DIRECTIVE	:	EMPLOYMENT SERVICE PROGRAM LETTER NO. 06-99
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	John R. Beverly, III Director U.S. Employment Service
SUBJECT	:	Work Opportunity Tax Credit (WOTC) Program and Welfare-to-Work Tax (WtW) Credits' Guidance During Authorized Lapse.

1. Purpose. To provide specific procedural guidance to States for processing requests for certification under the Work Opportunity and Welfare-to-Work Tax Credits after these expire. This guidance covers the period July 1- September 30, 1999. If the WOTC and WtW tax credits have not been reauthorized by September 30, additional guidance will be issued.

2. References. The Tax and Trade Relief Extension Act of 1998, part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (P.L. 105-277); ESPL No. 2-99, dated November 5, 1999; and ETA Handbook No. 408, Second Edition, November 1998:

3. Background. The current WOTC program and WtW Tax Credit legislative authority expired June 30, 1999. Last year, the Congress retroactively extended both the WOTC program and the WtW Tax Credit. This action created a hiatus during which employers who failed to file for WOTC and/or WtW certification were denied the credit. However, employees who filed for certification during the hiatus and met the qualifying criteria were eligible for the credit. Employers should be notified, that although Congress has retroactively covered authorization lapses in the past, certifications for employer hires during this hiatus are not guaranteed.

4. Information. A news release from the House Ways and Means Committee, Committee on Finance. dated May 10, 1999, informs that extenders of expiring tax provisions will be part of the reconciliation bill due to be reported by the tax writing committees in July 1999. It explains that even though the committees may not act until July 16 and July 23 respectively, the reauthorizations-which include both the WOTC and WtW-- will be effective as of July 1,1999. In brief, this means that it is expected that the WOTC program and the WtW Tax Credit will be reauthorized, retroactive to its expiration date of June 30.

5. Action Required.  State Employment Security Agency (SESA) Administrators are requested to take steps to increase employer awareness regarding the WOTC and WtW authorization lapse and the conditions for employer certification requests of new hires during this period.

   SESAs are also to adhere to the following:

   Mandatory Procedures:

   • States must accept and fully process WOTC and WtW certification requests for employer hires made prior to July 1, 1999.

   • States must accept, date stamp, log, and retain certification requests for employer new hires made between July 1, 1999 - September 30, 1999.

   • States and Participating Agencies should continue to issue conditional certifications.

   Voluntary Procedures:

   • Since funds are available through the end of this fiscal year, States may conduct all steps necessary to process certification requests for up to but not including issuance of the actual certification.

   • Those States that run out of FY 1999 funds to administer the WOTC and WtW tax credits can either:

     1. utilize Wagner Peyser funds Sec. 7(a) and (b) for WOTC and WtW and to process any existing backlogs. These states, however, must modify their annual plan to reflect such activities, or

     2. through the RA, request and recapture any unused funds from states in different regions who still have not exhausted their initial allocation and do not need them to process current certification requests, existing backlogs, and other FY

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