TEGL 08-24 Change 1.pdf

EMPLOYMENT AND TRAINING ADMINISTRATION

ADVISORY SYSTEM

U.S. DEPARTMENT OF LABOR

Washington, D.C. 20210

CLASSIFICATION

WOTC

CORRESPONDENCE SYMBOL

OWI DNPTTA

DATE

March 11, 2025

RESCISSIONS

None

EXPIRATION DATE

Continuing

ADVISORY: TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 08-24,

CHANGE 1

TO: STATE WORKFORCE AGENCIES

STATE WORKFORCE ADMINISTRATORS

WORK OPPORTUNITY TAX CREDIT COORDINATORS

FROM: AMY SIMON

Acting Assistant Secretary

SUBJECT: Change 1 to Training and Employment Guidance Letter (TEGL) No. 08-24, Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal

Year (FY) 2025

1. Purpose. To convey additional Fiscal Year (FY) 2025 Work Opportunity Tax Credit

(WOTC) funding allotments and application requirements for State Workforce Agencies

(SWA), based on funding appropriated through a second continuing resolution (CR#2) through March 14, 2025. The rest of Training and Employment Guidance Letter (TEGL)

No. 08-24 remains the same.

2. Action Requested. Grantees must meet the application requirements detailed in section 4 within 30 calendar days from the date of this TEGL issuance.

3. Summary and Background.

a. Summary – On December 5, 2024, the Employment and Training Administration (ETA) issued TEGL No. 08-24, which announced the initial FY 2025 WOTC funding allotments of $4,101,822 under the American Relief Act, 2025, (Pub. L. 118-158, September 26, 2024). Congress passed a second continuing resolution (CR#2) known as the American

Relief Act, 2025, (Pub. L. 118-158, December 21, 2024). CR#2 provides for incremental

FY 2025 grant funding for states’ administration of the WOTC, prorated based on the

CR#2’s expiration date of March 14, 2025. The appropriation for WOTC under CR#2 is

$4,253,398. Once Congress authorizes final appropriations for FY 2025 or additional incremental funding under a subsequent CR, ETA will publish a change to this TEGL to announce the full-year or incremental allotments and balances for states. 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 I, 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 to administer the 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 incremental FY 2025 funding.

Allotment Formula. While under a continuing resolution, ETA calculates incremental allotments to states based on the prior fiscal year’s allotment percentages. Specifically, ETA determined the FY 2025 CR #2 state allotment amounts (provided in Attachment I) for normal WOTC operations by calculating each state’s relative share of FY 2024 funding and multiplying each state’s relative share by the total FY 2025 WOTC CR# 2 prorated funding amount through March 14, 2025.

Once Congress authorizes final appropriations for FY 2025, ETA will determine FY 2025 state allotments for normal WOTC operations according to the following methodology:

After allocating $36,000 to the U.S. Virgin Islands, ETA distributes the remaining funds to the SWAs by administrative formula with an estimated $94,957 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. 40 percent based on each State’s relative share of certifications issued for the most recently completed fiscal year’s available data (October 1 through September 30);

b. 40 percent based on each State’s relative share of the denials issued for the most recently completed fiscal year’s available data (October 1 through September 30); and

c. 20 percent is based on each state’s relative share of Civilian Labor Force (CLF) averages for the 12-month period of the most recently completed fiscal year’s available data

(October 1 through September 30).

Application Requirements for FY 2025 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-08-24, C1at 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 ‘continuation’ 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 https://www.grants.gov/ must have a UEI 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 2025 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

2024 WOTC grant as an approximate for FY 2025 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 may also follow the “Search Grants” link and enter ’ETA-WOTC-

TEGL-08-24’ in the Keyword(s) field to search for the formula 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 https://www.sam.gov/ https://www.grants.gov/applicants/grant-applications/how-to-apply-for-grants https://www.grants.gov/ mailto:support@grants.gov employers, job seekers, and other Workforce Innovation and Opportunity Act

(WIOA) partners.

• 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 2025 grant award, SWAs are responsible for conducting the WOTC activities outlined in the WOTC Statement of Work (See Attachment

II of TEGL 08-24, available here: https://www.dol.gov/agencies/eta/advisories/tegl-08-24).

As noted above, this TEGL provides incremental funding proportional to funds appropriated through the March 14, 2025 expiration date in CR#2; 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 extended the authorization for WOTC (https://www.congress.gov/116/plaws/publ260/PLAW-

116publ260.pdf);

• Pub. L. 118-47, Further Consolidated Appropriations Act, 2024

(https://www.congress.gov/118/plaws/publ47/PLAW-118publ47.pdf);

• TEGL No. 06-23, Change 2, Change 2 to Training and Employment Guidance Letter No.

06-23, Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal Year

2024 (https://www.dol.gov/agencies/eta/advisories/tegl-06-23-change-2); and

• Pub. L. 118-83, Continuing Appropriations and Extensions Act, 2025

(https://www.congress.gov/118/plaws/).

• Pub. L. 118-158, American Relief Act, 2025 (BILLS-118hr10545enr.pdf).

https://www.dol.gov/agencies/eta/advisories/tegl-08-24 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/116/plaws/publ260/PLAW-116publ260.pdf https://www.congress.gov/118/plaws/publ47/PLAW-118publ47.pdf https://www.dol.gov/agencies/eta/advisories/tegl-06-23-change-2 https://www.congress.gov/118/plaws/publ83/PLAW-118publ83.pdf https://www.congress.gov/118/bills/hr10545/BILLS-118hr10545enr.pdf

7. Attachment(s).

• Attachment I: Work Opportunity Tax Credit Fiscal Year 2025 CR 2 State Allotments

Attachment I Work Opportunity Tax Credit FY 2025 Funding under Continuing Resolution

I-1

State CR #2 12/21/24 thru 3/14/25 (23.01%) Total

$4,253,398

Alabama 65,540 Alaska 18,208 Arizona 75,209 Arkansas 35,682

California 538,022 Colorado 65,388 Connecticut 37,134 Delaware 22,338 District of Columbia 18,208 Florida 217,563 Georgia Hawaii

111,308 23,011

Idaho 20,621 Illinois 159,574 Indiana 59,679 Iowa 47,782

Kansas 32,085 Kentucky Louisiana

77,283 67,839

Maine 18,208

Maryland Massachusetts

87,080 83,104

Michigan Minnesota

125,502 62,904

Mississippi Missouri

45,295 82,693

Montana 18,208 Nebraska 29,129

Nevada 37,452 New Hampshire New Jersey New Mexico

18,208 81,598 37,102

New York 273,808 North Carolina 120,140 North Dakota 18,208 Ohio 189,910

Oklahoma 56,855 Oregon Pennsylvania Puerto Rico

56,887 155,201 22,490

Rhode Island 19,719 South Carolina 61,539 South Dakota 18,208 Tennessee 142,785

Texas 346,978 Utah 27,382 Vermont 18,208 Virginia 90,420

Washington West Virginia Wisconsin

90,838 27,382 70,991

Wyoming Virgin Islands

18,208 8,284