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DOL Provides Guidance for PATH Act WOTC Updates

On Friday, June 17, the Department of Labor issued a long-awaited TEGL providing the states critical guidance regarding the renewal and expansion of WOTC which were included in the PATH Act passed on December 18, 2015.

A previous post reviewed the timeline of events through the end of May.

The TEGL provides the following critical points:

1. The IRS had previously provided transition relief for the 28-day application requirement for employees hired back to 1/1/2015 through 5/31/2016. Given that the release of this TEGL was delayed passed that deadline, the TEGL references a new IRS Notice 2016-40 (which has yet to appear on the IRS website as of this writing) which extends this transition relief through 8/31/2016. Specifically, applications for employees in all target groups, except for the new long-term unemployment recipient category, with hire dates between 1/1/2015 and 8/31/2016 can be submitted through 9/29/2016. Applications for employees in the new long-term unemployment category with hire dates between 1/1/2016 and 8/31/2016 can also be submitted through 9/29/2016. Essentially, this extends the current transition relief for 90 days without any other changes.

2. The TEGL describes the procedure states should take in order to certify eligibility for the new long-term unemployment recipient category. DOL is directing the state agencies to arrange for access to their states’ unemployment insurance claims and wage records. They will then need to develop a process to review this data to validate that applicants were in fact unemployed for at least 27 consecutive weeks and received some unemployment compensation during that unemployment. Only where the data is unavailable to validate those requirements are the states directed to use the new Self Attestation Form, ETA form 9175.

3. Regarding applications for the long-term unemployment recipient category that have been submitted thus far in 2016 prior to this TEGL, the DOL is directing the states to attempt to determine eligibility using UI claims and wage records. Where that data is insufficient to make a determination, the TEGL directs the states to send a “needs letter” to the employer requesting that they obtain a completed self-attestation form from the employee in question. There appears to be no remediation for cases in which it would be impractical to obtain the form.

Update: IRS Notice 2016-40 is available here. The IRS clarifies that the end of transition relief is 9/28/2016, not 9/29/2016 as the DOL had stated.

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