Employment and Training Administration
Washington, D. C. 20210






November 5, 1998


ESPL No. 1-99


June 30, 1999











U.S. Employment Service




Reauthorization of the Work Opportunity Tax Credit (WOTC) Program and the Welfare-to-Work Tax (WtW) Credit

  1. Purpose. To announce the reauthorization of the Work Opportunity Tax Credit Program and extension of the Welfare-to-Work Tax Credit under the Tax and Trade Relief Extension Act of 1998 (P.L. 105-277), &#sect; 1002 and 1003 respectively.

  2. References. Tax and Trade Relief Extension Act of 1998 --the Act--part of theOmnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, P.L. 105-277 (112 Stat. 2681); Internal Revenue Code of 1986, Sections 51 and 51A, as amended; and ETA Handbook No. 408, Second Edition, November 1998.

  3. Background. The current WOTC program's legislative authority expired June 30, 1998 and the Welfare-to-Work Tax Credit was set to expire on April 30, 1999.

  4. Background Authorization.  The Tax and Trade Relief Extension Act of 1998 (P.L. 105-277) was signed into law on October 21, 1998. It extends the WOTC program --without changes-- for a 12-month period through June 30, 1999, and makes the program retroactive to its expiration date of June 30, 1998. The reauthorization applies to all target group individuals who begin work for an employer on/or after July 1, 1998 and before July 1, 1999. Also, the Act extends the WtW Tax Credit through June 30, 1999. As a result of this reauthorization, SESAs areinstructed to process all timely requests for certification received and filed during the period of July 1, 1998 to October 21, 1998. Because this Act made no changes to the WOTC or WtW tax credits, SESAs' certification and program operation responsibilities for these two tax credits remain the same as described in the second edition, November 1998, of ETA Handbook No. 408. (This Handbook will be issued shortly under separate cover). These include procedures for: determining target group eligibility and issuing certifications; establishing working partnerships with different participating agencies at the State and local levels for resolving technical issues; clarifying target group qualifications; issuing Conditional Certifications; conducting verification activities; complying with quarterly reports' responsibilities; and for records' retention.

  5. Funding. (20) million dollars have been appropriated for the administration of WOTC and WtW during FY 1999. These funds will be allocated to the SESAs based on a formula that takes into consideration each State's: a) workload data as reported in the lastquarter of the fiscal year, b) percentage of the Civilian Labor Force, and c) percentage of the population on Welfare. Allocations and information on the availability of these funds with an adjustment for postage will be issued shortly under separate cover. States may continue to use indicia mail.

  6. Reporting Authority. Pursuant to the Paperwork Reduction Act of 1995, the Office of Management and Budget (OMB) has approved the information collection requested for the WOTC/WtW administrative and reporting forms. ETA Reporting Forms 9057, 9058, 9059 and ETA Administrative Forms 9061, 9062, 9063, and 9065 are approved under OMB No. 1205-0371, with an expiration date of June 30, 2001. However, please note that OMB permits the use of expired forms when the form is unchanged. This is intended to avoid unnecessary expenses in duplication and distribution. Therefore, the SESAs are instructed to continue to accept the July 31, 1998, ETA 9061 expired form until further instructed by DOL/ETA, U.S. Employment Service.

  7. Action Required. State Employment Security Agency (SESA) Administrators are requested:

    1. to provide this information to appropriate staff, employers and participating agencies, and administer the WOTC and WtW tax credits in accordance with the guidance provided in the second edition, November 1998, of ETA Handbook No. 408,

    2. not to include any certification activities in their the 44' Quarter, FY 1998 reports, resulting from employers' requests for certification received during the period of July 1, 1998 to September 30, 1998. All processing, verification, and certification activities performed during this and the subsequent period of October 1 - 21, 1998, under the WOTC program, should be prepared and reported as Quarter 1 data, FY 1999, inform the SESAs and appropriate staff that these guidelines are effective upon receipt.

  8. Inquiries. Direct all questions to the appropriate Regional WOTC/WtW Coordinator.

  9. Attachments. ETA Quarterly Reporting Forms 9057, 9058, and 9059 and ETA Administrative Forms 9061, 9062, 9063 and 9065, Clarification to Instructions for ETA Form 9058, Report No. 2, and FY 1999 Reporting Schedule.