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:
- 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);
- 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);
- 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);
- 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
- 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