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Updates clarify WOTC requirements and transitional relief

January 19, 2017

By Stacey May, Director of Tax Credits

In an updated Training and Employment Guidance Letter (TEGL 25-15 Change 1, January 11th, 2017), the Department of Labor (DOL) clarifies requirements for the Work Opportunity Tax Credit’s (WOTC) new Long-Term Unemployed (LTU) target group, grants additional transitional relief for State Workforce Agencies (SWA) on automated electronic systems, and specifies a deadline for businesses to use updated forms.

In order to determine eligibility for LTU applicants, the DOL instructs SWAs to use unemployment insurance wage records to verify whether an individual has been unemployed for 27 weeks or more, and unemployment insurance claim records to verify whether an individual received unemployment payments for all or part of the 27-week period. When neither of these are available, SWAs may use Form 9175 (LTU Self Attestation) to determine eligibility. As a result, the best practice remains always having an applicant who may qualify for the LTU category fill out Form 9175, just in case the state cannot get the necessary information on its own.

The TEGL also grants a 90-day extended grace period to states in order to modify their automated electronic systems to accept the most recent forms. Employers and consultants may file using other filing methods (mail, fax, email, etc.) during this time using both new and older forms. However, at the end of the 90-day period on April 11, 2017, states will only accept the newest forms with the LTU category and other updates. Therefore, before April 11, employers should transition to using the updated 8850 (revised March 2016) and 9061 (revised May 2016) in order to avoid any rejections or delays in applications.

The DOL will likely provide additional clarification and guidance in the future once these practices are in place for a while. Keep an eye on this space for the latest updates and information.

For more information or assistance on WOTC and employment tax credits, call 888-556-0123, email taxcreditrep@hkpayroll.com or submit our online form.

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