DIRECTIVE	:	EMPLOYMENT SERVICE PROGRAM LETTER NO. 10-99
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	GRACE A. KILBANE Administrator Office of Workforce Security
SUBJECT	:	Reauthorization of the Work Opportunity Tax Credit (WOTC) and Welfare;-to-Work Tax Credit (WtW)

1. Purpose. To announce the reauthorization of the Work Opportunity and Welfare-to-Work Tax Credits under the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170) § 505.

2. References. The Ticket to Work and Work Incentives Improvement Act of 1999, (P.L. 106-170) § 505; 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/WtW Tax Credits legislative authority expired June30, 1999.

4. Authorization. The Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170)--the Act--, was signed into law on December 17, 1999. It extends the WOTC/WtW Tax Credits for a 30-month period through December 31, 2001, and makes the reauthorization retroactive to the credits' expiration date of June 30, 1999. The definition of non-qualifying rehires has been changed to exclude a person from qualifying an employer for the tax credit if, prior to the hiring date, the person was employed by the employer at any time. The rehire's WOTC status at the time of the original hire now is irrelevant. The reauthorization applies to individuals who began work for the employeron/or after July 1, 1999, and before January 1, 2002. Under the reauthorizing legislation, SESAs' certification and program operation responsibilities for these two tax credits remain the same as described in the second edition, November 1998, ofETA Handbook No. 408. 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 and issuing Conditional Certifications; conducting verification activities; and complying with quarterly reports' and records' retention responsibilities.

5. Funding. Appropriations of $21,854,000 for State administration and implementation of WOTC/WtW tax credits include an additional $1,854,000 for the U.S. Department of Labor to provide an extensive range of technical assistance to approximately 10 States previously identified by Congress as having sustained processing backlogs. The original $20 million will be allocated to the SESAs based on a formula that takes into consideration: a) the workload data reported for the last quarter of the fiscal year; b) a percentage of the Civilian Labor Force; and c) a percentage of the population on Welfare. Allocations and information on these funds with an adjustment for postage will be issued under separate cover. States may continue to use indicia mail.

6. Reporting Authority. In 1998, and pursuant to the Paperwork Reduction Act of 1995, the Office of Management and Budget (OMB) approved the forms. ETA Reporting Forms 9057 - 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. The SESAs, participating agencies, employers and/or their representatives should continue to use these forms.

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

   1. 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; and

   2. Ensure that the SESA WOTC/WtW Coordinators receive a copy of this ESPL and begin all program activities--which include executing the corresponding actions for all the timely submitted employer requests received during the hiatus--effective upon receipt of this ESPL, keeping in mind the change in the definition of non-qualifying rehires.

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