Program Plan
Department of Labor - Work Opportunity Tax Credit (WOTC) Recovery Plan
Updated 07/29/2009
Objectives
Program Purpose
The Work Opportunity Tax Credit (WOTC) Program was created in 1996 by the Small Business Job Protection Act. The program provides a tax credit to incentivize private-sector businesses to hire individuals from 12 target groups who have consistently faced significant barriers to employment, including the two new target groups authorized by the Recovery Act.
Public Benefits
The benefits are two-fold: 1) the program enables the disadvantaged persons in the targeted groups to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing tax payers, and 2) the participating private-sector businesses are provided with a federal income tax credit for up to $2,400 if they hire individuals in the two new target groups, Unemployed Veterans and Disconnected Youth.
The two new target groups are unemployed veterans and disconnected youth. An individual will qualify as an unemployed veteran if they were discharged or released from active duty from the Armed Forces during the five-year period prior to hiring and received unemployment compensation for more than four weeks during the year before being hired by the business that will receive the tax credit. An individual qualifies as a disconnected youth if they are between the ages of 16 and 25 and have not been regularly employed or attended school in the past 6 months, or they are not readily employable due to lack of basic skills.
Measures
The measures have been revised to enrich the performance metrics for Recovery targets. In some instances, targets will not be available until additional baseline data has been collected.
| Measure | Target/Actual |
|---|
| 2009 | 2010 | 2011 | 2012 |
|---|
[-]
Applications processed for new target groups | 0/0 | - | - | - |
Measure Information
| Frequency : Quarterly | | Direction : Increasing | | Type : Output | Explanation : The Recovery Act introduced two new target groups: 1) Unemployed Veterans and 2) Disconnected Youth with their respective eligibility requirements.
This new measure will be an aggregate report of the number of applications processed by all (State Workforce Agencies) grantees. The Recovery Act did not provide additional funds for the administration of WOTC, but did expand the scope of eligible target groups. A baseline has yet to be determined for the number of applications processed.
| | Unit : Number |
|
Schedule and Milestones
Issuance of Internal Revenue Service Notice providing definitions of “unemployed veteran” and “disconnected youth”- This step had to be completed to enable finalizing ETA’s Training and Employment Guidance Letter.
Completed: May 28, 2009
New Forms.- All seven reporting and administrative/processing forms and all program related materials, including an Addendum to the ETA Handbook 408, were revised and updated to reflect the two new target groups introduced by the Recovery Act and its statutory requirements. The package was submitted to the Office of Management and Budget (OMB) for clearance. These program materials will be communicated in the upcoming Training and Employment Guidance Letter (TEGL) and training Webinars.
Expected Completion Date: August 31, 2009
Issuance of Training and Employment Guidance Letter for Implementing Tax Credit
Provisions for Two New Target Groups.- Training and Employment Guidance Letter will be issued and distributed to the workforce system once cleared by the Office of Management and Budget. ETA anticipates issuing the TEGL in August 2009.
Expected Completion Date: August 31, 2009
Funding/Strategic Plans.- ETA is revising guidance to the States related to their strategic plans for implementing the WOTC program. The new plan will include the two new targeted populations. ETA expects to implement the new planning process in FY 2010.
Expected Completion Date: October 1, 2009
Technical Assistance Webinars.- ETA will conduct ongoing technical assistance through Webinars, monthly conference calls, e-mail and telephone communications, and regional meetings. Three National Webinars are scheduled for late June to train public and private sector representatives on new provisions introduced by the Recovery Act of 2009.
Expected Completion Date: Ongoing
Program Reporting.- Regional WOTC Coordinators will be trained on the quarterly review process that will assist them in monitoring the accuracy of the States’ quarterly reports.
Expected Completion Date: Ongoing
Quarterly financial and program reports.- Quarterly financial and program reports are due 45 days after the end of each quarter, by Fiscal Year, according to ETA's Workforce Investment Act and Wagner-Peyser Act reporting policy. Fiscal Year 2008 began on October 1, 2008.
Expected Completion Date: Ongoing
Milestones
No Data Available
Projects and Activities
In general, the program offers a tax credit to businesses who hire disadvantaged members of the 12 target groups. The program is administered jointly by the Departments of Labor and Treasury. Treasury, the lead agency for the WOTC Program, administers the tax credit’s provisions through the Internal Revenue Service (IRS). Labor, through the Employment and Training Administration (ETA), allocates program funds to the States, develops policy and program guidance for the processing, verification and certification processes, develops a quarterly reporting system to collect program data, provides technical assistance and training, and oversees program implementation at the regional level.
To assist States in administering the program under its expanded scope, ETA will be actively engaged in technical assistance for effective program administration.
State Workforce Agencies (SWAs) administer WOTC and will help ensure the timely processing of applications. The operational management of the WOTC certification process includes: 1) determining whether the certification requests received were filed in a timely manner, 2) verifying target group eligibility with different state service providers, and 3) issuing to employers the state’s final determination (i.e., a certification or a denial).
SWAs will need to inform employers about the changes to WOTC – especially the two new target groups. They will also be involved in establishing quality control and record-keeping capability in accordance with IRS records retention requirements. Lastly, SWAs are responsible for data management and more specifically, the collecting and reporting of program data to ETA on a quarterly basis to ensure program integrity.
The Internal Revenue Service has defined the two target groups (unemployed veterans and disconnected youth) so as to require access to state unemployment insurance data to verify an individual meets the definition. SWAs will be required to develop partnerships with their state unemployment insurance programs to obtain this data.
NOTE: No Recovery Act Funds were appropriated to support additional administrative costs of implementing the two new target groups. The total budget for States to administer the WOTC program nationally for FY 2009 is $17,368,000. The proposed funding target for FY 2010 is $18,520,000.
Review Process
The Department has established reporting systems and OMB-approved forms that grantees use to track, document and report expenditures and performance on a quarterly basis. Grantees are required to certify the accuracy of these reports prior to submitting them to ETA through the electronic reporting systems.
ETA uses its Grants Electronic Management System (GEMS) and other related electronic data collection systems to conduct and document quarterly desk reviews of financial obligations, expenditures and program performance. Grantees identified as “high risk grantees” through these reviews are given priority attention for on-site monitoring. ETA’s quarterly desk reviews along with on-site reviews are used to identify potential risks and encourage program improvements through technical assistance and training.
Additionally, Regional WOTC Coordinators conduct periodic compliance review visits of States with special needs or deficiencies. To assist in the review, coordinators use the Technical Assistance and Compliance Review Worksheet Guide which covers all financial and program components. ETA is also collecting more frequent information from States through “Monthly Conference Calls” with the WOTC Regional Coordinators. This data inform technical assistance and guidance to the States for the successful administration of the program.
To further ensure that funds are spent on the intended purpose and accurately reported, the Department requires all grantees to submit single audits annually. ETA works with grantees to resolve any audit findings through additional reviews and the development and implementation of corrective action plans.
Improving Performance Accountability of Grants - All state and local government and nonprofit recipients that expend $500,000 or more in Federal assistance in one year are required by the Single Audit Act to obtain an annual audit by an independent public accountant. A challenge for the Department is that grantees’ audits conducted under the Single Audit Act are not always completed in a timely manner. Therefore, ETA has implemented a procedure for annually reviewing ETA grantees’ Single Audit Act report status and sending written notifications to grantees whose single audit reports are delinquent.
Actions Remaining
Send follow up letters to grantees who continue to be delinquent.- ETA has implemented a procedure in the accounting office to identify delinquent grantees and send them a warning letter.
Fiscal Year 2008
Codify standard operating procedures into Procedures Manuals.- Procedures have been updated to include steps for sending delinquent notices to grantees once the list has been received from the accounting office.
Fiscal Year 2008
Cost and Performance Plan
Consistent with the transparency and accountability objectives of the Recovery Act, States will submit quarterly reports which will provide information on applications received, certified and denied. The reports will include information on the two new target groups, disconnected youth and unemployed veterans.
ETA will post the summary of program data on the ETA website, the DOL Recovery webpage, and Recovery.gov.
Energy Efficiency Spending Plans
Program Plan Award Types
No Data Available