or other formal agreements, with partner agencies in the American Job Center network (also known as the One-Stop Career Center system) to coordinate efforts to promote WOTC to employers, job seekers and other Workforce Innovation and Opportunity Act partners.

• Develop working agreements such as MOUs or other formal agreements with other SWAs for the timely and orderly processing of “out of state” certification requests requiring

SWAs to provide available documentation and/or records for WOTC potentially eligible applicants (new hires) relocating and working in another state.

Attachment II

II-2

• Develop working agreements, such as MOUs or other formal agreements, with state or local partnering agencies (i.e., state Vocational Rehabilitation Agencies, Veterans Affairs

Administration and related organizations, Employment Networks, and other local workforce areas), for the purposes of expediting verification of targeted group eligibility information submitted in certification requests, and issuing Conditional Certifications, where appropriate. SWAs are expected to train state and participating agency staff, and provide monitoring and technical assistance to these agencies, as appropriate, for conducting targeted group preliminary eligibility determinations and issuing Conditional

Certifications.

Other Grant Agreement Conditions

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

• SWAs must assure that all data exchanges conducted through or during the course of performance of this grant will be conducted in a manner consistent with applicable Federal law and TEGL No. 39-11, issued on June 28, 2012. All such activity conducted by ETA and/or recipients will be performed in a manner consistent with applicable state and Federal laws.

• SWAs must fulfill performance and financial reporting requirements under the grant agreement.

https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7872