I.Purpose

The purpose of this policy is to disseminate the changes in the Ohio Department of Job and Family Services (ODJFS) Work Opportunity Tax Credit (WOTC) policies due to new procedural guidance from the USDOL Employment and Training Administration (ETA) contained in Training and Employment Guidance Letter (TEGL) 16-20. This guidance supersedes that outlined in the Third Edition of the ETA Handbook No. 408, published in November 2002, and its August 2009 Addendum.

II.Effective Date

IMMEDIATELY

III.Background

The Work Opportunity Tax Credit (WOTC) is jointly administered by the U.S. Departments of Labor and Treasury and is set forth under Section 51 of the Internal Revenue Code of 1986, as extended and amended by the Protecting Americans from Tax Hikes Act (PATH Act) of 2015. WOTC is reauthorized until December 31, 2025 under Section 113 of Division EE of Public Law 116-260 (Taxpayer Certainty and Disaster Relief Act of 2020). WOTC provides a tax credit to employers who hire workers with certain personal characteristics including, veterans, recipients of certain public benefits, or other populations that normally face barriers to employment. The Ohio Department of Job and Family Service, Office of Workforce Development is the State Workforce Agency (SWA) statutorily authorized to administer the operation of the WOTC certification process for the State of Ohio. All SWAs must administer the WOTC in accordance with the policies and procedural guidance set forth by the USDOL ETA and the requirements outlined in the WOTC Statement of Work (SOW).

IV.Requirements

The WOTC is a federal tax credit available to employers who hire and retain individuals from certain target groups who have consistently faced significant barriers to employment.

An employer can expect a tax savings of between $750 and $9,600 for each qualified employee, depending on the category of qualification. The following list delineates the current target groups, eligibility requirements to qualify for each group, and the maximum credit amount.

• Qualified IV-A Recipient (Category A)
  
  An individual who is a member of a family receiving assistance under part A of Title IV of the Social Security Act relating to Temporary Assistance to Needy Families (TANF). An IV-A Recipient is, for purposes of the WOTC, a family member who is specifically listed on the TANF grant and receives benefits for the requisite period. The assistance must be received for any nine months during the eighteen-month period ending on the hiring date. Please note, Medicaid and Medicare are not considered IV-A benefits. The maximum tax credit for this category is $2,400.
• Qualified Veteran (Category B)
  
  For WOTC purposes, a qualified veteran is an individual who must have served on active duty (not including training) in the United States Armed Forces for a period of more than 180 days or been discharged or released from active duty for a service-connected disability and must not have had a period of active duty of ninety days or more that ended during the sixty-day period ending on the hire date. To be a qualified veteran, the individual must also meet one of the following criteria:
  
  1. Be a member of a family that has received Supplemental Nutrition Assistance Program (SNAP) benefits for at least a three-month period during the fifteen-month period ending on the hiring date. (Maximum tax credit $2,400);
  2. Be entitled to compensation for a service-connected disability and is hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces. (Maximum tax credit $4,800);
  3. Be entitled to compensation for a service-connected disability and was unemployed for a period or periods totaling at least six months (whether consecutive or not) in the one-year period ending on the hiring date. (Maximum tax credit $9,600);
  4. Be unemployed for a period or periods totaling at least four weeks (whether consecutive or not) but less than six months in the one-year period ending on the hiring date. (Maximum tax credit $2,400); or
  5. Be unemployed for a period or periods totaling at least six months (whether consecutive or not) in the one-year period ending on the hiring date. (Maximum tax credit $5,600).
• Qualified Ex-Felon (Category C)
  
  An individual who has been convicted of a felony under any federal or state law and is hired not more than one year after the conviction or release from prison for that felony is considered a qualified ex-felon.
  
  Ex-felons who are participating in a transitional program, such as work release, are eligible for the WOTC program if they were convicted of a felony and served a jail sentence as defined above. Individuals convicted of felonies while in military service may also be eligible under the ex-felon group. For those serving time in a halfway house as part of their sentence, the release date may be considered one year from the date they complete their time in the halfway house.
  
  Maximum tax credit $2,400.
• Designated Community Resident (Category D)
  
  An individual who is at least eighteen, but not yet forty years of age and whose principal residence is within an empowerment zone or rural renewal county. For the State of Ohio, the following areas will be the most common for this category:
  
  • Empowerment Zones (D1)
    
    Ohio Areas – may include Cleveland, Cincinnati, Columbus and Ironton
  • Rural Renewal Counties (D2)
    
    Ohio Counties: may include Monroe, Crawford, Paulding, Seneca and Van Wert
    
    Verification that an employee is located in an Empowerment Zone or Rural Renewal County can be found at the following site.
    
    WOTC Address Locator - Google My Maps
    
    For more information, see the Instructions for Form 8850 on the IRS Website at: https://www.irs.gov/instructions/i8850.
    
    Maximum tax credit $2,400.
• Vocational Rehabilitation Referral (Category E)
  
  An individual who has a physical or mental disability resulting in a substantial barrier to employment who was referred to the employer upon completion of (or while receiving) rehabilitation services by Opportunities for Ohioans with Disabilities, or an employment network under the Ticket to Work program, or by the Department of Veteran Affairs.
  
  Maximum tax credit $2,400.
• Summer Youth (Category F)
  
  An individual must be between the ages of sixteen and seventeen years old and both:
  • work for the employer between May and September and
  • live in an Empowerment Zone (see Category D).
  
  Maximum tax credit $1,200.
• Qualified Recipients of SNAP benefits (Category G)
  
  An individual who is at least eighteen but not yet forty years of age on their hiring date and 1) is a member of a family that either received SNAP benefits for the six-month period ending on the hire date OR 2) is no longer eligible for such assistance as an able-bodied adult without dependents (ABAWD) who ceases to be eligible for assistance under the work requirements at Section 6(o) of the Food and Nutrition Act of 2008 but the family received benefits for at least three months of the five-month period ending on the hire date.
  
  Maximum tax credit $2,400.
• Qualified Supplemental Security Income (SSI) Recipients (Category H)
  
  An individual who is receiving SSI benefits under the Title XVI of the Social Security Act (including benefits of the type described in section 1616 of the Social Security Act or section 212 of Public Law 93-66) for any month ending on the hiring date. NOTE: Ticket Holders may be certified under the SSI target group.
  
  Maximum tax credit $2,400.
• Qualified Long-Term Family Assistance Recipient (Category I)
  
  An individual who is a member of a family that meets one of the following criteria:
  • Has received Temporary Assistance for Needy Families (TANF) payments for at least eighteen consecutive months ending on the hiring date; or
  • Receives TANF payments for any eighteen months (whether consecutive or not) beginning after August 5, 1997, with the last month being within two years of the hiring date; or
  • Stopped being eligible for TANF payments due to federal or state limits on the maximum period such assistance is payable, and the individual is hired not more than two years after such eligibility ends.
  
  Unlike other categories for the WOTC, employers may claim the credit for two years for a long term TANF recipient. The maximum first year credit is $4,000 and the maximum for the second year is $5,000.
• Qualified Long-Term Unemployment Recipients (Category L)
  
  An individual who has been unemployed for at least twenty-seven consecutive weeks AND has received unemployment compensation under federal or state law at some point during this period immediately preceding the hiring date.
  
  Maximum tax credit $2,400.

V.WOTC Application Process

As the SWA designated to process the Work Opportunity Tax Credit applications for target group certification, ODJFS WOTC has updated the procedures currently in place to align with the new guidance provided in TEGL 16-20. To this end, the ODJFS WOTC application process will now involve three distinct phases: Intake, Verification, and Notification.

a)Intake Phase

During the intake phase, ODJFS WOTC will collect the required forms and supporting documentation from interested employers or authorized employer representatives to verify WOTC eligibility through the online portal. ODJFS WOTC will only accept certification requests and supporting documentation via the online portal. https://wotc.jfs.ohio.gov/UserLogin.aspx?ReturnUrl=%2f

For this process, the employer or authorized employer representative must submit the IRS Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) and either the ETA 9061 (Individual Characteristics Form) or ETA 9062 (Conditional Certification) with supporting documentation for targeted category (covered in Attachment A). Once ODJFS WOTC has received the forms from the employer or authorized employer representative, an initial review will be performed to ensure that the certification request was both timely and complete.

For a submission to be considered timely, the forms must have been submitted no later than the twenty-eighth calendar day after the employee begins working for the employer. If IRS form 8850 is not received within this allotted time, the request for certification will be denied.

Based on USDOL guidance, no duplicate applications will be processed. ODJFS WOTC will process one certification per employer, per employee.

It is the responsibility of the employer to verify the applicant meets the requirements to qualify for the WOTC tax credit. If the applicant no longer meets the criteria, it is the employer’s responsibility to notify WOTC and a revocation notice will be sent to the IRS and USDOL.

Once signed by the employer and employee, no changes are to be made to the IRS Form 8850 by any authorized employer representatives or ODJFS WOTC employees. If it is suspected that alterations have been made without the consent of the employer or employee, an effort to contact those involved will be made for clarification. Unauthorized alterations may lead to denial.

b)Verification Phase

Once it has been determined that an employer or authorized employer representative has submitted a complete, and timely, request for certification, ODJFS WOTC will review the documents and supporting evidence to determine if the employee meets the requirements of the target group that the employer specified. ODJFS WOTC will rely on the information provided on the IRS 8850 and the ETA Form 9061 or 9062 combined with supporting documentation to make eligibility determinations, so it is imperative that employers and authorized employer representatives submit complete and legible documents with all evidence required. An attempt to validate an employee’s target group will be made; however, if an employer or authorized employer representative does not provide adequate supporting documentation and ODJFS WOTC is unable to make a determination within ninety-days of notice date, the certification request will be denied. It is ultimately the responsibility of the employer or their authorized representative to provide all information necessary.

All applications with hire dates of 1/1/2017 or after must be supported by documentation. Applications that fall within this period that do not include supporting documentation will be denied if supporting documentation is not supplied within 90 days.   

c)Notification Phase

ODJFS WOTC will issue notifications to employers or authorized employer representatives to inform them that their applications were certified, denied, or denied pending more information.

i.Certification

A certification notification will be issued to an employer or authorize employer representative when ODJFS WOTC has determined that the employee meets the certification criteria for the targeted group specified on the IRS Form 8850.

ii.Denial

A notification of denial will be issued to an employer or authorized employer representative when it is determined that an employee does not meet certification criteria.  Additionally, if IRS Form 8850 is not submitted by the twenty-eighth calendar day after the employee began working in Ohio, a denial will be issued. Refer to denial reason provided on notice received.

iii.Denial Pending More Information

A denial pending more information notification, “Deficiency Notice letter”, will be issued when additional information is needed to complete a certification request. Deficiency Notice letters will set forth the additional information and/or documentation that must be submitted within ninety-calendar days from notice date. The certification request will be denied if the employer or authorized employer representative does not submit the additional information and/or documentation by the deadline.

Out of State Wage Requests will set forth the additional information and/or documentation that must be submitted within ninety-calendar days from notice date. The certification request will be denied if additional information and/or documentation is not received from the responsible state by the deadline.

1.Authorized Representatives: An employer may authorize a third party to represent them by submitting an IRS Form 2848 (Power of Attorney and Declaration of Representative) to ODJFS WOTC at WOTC_contact@jfs.ohio.gov prior to submitting or uploading applications. Without being listed on such a form, an employer representative cannot facilitate the employer’s certification requests nor submit Form(s) 8850 on behalf of the employer. The ODJFS WOTC will hold these POAs on electronic file rather than require a new form submitted with each Form 8850.  ODJFS WOTC will not conduct any business with an individual who is not listed as an authorized employer representative on an employer’s IRS Form 2848, nor will IRS Form 2848 be accepted if it is signed and dated after the ODJFS WOTC certification request is submitted.

The IRS has not issued any guidelines or information granting approval for e-signing or e-filing the IRS Form 2848.

An authorized employer representative may act on behalf of the employer regarding the certification process, which includes, but is not limited to:

• Submission of the IRS Form 8850 and ETA Forms 9061 and 9062
• Submitting missing information necessary for a certification request
• Providing updates or clarification regarding an employer’s certification request

2.Notices and Communications: ODJFS WOTC will make all notices and communications available to employers or authorized employer representatives will be notified when there is an IRS Form 2848 on file that indicates such (at the time the employer requests certification).

For more information regarding the IRS Form 2848, see  Forms and Pubs Index Search | Internal Revenue Service (irs.gov)

3.Employer Appeals: An employer or authorized employer representative may file an appeal within a period of one year from the date on which ODJFS WOTC issues a denial letter for a complete and timely filed certification request. These appeals must be submitted in writing and may be submitted to WOTC contact@jfs.ohio.gov.  Appeals should clearly communicate why an employer or authorized employer representative believes the denial was incorrect and provide any clarifying information that was not submitted originally or explain any potential misinterpretations that the employer feels may have been made.

If an employer or authorized employer representative is dissatisfied with the results of an appeal review, they can appeal to the regional or national offices. This information will be provided in any final determination notices sent to employers or authorized employer representatives.

VI.Inquiries

Please direct any questions about this policy, or any other relevant inquiry to ODJFS WOTC at WOTC_contact@jfs.ohio.gov.

VII.Expiration

This issuance will stay in effect until December 31, 2025 unless circumstances require it be modified, replaced, or retracted.

VIII.     Monitoring 

Through the state's monitoring system, program monitors will review the ODJFS WOTC program during the annual monitoring review for compliance with federal and state laws and regulations. Any issues will be handled through the state's monitoring resolution process.

X.References

Section 113 of Division EE of P.L. 116-260 - The Consolidated Appropriations Act of 2021

Section 51 of the Internal Revenue Code (26 U.S.C. §51)

TRAINING AND EMPLOYMENT GUIDANCE LETTER No. 16-20,  Work Opportunity Tax Credit (WOTC) Procedural Guidance

TRAINING AND EMPLOYMENT GUIDANCE LETTER No. 06-20, Change 1,

Work Opportunity Tax Credit (WOTC) Funding Allotments for Fiscal Year 2021

TRAINING AND EMPLOYMENT GUIDANCE LETTER No. 25-15, Change 2 Work Opportunity Tax Credit 2015 Reauthorization

Attachments

USDOL Employment and Training Administration WOTC Eligibility Desk Aid

WOTC Qualifying Wages Chart