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February 20, 1997
Veterans' Program Letter. 7-97
Memorandum for: All Regional Administrators and Directors for Veterans'
Employment and Training and All State Employmnet Security Agency Administrators
(SESAs) and All Regional Administrators, Employment and Training
Administration
From: Preston M. Taylor Jr.
SUBJECT: Work Opportunity tax Credit (WOTC)
I. Purpose: To transmit to State Employment Security Agencies (SESAs)
and Veterans' Employment and Training Service (VETS) staff information on
employment opportunities for veterans under WOTC.
II. Reference: Public Law 104-188; The Small Business Job Protection Act
of 1996; Employment Service Program Letter No. 5-97, dated November 25, 1996;
Employment Service Program Letter No. 6-97, dated December 5, 1996; and revised
6th edition of Employment and Training Handbook 377, January 1997.
III. Background: The WOTC program became effective on October 1, 1996
and is authorized through September 30, 1997. WOTC replaces the Targeted Jobs
Tax Credit (TJTC) which had been a complex and active Employment Service
program involving reimbursable program funding allocations. Like its
predecessor, the WOTC has been designed with two main objectives: (1) It seeks
to address-the employment and training needs of a large group of individuals
who face significant barriers to employment; and (2) It provides tax credits to
employers who hire individuals from seven targeted groups of which "a qualified
veteran- is one. Briefly, a qualified veteran means any individual who is
certified by the designated local agency as:
- Having served on active duty more than 180 days or discharged
with a service connected disability, and
- Is a member of a family receiving Aide to Families with Dependent
Children (AFDC) for at least a 9-month period of the 21-month period which
ended on the hiring date, or
- Is a member of a family receiving Food Stamps for a 3-month period
ending during the 15-month period ending on the hiring date.
There are several significant improvements in the WOTC program over the
previous TJTC:
A longer retention period before employers can claim a tax credit. TJTC
required 120 hours. The provision in the WOTC increased this period to 400
hours.
Employers are required to pre-screen potential candidates to determine
WOTC eligibility before a job offer is made. This provision is designed to
ensure that only qualified target group members will be hired.
The eligibility determination process has been simplified by requiring
AFDC and Food Stamp eligibility for six of-the seven target groups introduced.
The "Family Income" requirement applies only to the "exfelon" target group
under the WOTC program.
IV. Action Required:
A. Directors for Veterans' Employment and Training (DVETS) will meet
with their respective State Agency counterparts to discuss the implementation
of the WOTC program.
B. DVETs will ensure that Local Veterans' Employment Representatives and
Disabled Veterans' Outreach Program Specialists are aware of, and make
appropriate referrals of eligible veterans under WOTC.
C. Further guidelines and marketing information will be disseminated
through the Employment and Training Administration's U. S. Employment Service,
including copies of Employment and Training Handbook 377, revised 6th edition,
January 1997.
Inquiries: All inquiries which cannot be resolved at the VETS' Director
level should be directed to the Regional Administrator and those that cannot be
addressed at the Regional level should be directed to Tom Sullivan in the
National Office at (202) 2199105 or via e-mail.
Expiration Date: September 30, 1997
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