Approaching the end of May 2016, where do we stand with the changes made to WOTC in the PATH Act?
The Protecting Americans from Tax Hikes Act of 2015 (“PATH Act” Division Q of P.L. 114-113) was enacted Dec. 18, 2015. That legislation extended WOTC for five years, one year back and four years forward, through the end of 2019. It also added a new targeted group of eligible employees beginning in 2016 called long-term unemployment recipients.
On January 28, 2016 the Dept. of Labor provided “Interim Instructions” to the State Workforce Agencies informing them to expect revised forms IRS 8850 and ETA 9061. The instructions state: “States may accept applications for the New Target Group using the current forms ETA forms 9061 or 9062, yet must postpone processing those certification requests until ETA issues additional guidance.”
On March 23, 2016 the IRS published a revised form 8850 as well as Notice 2016-22. As has been the case following prior periods of program hiatus, the Notice provides transition relief from the standard 28-deadline for submitting applications. Employers who hired members of targeted groups on or after January 1, 2015 and on or before May 31, 2016 may submit applications to the state agencies by June 29, 2016. In the case of employees in the long-term unemployment recipient category, employees must be hired on or after January 1, 2016. The Notice explains that revised forms IRS 8850 and ETA 9061 are necessary to administer the new target group.
The Notice also indicated that a separate self-attestation form or affidavit would be required:
The Treasury Department and the IRS anticipate that the modified forms will include a requirement that the individual signing the form attest that he or she meets the requirements to be a qualified long-term unemployment recipient and a requirement that the individual attest to the period(s) during which the individual was unemployed and the period the individual received unemployment compensation.
It wasn’t until May 10, 2016 that the DOL submitted proposed ETA 9061 and self-attestation forms to the Office of Management and Budget (OMB), the agency that must approve government forms. DOL requested that OMB approve the forms under “emergency” procedures in just three days. Ultimately, OMB approved the forms on May 17, 2016. The new form is called ETA 9175.
In order for the State Workforce Agencies to understand how to utilize the new self-attestation form and how to make qualification determinations in the new target category, they require a Training and Employment Guidance Letter (TEGL) from DOL. Such a TEGL has yet to be provided.
On May 16, 2016 Congressmen Tom Reed (R-NY) and Bill Pascrell (D-NJ) sent a letter to Labor Secretary Thomas Perez, Treasury Secretary Jacob Lew, and IRS Commissioner John Koskinen. In the letter, they pointed out the delay in implementing the new WOTC category passed in the PATH Act and asked that additional transition relief be granted in order to enable the states and employers to make the necessary changes to utilize the new category:
Continued delay of issuance of the forms and guidance needed for WOTC has put states and employers in a difficult position to implement the new provisions. An extended transitional relief period will ensure that employers screening and hiring individuals, as well as state agencies, are fully prepared to comply with the forms and guidance, once issued. We further suggest that because it has taken so long to issue guidance and forms for the long-term unemployed, the requirement that applicant fill out the attestation should only be imposed prospectively from when the forms are publicly available. For those individuals hired in 2016 in the long-term unemployed category, IRS Form 8850 which requires them to attest that ” … you are in a period of unemployment that is at least 27 consecutive weeks and for all or part of that period you received unemployment compensation,” should be sufficient.
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