U.S. Employment Service/ALMIS 

U.S. Department of Labor 

Employment and Training Administration 

ETA Handbook No. 408 

Third Edition, November 2002

for the: 

Work Opportunity Tax Credit Program & the 

Welfare-to-Work Tax Credit 

USES/ALMIS 

Office of Workforce Investment 

Rm. C-4514 - FPB 

Washington, D.C.

 
WOTC - P.L. 107-147 ETA HANDBOOK 408

i (R-6/02) 

C O N T E N T S 

F O R E W O R D...........................................vi

I. THE WORK OPPORTUNITY TAX CREDIT PROGRAM.............I-1

BACKGROUND..........................................I-1

A. General........................................I-1

B. Legislative Authority WOTC/WtWTC...............I-2

C. Legislative Intent.............................I-3

D. WOTC/WtWTC and Employment and Training 

Objectives.....................................I-4

E. Effective Date.................................I-4

II. WORK OPPORTUNITY TAX CREDIT PROVISIONS.............II-1

A. Target Groups At-A-Glance.....................II-1

Qualified IV-A Recipient......................II-2

Qualified Veteran.............................II-3

Qualified Ex-Felon............................II-5

High-Risk Youth...............................II-7

Vocational Rehabilitation Referral............II-8

Qualified Summer Youth Employee..............II-10

Qualified Food Stamp Recipient...............II-12

Qualified Supplemental Security Income (SSI) 

Recipient...............................II-14

New York Liberty Zone Business Employee 

(NYLZBE)................................II-15

B. Essential Terms..............................II-16

Agency Declaration of Verification Results 

(ETA 9065)..............................II-16

Audit........................................II-16

Certification (ETA 9063).....................II-16

Conditional Certification (ETA 9062).........II-16

Deferred Adjudication........................II-17

Designated Local Agency (DLA)................II-17

Employer Representative......................II-17

Employment Start Date........................II-17

Empowerment Zone/Enterprise/Renewal CommunityII-17

Extended Active Duty.........................II-18

Family/Member of a Family....................II-18

Family/Member of a Family Receiving Food 

Stamps (i.e., Food Stamp Recipient).....II-18

IV-A Successor Program.......................II-19

Hiring Date..................................II-19

Individual Characteristics Form..............II-19

Member of a Target Group.....................II-19
WOTC - P.L. 107-147 ETA HANDBOOK 408

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Minimum Employment Period....................II-19

Non-Certified Individual.....................II-19

Participating Local Agency...................II-20

Pre-Screening Notice & Certification Request 

(PSN/CR)................................II-20

Principal Place of Abode.....................II-20

Qualified Ex-Felon...........................II-20

Family Size..................................II-21

Family Income................................II-21

“Includable” Income:.........................II-22

“Excludable” Income:.........................II-22

Qualified Veteran............................II-24

Quality Review...............................II-24

Two-Tier Employment Retention Period.........II-25

Verification.................................II-25

Work Release.................................II-25

III. QUALIFIED WAGES AND SPECIAL RULES.................III-1

A. Qualified Wages..............................III-1

1. Wages...................................III-1

2. Qualified First-Year Wages..............III-1

3. Qualified Summer Youth Wages............III-1

4. Eligibility of Resident Aliens and 

Non-Citizens............................III-2

5. Agricultural and Railroad Employees.....III-3

6. Trade or Business Employment Wages......III-4

7. On-the-Job Training Payments............III-5

8. Work Supplementation Payments...........III-6

B. Special Rules - Tier 1.......................III-7

1. Credit Allowed..........................III-7

C. Special Rules - Tier 2.......................III-7

1. Credit Allowed..........................III-7

2. Tax Liability Limitation................III-9

3. Carryback and Carryover of 

Unused Credits..........................III-9

4. Limitation on Unused Credit in a 

Carryback or Carryover Year.............III-9

5. In General.............................III-10

6. Nepotism...............................III-11

7. Non-qualifying Rehires.................III-12

8. Breaks in Employment...................III-13

9. Successor Employers....................III-13

IV. THE WELFARE-to-WORK TAX CREDIT.....................IV-1

Background....................................IV-1

A. General.......................................IV-1
WOTC - P.L. 107-147 ETA HANDBOOK 408

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B. Legislative History...........................IV-1

V. WELFARE-TO-WORK TAX CREDIT NEW PROVISIONS...........V-1

A. Group At-A-Glance..............................V-1

Long-Term Family Assistance Recipient..........V-2

B. Essential Terms................................V-3

1. Minimum Employment Period.................V-3

2. Qualified First-Year Wages................V-3

3. Qualified Second-Year Wages...............V-3

4. Certification Process.....................V-3

5. Coordination of the WOTC and the 

Welfare-to-Work Tax Credit................V-4

VI. ROLES AND RESPONSIBILITIES.........................VI-1

A. Federal Level.................................VI-1

1. The Employment and Training 

Administration (ETA) and the Internal 

Revenue Service (IRS)....................VI-1

2. Department of Treasury...................VI-1

3. Department of Labor......................VI-1

4. Other Federal Agencies/Programs..........VI-3

5. ETA Regional Offices.....................VI-4

B. State Level...................................VI-5

1. State Role...............................VI-5

2. Designated Local Agency Role.............VI-5

3. Other State Agencies.....................VI-8

C. Local Participating Agencies..................VI-8

1. Local Welfare............................VI-8

2. One-Stop Career Centers..................VI-8

3. Parole and Probation.....................VI-8

4. Veteran Organizations....................VI-8

5. Food Stamp Program Agencies..............VI-8

6. Vocational Rehabilitation,...............VI-8

7. ETA Grantees;............................VI-8

VII. WORK OPPORTUNITY & WELFARE-TO-WORK TAX CREDITS’ 

CERTIFICATION PROCESS..................................VII-1

A. Administrative Forms.........................VII-1

1. IRS Form 8850...........................VII-1

2. USDOL ETA Form 9061.....................VII-2

3. Agency Verification Forms...............VII-4

4. Conditional Certification Form..........VII-5

5. Employer Certification Form.............VII-6

6. Miscellaneous State Addendum............VII-7

7. WOTC/WtWTC Worksheet....................VII-8

B. Supporting Documentation.....................VII-8
WOTC - P.L. 107-147 ETA HANDBOOK 408

iv (R-6/02) 

C. Certification Process.......................VII-10

1. General Provisions.....................VII-10

2. Participating Local Agency.............VII-10

3. Conditional Certification..............VII-10

4. Pre-Screening Notice and Certification 

Requests...............................VII-14

5. Verification and Audits................VII-17

6. Audit Methodology......................VII-21

D. Mailed WOTC and WtWTC Documents.............VII-26

1. Evidence of Mailing....................VII-26

2. Recording by the Designated 

Local Agency...........................VII-27

3. Timely Mailing Treated As 

Timely Filing..........................VII-28

4. Mailing Requirements...................VII-29

5. Acceptability of Postmarks.............VII-29

E. Examples of Documentary Evidence............VII-32

F. Special Rules for Conditional 

Certifications..............................VII-33

1. Validity Period of Conditional 

Certifications.........................VII-33

G. Special Rules for Timeliness................VII-34

H. Employer Representatives....................VII-35

Power of Attorney -.........................VII-35

VIII. ADMINISTRATION AND REPORTING REQUIREMENTS...VIII-1

A. Cooperative Agreements at State and 

Local Levels................................VIII-1

B. WOTC Funding................................VIII-2

1. Authorization..........................VIII-2

2. Accounting Costs.......................VIII-2

C. Identifying WOTC and WtWTC Job Orders.......VIII-2

D. Liability...................................VIII-2

E. Records’ Retention..........................VIII-3

1. Designated Local Agencies..............VIII-3

2. Participating Agencies.................VIII-4

F. Policy Clarification/Appeals Resolution.....VIII-5

G. WOTC/WtWTCs’ Appeals’ Guidelines............VIII-5

H. Documentation That Can Be Used for 

Employers’ Appeals..........................VIII-6

Category A. AFDC/TANF Recipient.............VIII-6

Category B. Veteran.........................VIII-6

Category C. Ex-Felon........................VIII-7

Category D. Empowerment Zone/Enterprise/ 

Renewal Communities....................VIII-7
WOTC - P.L. 107-147 ETA HANDBOOK 408

v (R-6/02) 

Category E. Vocational Rehabilitation.......VIII-7

Category F. Summer Youth....................VIII-7

Category G. Food Stamps.....................VIII-8

Category H. Supplemental Security Income....VIII-8

Category I. Welfare-to-Work Long Term 

Assistance Recipient...................VIII-8

Employer Information is Incomplete..........VIII-8

IRS Form 8850, Denied for Failure to 

Submit in a Timely Manner..............VIII-8

I. Program Reporting Requirements..............VIII-9

J. Reporting Procedures.......................VIII-10

1. Submitting the Reports................VIII-10

2. Completing the Forms..................VIII-11

K. Paperwork Management.......................VIII-26

1. Forms.................................VIII-26

2. Reporting.............................VIII-27

APPENDICES 

Appendix I.......................................Legislation 

Appendix II.............................Administrative Forms 

Appendix III.................................Reporting Forms 

Appendix IV...........................IRS Forms/Publications 

Appendix V...............................Tools and Resources 

Appendix VI....................................Miscellaneous 
WOTC - P.L. 107-147 ETA HANDBOOK 408

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F O R E W O R D 

The November 2002, third edition, of ETA Handbook No. 408, for 

the Work Opportunity Tax Credit (WOTC) Program and the Welfareto-Work Tax Credit (WtWTC) describes and explains the 

modifications to the WOTC program and a new provision introduced 

by the Job Creation and Worker Assistance Act of 2002 (P.L. 107-

147). Also, this edition includes a series of legislative updates 

since 1998, policy changes and clarifications to past program 

practices previously issued as directives to the State Workforce 

Agencies (SWAs), and introduces the SWAs to the newly electronic 

EIMS, Tax Credits’ Reporting System, which replaces the current 

paper reporting process. The majority of the clarifications 

and/or new information are the result of the coordinated efforts 

of the members of a National Work Group that met twice in the 

Summer of 2001 to seek ways to simplify and streamline the tax 

credits’ working cycle. 

The Internal Revenue Code of 1986, Section 51, as amended and its 

enacting legislation, P.L. 104-188, specify that the “State 

Employment Security Agencies (SESAs)” are the "designated" 

agencies responsible for administering the WOTC and WtWTC 

certification procedures of this program. This law defines a 

"designated local agency (DLA),” as a SESA --now referred to as a 

State Workforce Agency or SWA, according to the Workforce 

Investment Act of 1998-- established by the Wagner-Peyser Act of 

1933, as amended. WOTC and WtWTC certification decisions by the 

SWAs must conform to all Internal Revenue Service rules and 

regulations (§51, 51A, and 52 of the Internal Revenue Code) 

governing the operation of these two tax credits and to the 

policies and interpretations of the U.S. Employment Service and 

ALMIS, Office of Workforce Investment, U.S. Department of Labor. 

This third edition reiterates the key role that private sector 

employers --large, medium and small-sized-- represent for the 

success of both tax credits. For smaller employers, every new 

hire represents some investment and high risk on their part since 

hires from the different targeted groups are viewed as 

representing an even higher risk and monetary investment. To 

this end, the administration of the program should be designed so 

the two tax credits can be easily obtainable and not impose a 

significant administrative burden on the participating employers. 

Enhanced quality control designed to promote program integrity 

remains a primary program objective. SWAs have the primary 

responsibility for quality control and have the flexibility to 

apply the documentation and verification activities in a manner 

that is reasonable and consistent with states’ resources and the 

legislative intent of both tax credits.
WOTC - P.L. 107-147 ETA HANDBOOK 408

 I-1 (R-6/02)

I. THE WORK OPPORTUNITY TAX CREDIT PROGRAM 

BACKGROUND 

A. General.

The Work Opportunity Tax Credit (WOTC) Program 

was created by the Small Business Job Protection 

Act of 1996 (P.L. 104-188) –-Act of 1996-- and 

the Welfare-to-Work Tax Credit (WtWTC) was 

created by the Taxpayer Relief Act of 1997 (P.L. 

105-34)—Act of 1997. These two tax credits were 

reauthorized by the Ticket to Work and Work 

Incentives Improvement Act of 1999 (Public Law 

106-170) -–Act of 1999-- through December 31, 

2001. On December 31, 2001, the credits’ 

legislative authority expired.

On March 9, 2002, the President signed into law 

the Job Creation and Worker Assistance Act of 

2002 --the Act-- (Public Law 107-147)

reauthorizing and extending the WOTC and WtWTC 

for 24 months, under Sections 51 and 51A of the 

Internal Revenue Code (IRC). The 2002 Act also 

enacted section 1400L of the IRC, which creates a 

new target group, the “New York Liberty Zone 

Business Employee (NYLZBE).” This target group 

applies only to those workers and employers 

located in the New York City Liberty Zone, 

(generally, South of Canal Street in the Borough 

of Manhattan), affected by the September 11, 

2001, terrorist attack. This provision applies to 

both new hires and existing employees. 

Certification by the SWAs/SESAs is not required 

for these employees. Therefore, this target 

group will not be discussed further in this 

Handbook. 

The WOTC program was designed to help individuals 

from certain groups who consistently have had a 

particularly high unemployment rate. P.L. 105-34 

changed the WOTC to a two-tiered credit based on 

how long the individual is employed. The actual 

amount of the tax credit depends on several 

factors, including the target group of the 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

 I-2 (R-6/02)

applicant and the amount of wages earned. (For 

information on the WtWTC, see Chapter V.) 

There are nine (9) target group designations for 

the expanded WOTC program. The target group 

titles and designations are as follow: 

 Qualified IV-A Recipient (A) 

 Qualified Veteran (B) 

 Qualified Ex-felon (C) 

 EZ/EC/RC High-Risk Youth (D) 

 Vocational Rehabilitation Referral (E) 

 EZ/EC/RC Qualified Summer Youth 

Employee (F) 

 Qualified Food Stamp Recipient (G) 

 Qualified Supplemental Security Income 

Recipient (H) 

 New York Liberty Zone Business Employee 

(no designation) 

Under Tier 1 of the Two-Tier Retention Period

introduced by the 1997 Act, before claiming the 

tax credit, employers must employ the WOTC 

eligible for at least 120 hours but less than 400 

hours to qualify for a credit of 25 percent of up 

to $6,000 in qualified wages for a maximum credit 

of $1,500. Under Tier 2, employers must employ 

the WOTC eligible for at least 400 hours or more 

to qualify for a credit of 40 percent of up to 

$6,000 in qualified wages for a maximum credit of 

$2,400. This is calculated using the actual 

first-year wages paid or incurred. 

B. Legislative Authority WOTC/WtWTC.

Sections 604, 605 and 301(a), Title VI, of the 

Job Creation and Worker Assistance Act of 2002 

(P.L. 107-147), March 9, 2002, for the WOTC 

Program; Sec. 1002 for the WOTC program and 1003 

for the WtWTC of the Tax and Trade Relief 

Extension Act of 1998, part of the Omnibus 

Consolidated and Emergency Supplemental 

Appropriations Act of 1999, (P.L. 105-277) —See 

Appendix I--, October 21, 1998; and Sections 51 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

 I-3 (R-6/02)

and 51A of the Internal Revenue Code of 1986, as 

amended. Please, note that Title 26 of the United 

States Code (USC) is the Internal Revenue Code. 

C. Legislative Intent.

1. The WOTC was designed to appeal to a wide 

range of employers, to impose a minimal 

burden upon participating employers, and to 

promote the hiring of targeted group 

individuals. The Work Opportunity Tax Credit 

was designed specifically to streamline the 

eligibility determination process used by 

previous tax programs as well as to close 

the gaps that appeared between and within 

some target group designations. 

2. The WtW Tax Credit was designed to appeal 

to a wide range of employees, to impose a 

minimal burden on participating employers, 

and to promote the hiring of long-term 

welfare assistance recipients. The WtWTC 

credit was designed to use the same 

certification process as is in place for the 

WOTC target group members. 

3. The Departments of Treasury and Labor share 

administrative responsibility for the WOTC 

program. Treasury, through the Internal 

Revenue Service (IRS), administers the tax 

provisions of the credit. Labor, through 

the Employment and Training Administration 

(ETA), Division of the United States 

Employment Service/ALMIS, awards grants to 

States for administration of the eligibility 

determination and Certification provisions. 

Certifications are issued by the State 

Workforce Agencies (SWAs), also known as 

"Designated Local Agencies (DLAs)" 

established in accordance with the WagnerPeyser (W-P) Act of 1933, as amended (29 

U.S.C. 49-49n). Where a "SESA,” now a 

“SWA," no longer exists, and the Employment 

Service functions traditionally performed by 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

 I-4 (R-6/02)

the SWA/SESA are incorporated into another 

state agency approved by the State 

Legislature, that agency will then be the 

DLA having approval authority for issuing 

Certifications. 

D. WOTC/WtWTC and Employment and Training Objectives

1. The WOTC and WtWTC are intended to further 

the partnership between the employment and 

training system and the private sector in 

dealing with problems of the disadvantaged 

and the unemployed. These two tax credits 

are significant complements to the welfare 

reform effort and can be used as incentives 

for employers to hire regular as well as 

long-term welfare recipients. DLAs should 

market WOTC and WtWTCs in this vein. 

2. Enhanced quality control designed to promote 

program integrity remains a primary program 

objective. The procedures provided in this 

Handbook are integrated to allow for a 

standardized, reportable audit system. 

SWAs/DLAs have the primary responsibility 

for quality control and have the flexibility 

to apply the documentation and verification 

provisions in a manner that is both 

reasonable and consistent with state 

resources and the legislative intent of both 

the WOTC and the WtWTCs. The WOTC/WtWTC 

audit process will serve as a major basis 

for assuring program integrity. 

E. Effective Date. 

Guidelines in the ET Handbook 408, Third Edition, 

November 2002, are effective upon receipt. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-1 (R-6/02) 

II. WORK OPPORTUNITY TAX CREDIT PROVISIONS 

A. Target Groups At-A-Glance

The following pages offer a complete and concise 

description for eight of the nine target groups 

under the WOTC program. In some areas additional 

information is provided to clarify already 

existing definitions and/or policy practices. 

Also, this chapter includes the specific WOTC 

law, target group requirements and information 

regarding the calculation of this credit. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-2 (R-6/02) 

Qualified IV-A Recipient target group designation (A) 

This target group refers to any individual who is certified 

by the Designated Local Agency as being a member of a 

family: 

 receiving AFDC/TANF, or benefits under 

a successor program for any 9 months

during the 18-month period ending on 

the hiring date. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 

Note. A IV-A Recipient is, for purposes of the WOTC, a 

family member who is specifically listed on the grant. 

Only such family members make the employer eligible to 

receive the credit. Medicaid and Medicare are not IV-A 

benefits. 

HHS’s Method for Counting Months - according to the 

Department of Health, and Human Services, receipt of 

benefits for as little as one day in a month count as 

benefits received for the entire month (i.e., 1 day = 1 

month). The Department of Labor has adopted HHS’s method 

for verifying eligibility of benefits. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-3 (R-6/02) 

Qualified Veteran

target group designation (B) 

This target group refers to any veteran certified by the 

Designated Local Agency as one who: 

 is a member of a family receiving 

assistance under a Food Stamp Program 

under the Food Stamp Act of 1977 for, 

at least, a 3-month period within the 

last 15 months (See IRS Form 8850, Rev. 

October 2002), and

 has served on active duty (other than 

active duty for training) in the Armed 

Forces of the United States for a 

period of more than 180 days, or was 

discharged or released from active duty 

in the Armed Forces of the United 

States for a service-connected 

disability; and

 did not have any day during the 60-day 

period ending on the hiring date which 

was a day of "extended active duty" in 

the Armed Forces of the United States. 

The term "extended active duty" means a 

period of more than 90 days during 

which the individual was on active 

duty, other than active duty for 

training. 

Clarification. Dishonorably Discharged. The initial 

legislative history of the former Targeted Jobs Tax Credit 

(TJTC) Program is specific in its intent to include persons 

who were “dishonorably discharged” from military service if 

they meet the eligibility requirements of a targeted group, 

including the current “Qualified Veterans” target group. 

This legislation does not change the veterans’ definitions 

for other employment and training programs administered by 

the Department of Labor. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-4 (R-6/02) 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-5 (R-6/02) 

Qualified Ex-Felon

target group designation (C) 

This target group refers to any person certified by the 

Designated Local Agency as one who: 

 has been convicted of a felony under 

any statute of the United States or any 

State; and

 has a hiring date which is not more 

than one (1) year after the last date 

on which he/she was so convicted or was 

released from prison; and

 is a member of an economically 

disadvantaged family. 

Clarification. The definition of the Ex-Felon target group 

has been clarified, in past legislation, to treat an 

individual as convicted if a State Court places the 

individual on probation without a finding of guilty...[but 

only if the court considers this to have been a 

“conviction,”] (i.e., “deferred adjudication,” for this 

definition and source, please, see Congressional Record, 

October 26, 1990, p. H12733). 

Note 1. Ex-Felons who are participating in a transitional 

program; e.g., “work release,” are eligible for the WOTC 

program if they were convicted of a felony and are members 

of an economically disadvantaged family. 

Note 2. Individuals convicted of a felony while in 

military service may also be eligible under the ex-felon 

target group. 

Note 3. A member of an economically disadvantaged family 

means being a member of a family which had an income during 

the 6 months immediately preceding the earlier of the month 

in which such income determination occurs or the month in 

which the hiring date occurs, which, on an annual basis, 

would be 70 percent or less of the Bureau of Labor’s most 

current “Lower Living Standard Income Levels” (LLSILs). In 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-6 (R-6/02) 

addition, a determination that an individual is a member of 

an economically disadvantaged family is valid for a 45-day 

period beginning on the date of the determination. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-7 (R-6/02) 

High-Risk Youth

EZ/EC and Renewal Community (RC) High-Risk Youth 

target group designation (D) 

This target group refers to any person certified by the 

Designated Local Agency as one who: 

 is at least age 18, but not yet age 25, 

on the hiring date; and

 has his/her "principal place of abode" 

within an empowerment zone (EZ), 

enterprise community (EC) or renewal 

community (RC)1

. 

In the case of a high-risk youth, the term “qualified 

wages” must not include wages paid or incurred for services 

performed while he/she lived outside an EZ, EC or RC. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 

 

1

 Renewal Communities are economically distressed urban and rural communities identified and designated as a result 

of the “Community Renewal and New Markets Initiative” enacted in 2000. Through a tax-incentive package designed 

to attract businesses, the Congress enables these distressed areas to flourish through economic and social renewal. The 

Renewal Tax Relief Act of 2000 authorized the designation of 40 Renewal Communities and nine additional EZs. On 

December 31, 20011, HUD designated 40 Renewal Communities, 28 in urban areas and 12 in rural areas. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-8 (R-6/02) 

Vocational Rehabilitation Referral

target group designation (E) 

This target group refers to any person certified by the 

Designated Local Agency as: 

 having a physical or mental disability 

which, for such individual, constitutes 

or results in a substantial handicap to 

employment; and

 was referred to the employer upon 

completion of or while receiving 

rehabilitative services pursuant to an 

individualized written plan of 

employment (IWPE) under a state plan 

for vocational rehabilitation services 

approved under the Rehabilitation Act 

of 1973; or

Clarification. ETA’s and IRS’s guidance and interpretation 

allows the State Workforce Agencies or DLAs to issue 

certifications to Vocational Rehabilitation (VR) Referrals 

for individuals who have received rehabilitation services 

up to two years after receipt of the last VR services. 

Note. Title IV. “Technical Corrections,” Section 4006, “Other 

Amendments,” of the Omnibus Consolidated and Emergency Supplemental 

Appropriations Act of 1999 (P.L. 105-277), under (c)”Clerical 

Amendments,” states the following: 

(1) Clause (i) of section 51(d)(6)(B) of the 1986 [Internal 

Revenue] Code is amended by striking “rehabilitative plan” from 

the [individualized written rehabilitative plan (IWRP)] and 

inserting “plan of employment.” It should read, “individualized 

written plan of employment,” instead. (For legislative language 

see Appendix I. Conference Report to H.R. 4328, Making Omnibus 

Consolidated and Emergency Appropriations for Fiscal Year 1999, 

p. 944) 

 a vocational rehabilitation program for 

veterans, carried out under Chapter 31 

of Title 38, U.S. Code. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-9 (R-6/02) 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400. 

This allows a maximum credit of $1,500. For employees 

working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-10 (R-6/02) 

Qualified Summer Youth Employee

EZ/EC and Renewal Community (RC) Summer Youth Employees 

target group designation (F) 

This target group refers to any person certified by the 

Designated Local Agency as one who: 

 performs services for the employer 

between May 1 and September 15; and 

 has attained age 16, but not yet age 

18, on the hiring date or, if later, on 

May 1 of the calendar year involved; 

and

 has not been employed by the same 

employer prior to the 90-day (summer) 

period between May 1 and September 15; 

and

 has her/his "principal place of abode" 

within an empowerment zone, enterprise 

community, or renewal community (for 

information on renewal communities, see 

p. II-7). In the case of a summer 

youth, the term “qualified wages” must 

not include wages paid or incurred for 

services performed while he/she lived 

outside of the zone. 

Credit Limitation for this target group. Qualified wages 

for this target group are limited to wages paid for any 90-

day period between May 1 and September 15, 

Note. Special Rule for Continued Employment. An 

individual, who was a “Qualified Summer Youth” employee and 

meets the eligibility criteria for another target group, 

may be recertified by the SWA/DLA, and qualify the employer 

to claim the remainder balance of the one-year tax credit. 

A new IRS Form 8850 and ETA Form 9061 must be filed by the 

employer/consultant and the SWA/DLA should issue a new 

Certification. The total period of eligibility for the 

credit, including the time the individual is certified as a 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-11 (R-6/02) 

“Qualified Summer Youth” employee, cannot exceed one year. 

In those cases where the second certification is issued for 

the WtW target group, the employer may qualify for a 

two-year credit. 

The tax credit for this target group is calculated at a 

rate of 25% of the qualified first year's wages up to 

$3,000. This allows a maximum credit amount of $750. For 

those employees working at least 400 hours or more, the 

credit is calculated at the rate of 40% of the qualified 

wages up to $3,000 for a maximum tax credit of $1,200. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-12 (R-6/02) 

Qualified Food Stamp Recipient

target group designation (G) 

This target group refers to any person certified by the 

Designated Local Agency as one who: 

 has attained the age of 18, but not yet 

age 25, on the hiring date; and

 is a member of a family: 

• receiving assistance under a 

food stamp program under the 

Food Stamp Act of 1977 for 

the 6-month period ending on 

the hiring date; or

• receiving such assistance for 

at least 3 months out of the 

5-month period ending on the 

hiring date, [in the case of 

an able-bodied adult without 

dependents who has been 

determined ineligible to 

participate in the Food Stamp 

Program as the result of a 

failure to comply with the 

work requirements of section 

6(o) of the Food Stamp Act of 

1977.] 

Clarification. An “able-bodied adult without dependents” is 

an individual who is subject to section 6(o) of the Food 

Stamp Act (see below). To comply with the requirements of 

section 6(o), an individual must (A) work 20 hours or more 

per week, averaged monthly; (B) participate in and comply 

with the requirements of a work program for 20 hours or 

more per week, as determined by the SESA or DLA; or (C) 

participate in and comply with the requirements of a 

program under section 20 or a comparable program 

established by a State or political subdivision of a State. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-13 (R-6/02) 

Note. An individual is subject to section 6(o) of the Food 

Stamp Act if he or she satisfies the following: (a) is at 

least age 18 but not 25, (b) is physically and mentally fit 

for employment, (c) is not responsible for a dependent 

child, (d) is not pregnant, (e) is not exempt from any of 

the requirements listed here because of geography or a 

state’s discretion, and (f) does not meet any of the 

following exceptions: (1) complies with the work 

requirements of Title V of the Social Security Act, (2) 

receives unemployment compensation, (3) is a drug or 

alcohol center participant, or (4) is an eligible student. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-14 (R-6/02) 

Qualified Supplemental Security Income (SSI) 

Recipient 

target group designation (H) 

This target group refers to any individual who is certified 

by the designated local agency as being an individual who 

is: 

 receiving supplemental security income 

benefits under Title XVI of the Social 

Security Act (including benefits of the 

type described in Section 1616 of the 

Social Security Act or Section 212 of 

Public Law 93-66) for any month ending 

within the 60-day period ending on the 

hiring date. 

Note. Social Security Disability Income (SSDI) Recipient 

is not the same as Supplemental Security Income (SSI) 

Recipient. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-15 (R-6/02) 

New York Liberty Zone Business Employee 

(NYLZBE)

* No target group designation 

This target group refers to individuals who perform: 

 substantially all their services in the 

recovery zone for a business located on 

or South of Canal Street, East Broadway 

(East of its intersection with Canal 

Street), or Grand Street (East of its 

intersection with East Broadway) in the 

Borough of Manhattan, New York, New 

York (the New York Liberty Zone), or 

 substantially all their services in New 

York City for a business that relocated 

from the New York Liberty Zone 

elsewhere within New York City due to a 

physical destruction or damage of their 

workplaces by the September 11, 2001 

terrorist attack. 

The tax credit for this target group is calculated at the 

rate of 25% of the qualified first-year wages up to $6,000 

for employees working at least 120 hours but less than 400 

hours. This allows a maximum credit amount of $1,500. For 

employees working at least 400 hours or more, the credit is 

calculated at the rate of 40% of the qualified first-year 

wages up to $6,000. This allows a maximum credit amount of 

$2,400. 

Clarification. This target group applies only to employers 

who were located in the New York Liberty Zone on September 

11, 2001 or to those employers who relocated somewhere in 

the City of New York due to substantial structural damage 

to their building as a result of the September 11, 2001 

terrorist attack. *Also, this target group does not 

require certification from the New York Department of Labor 

to qualify employers for a WOTC. Therefore, there is no 

target group designation. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-16 (R-6/02) 

B. Essential Terms

Agency Declaration of Verification Results (ETA 

9065) 

is an optional USDOL-ETA form for DLA use only to 

record the results of verification activities 

conducted by the DLA. If the DLA elects to use 

an alternative form to record verification 

results, the alternative form must contain all of 

the information that appears on ETA Form 9065. 

Audit 

means the post-issuance examination, performed on 

a quarterly basis by someone other than the 

person who approved the Certification, of a 

prescribed random sample of Certifications and 

supporting documentation. 

Certification (ETA 9063) 

is an optional form issued to an employer by a 

SWA/DLA, which certifies that the person named on 

the Certification was determined to be a member 

of a WOTC target group, a long-term Family 

Assistance Recipient, or both and will, 

therefore, qualify the specified employer, who 

receives the Certification, to claim the 

appropriate tax credit for qualified wages paid 

to that person upon completion of the minimum 

employment period. 

Conditional Certification (ETA 9062) 

is a required form (formerly called a voucher) 

issued by a DLA or a participating local agency 

to an eligible WOTC applicant before the 

applicant is hired. This is done to assist the 

applicant in his or her job search. These 

documents are time-limited and require that the 

applicant still meets all eligibility criteria at 

the time of hire. Additionally, the employer must 

return the document accompanied by an IRS Form 

8850 to the DLA not later than the 21st day 

following the individual's employment start date. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-17 (R-6/02) 

Deferred Adjudication 

occurs when an individual is accused of a felony 

and a State Court places the individual on 

probation without a finding of guilty. For WOTC 

purposes, this judgment is treated as a 

conviction, if the court of competent 

jurisdiction considers it as such. This qualifies 

an individual for the Ex-felon target group. Not 

all State judicial systems use “deferred 

adjudication,” although procedures placing 

accused felons on probation without a finding of 

guilty should be considered “deferred 

adjudication” for WOTC purposes. (See 

Congressional Record, October 26, 1990, p. 

H12733). 

Designated Local Agency (DLA) 

means a State Workforce Agency (SESA) or the 

agency established in accordance with the WagnerPeyser Act of June 6, 1933, as amended (29 U.S.C. 

49-49n). 

Employer Representative 

means a person authorized to act on behalf of any 

employer in the WOTC Certification process; e.g., 

a management consultant, accountant, or 

contractor. For this purpose, a valid Form 2848, 

Power of Attorney and Declaration of 

Representative, to execute Form 8850 or otherwise 

represent the employer is acceptable. 

Employment Start Date 

is the date the person actually begins working 

for the employer. This may be, but is not 

necessarily, the same as the "hiring date." The 

start date is the date that is critical when 

determining timeliness of mailing the PreScreening Notice (PSN). 

Empowerment Zone/Enterprise/Renewal Community 

refers to an area or combination of areas 

designated by the U.S. Housing and Urban 

Development (HUD) and/or the United States 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-18 (R-6/02) 

Department of Agriculture (USDA) that meet 

certain population, size and poverty criteria. 

This definition does not include champion 

communities. Note. IRS section 51(d)(5)(A) and 

(B), as amended by P.L. 106-554, December 31, 

2001, authorizes the inclusion of members of the 

High-Risk and Summer Youth WOTC targeted groups 

for new hires made after January 1, 2002, that 

reside in the new Renewal Communities. Also, see 

p. 2 “Members of Targeted Groups,” Instructions 

for Form 8850, Rev. October 2002, Department of 

the Treasury, Internal Revenue Service. 

Extended Active Duty 

means a period of more than 90 days during which 

the person was on active duty (other than U.S. 

Military active duty for training). This 

legislation does not change the veterans' 

definitions for other employment and training 

programs administered by the Department of Labor. 

Family/Member of a Family 

The definition of a family/member of a family 

depends on the particular targeted group for 

which a person will be certified. 

Family/Member of a Family Receiving Food Stamps 

(i.e., Food Stamp Recipient) 

refers to a member of a certified food stamp 

"household" (including households certified to 

participate under a Simplified Food Stamp 

Program), regardless of whether the individual is 

currently an "ineligible household member" or 

whether the household has actually received its 

benefits. State agencies need not concern 

themselves with whether the individual is a 

member of a "family" because information that 

might be germane to whether a group of people 

constitutes a "family" is not required to be 

collected in the determination of a household's 

eligibility or benefit level for the Food Stamp 

Program. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-19 (R-6/02) 

IV-A Successor Program 

includes Temporary Assistance for Needy Families 

(TANF) or any program enacted by the Congress to 

replace it. 

Hiring Date 

is the date that a definite oral or written 

agreement to employ is reached between a 

jobseeker and a prospective employer, in which an 

employment starting date is specified. 

Individual Characteristics Form 

is form ETA 9061 which identifies applicants' 

categories of eligibility. 

Member of a Target Group 

means any person who meets the eligibility 

criteria for one of the nine WOTC and one WtWTC 

target group(s). 

Minimum Employment Period 

refers to the minimum number of hours an employer 

must retain a WOTC hire to get the credit. 

Before claiming the credit, an employer must 

employ the WOTC eligible individual for a minimum 

of 400 hours of service in order to qualify for 

the 40-percent credit or 120-399 hours in order 

to claim the 25-percent credit. This is also 

referred to as the "retention period". No credit 

is available for any employee who works less than 

120 hours. 

Non-Certified Individual 

means an individual, who has not been previously 

certified eligible as a member of a target group, 

by a participating, qualified certifying WOTC 

agency. Requests for certification, in writing 

(i.e., IRS Form 8850 "Pre-Screening Notice and 

Certification Request”), by an employer, for 

"non-certified" individuals must be received at 

the Designated Local Agency or submitted within 

21 calendar days of the employment start day. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-20 (R-6/02) 

Participating Local Agency 

is an organization authorized via a Memorandum of 

Understanding or Cooperative Agreement with the 

SWA/DLA to issue Conditional Certifications for 

members of specified target groups. 

Pre-Screening Notice & Certification Request 

(PSN/CR) 

is the IRS Form 8850 completed "on or prior to" 

the job offer date indicating an applicant's 

potential eligibility for a target group. The 

IRS 8850 Form must be submitted to the SWA/DLA no 

later than the 21st day after the employment 

start date. Note. The SWA/DLA, the IRS or the 

U.S Employment Service/USDOL cannot waive this 

statutory timeliness requirement. 

Principal Place of Abode 

is that place where one physically lives while 

earning wages from an employer. 

Qualified Ex-Felon 

For purposes of the ex-felon target group under 

WOTC, a family is: 

1. one or more persons living in a single 

residence who are related to each other by 

blood, marriage, or adoption. A step-child 

or a step-parent is considered to be related 

by marriage; 

2. for purposes of paragraph "1." above, 

a.) one or more persons not living in the 

single residence, but who were claimed 

as "dependents" on another person's 

Federal Income Tax return for the 

previous year, may be presumed, unless 

otherwise demonstrated in a manner 

satisfactory to the DLA (but not 

including self-attestation), to be part 

of the other person's family; 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-21 (R-6/02) 

b.) an older worker, 55 years of age or 

older, whether living in the residence 

or not, or a handicapped individual 16 

years of age or older, may be 

considered a "family of one;" 

c.) a person 18 years or older, except as 

provided in (2) above, including 

students at college, may be determined 

to be a "family of one" if he/she can 

demonstrate, in a manner satisfactory 

to the SWA/DLA, that he/she received 

less than 50 percent of support from 

the family during the months used for 

establishing economic eligibility, and 

who is not the principal earner, nor 

the spouse of the principal earner. 

This may be done even if the person was 

claimed as a dependent on another 

person's tax return for the previous 

year. 

d.) In some instances, an individual who is 

separated from a spouse may be 

considered a "family of one" if the 

absent spouse lives apart and provides 

no assistance to the applicant. 

Family Size 

is the maximum number of family members during 

the income determination period as used by the 

LLSILs. 

Family Income 

means all income actually received from all 

sources by all members of the family (as defined 

above), during the income determination period. 

The following examples of "includable" income and 

"excludable" income are to be used in determining 

economic eligibility for the Ex-Felon target 

group only: 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-22 (R-6/02) 

“Includable” Income: 

e.) Gross wages and salary (before 

deductions); 

f.) Net self-employment income (gross 

receipts minus operating expenses); 

g.) Cash income received from other sources 

such as: 

(1.) net rents; 

(2.) Old Age and Survivors Insurance 

(OASI) benefits under Title II of 

the Social Security Act; 

(3.) pensions; 

(4.) alimony; and 

(5.) periodic lifetime income from 

insurance policy annuities, (if 

not precluded below). 

“Excludable” Income: 

a.) Non-cash income such as food stamps, 

energy assistance or compensation 

received in the form of food or 

housing; 

b.) Imputed value of owner-occupied 

property, i.e., rental value; 

c.) Public assistance payments, including 

vouchers or scrip; 

d.) Cash payments received pursuant to a 

State plan approved under Title I 

(Grants to States for Old Age 

Assistance and Medical Assistance for 

the Aged), Title IV (Grants to States 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-23 (R-6/02) 

for Aid and Services to Needy Families 

With Children and for Children Welfare 

Services), Title X (Grants to States 

for Aid to the Blind), Title XVI 

(Supplemental Security Income (SSI) for 

the Aged, Blind and Disabled), of the 

Social Security Act; 

e.) Disability insurance payments received 

under Title II (Federal Old Age, 

Survivors, and Disability Insurance 

Benefits), of the Social Security Act; 

and disability insurance payments 

received under Title IV (Black Lung 

Benefits) of the Federal Coal Mine 

Health and Safety Act;

f.) Child support; 

g.) Federal, State or local unemployment 

insurance payments; 

h.) Payments to participants in employment 

and training programs, except wages 

paid for Federal OJT; 

i.) Uncollected capital gains and losses 

and assets withdrawn from a bank 

account; 

j.) One-time unearned income, such as, but 

not limited to: 

(1.) Payments received for a limited 

fixed-term, i.e., for a set period 

or length of time, under income 

maintenance programs and 

supplemental (private) 

unemployment benefits' plans; 

(2.) One-time or fixed term 

scholarships and fellowship 

grants, e.g., a fixed-term 

scholarship may include Financial 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-24 (R-6/02) 

Aid granted for either one or two 

consecutive semesters); 

(3.) Accident, health and casualty 

insurance proceeds; 

(4.) Disability and death payments, 

including fixed-term (but not 

lifetime) life insurance annuities 

and death benefits; 

(5.) One-time awards and gifts; 

(6.) Inheritance, including fixed-term 

annuities; 

(7.) Fixed-term worker's compensation 

awards; 

(8.) Terminal leave payments; 

(9.) Soil bank payments; 

(10.) Agriculture crop stabilization 

payments; 

(11.) Alaska oil trust fund 

disbursements for economic 

development; and 

(12.) gambling. 

k.) Pay or allowance which were previously 

received by any ex-service person while 

serving on active duty in the Armed 

Forces (this does not include National 

Guard or Reserve pay for training or 

active duty for training); and 

l.) Payments received under the Trade Act 

of 1974 and any amendments. 

Qualified Veteran 

is an individual who is a veteran as defined in 

Chapter II of this Handbook. 

Quality Review 

means the review of WOTC/WtWTC forms and other 

documents, including the Certification itself, to 

ensure that the required information is complete, 

consistent and accurately recorded. Quality 

reviews are performed at several “key points” in 

the eligibility determination and Certification 

process. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

II-25 (R-6/02) 

Two-Tier Employment Retention Period 

(also referred to as the "minimum employment 

retention period") refers to the minimum number 

of hours an employer must retain a WOTC hire to 

get the credit. Under Tier 1, before claiming 

the tax credit, employers must employ the WOTC 

eligible for at least 120 hours but less than 400 

hours to qualify for a credit of 25 percent of up 

to $6,000 in wages for a maximum credit of 

$1,500. Under Tier 2, employers must employ the 

WOTC eligible for at least 400 hours or more to 

qualify for a credit of 40 percent of up to 

$6,000 in wages for a maximum credit of $2,400. 

The tax credit is calculated using the actual 

wages paid or incurred. 

Verification 

means the process of ensuring or testing the 

validity of all Certifications issued by the DLA, 

including preliminary eligibility and other 

supporting documentation. The verification 

process includes "Quality Reviews” and "Audits”. 

Work Release 

is a state-approved transitional program, usually 

commencing not earlier than 12-months prior to 

release, which prepares a felon for return to 

mainstream society. Work release may include 

work inside or outside the institution (i.e., 

prison). Work release felons may be eligible for 

the qualified ex-felon target group. 

Note. Except for “work release,” persons 

currently incarcerated are not eligible for the 

program because they are not considered available 

for employment. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-1 (R-6/02) 

III. QUALIFIED WAGES AND SPECIAL RULES 

A. Qualified Wages. 

The Work Opportunity Tax Credit is figured only 

on qualified first-year wages paid or incurred to 

target group individuals who begin work for the 

employer after September 30, 1996 and before 

January 1, 2004. 

In general, "qualified wages" for WOTC purposes, 

means "wages" as defined by the Internal Revenue 

Code (IRC), and also section 3306 (b) of the 

Federal Unemployment Tax Act (FUTA). 

1. Wages 

generally mean all remuneration paid for 

employment, including non-monetary payments; 

e.g., room and board provided by the 

employer. To figure the credit, use "wages" 

as defined in Section 3306 (b) of the 

Federal Unemployment Tax Act determined 

without regard to any dollar limitation 

contained in such section. 

2. Qualified First-Year Wages 

are wages that an employee earns during the 

one-year period, which begins the day the 

employee starts work. The maximum amount of 

wages to which the 25 or 40 percent credit 

may be applied must not exceed $6,000 of 

first-year wages for all target groups, 

except qualified summer youth, which may not 

exceed $3,000. 

3. Qualified Summer Youth Wages. 

The maximum amount of wages to which the 

credit may be applied must not exceed $3,000 

of first-year wages for the qualified summer 

youth group (for any 90-day period between 

May 1 and September 15). 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-2 (R-6/02) 

4. Eligibility of Resident Aliens and NonCitizens. 

Generally, amounts paid for services 

performed in the United States by an alien 

individual (whether a resident of the United 

States or a nonresident) for an employer are 

considered “qualified wages." Generally, 

amounts paid for services performed outside 

of the United States by an alien individual 

(whether a resident of the United States or 

a nonresident) for an employer are not 

considered “qualified wages.” 

Note. For this purpose, 1) an individual 

who is a resident of Puerto Rico or the 

Virgin Islands is a U.S. citizen and, 

therefore, not an alien, and 2) “United 

States” geographically includes Puerto Rico 

and the Virgin Islands. For further 

information, see section 3306 of the IRC (26 

USC 3306). 

a.) Remuneration for services performed 

outside the contiguous United States, 

Alaska and Hawaii; e.g., Puerto Rico is 

"wages, only if performed by a United 

States citizen or by a Resident Alien 

for an American employer. Remuneration 

for services performed for an American 

employer outside the United States by 

an individual who is not a United 

States citizen or resident alien is not 

"wages." 

b.) Remuneration paid for services 

performed by a non-resident alien 

individual who has a (J) visa for the 

period he/she lives temporarily in the 

United States as a non-immigrant under 

subparagraph (J) of Section 101(a)(15) 

of the Immigration and Nationality Act 

as amended [8 U.S.C. 1101 (a)(15)(J)], 

and performed as specified in 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-3 (R-6/02) 

subparagraph (J), as the case may be, 

is not "wages.” 

c.) Thus, for purposes of the WOTC program 

the credit cannot be extended to an 

employer on wages paid to the 

nonresident employees referenced above 

if Federal employment taxes are not 

withheld. 

d.) In the case of the Commonwealth of 

Puerto Rico, employers who have a 

Federal income tax liability are 

eligible to participate in the WOTC 

program and as such are eligible to 

claim the WOTC and/or the WtWTC(s) 

provided they meet all the 

participating and timeliness 

requirements. 

e.) See also “Non-eligibility of H2-A 

Workers.” 

5. Agricultural and Railroad Employees. 

A different wage definition applies to 

certain agricultural and railroad employees. 

a.) Agricultural Employees. 

(1.) Qualified Wages. 

If, in any year a WOTC eligible 

employee performs services that 

qualify during more than half of 

any pay period as agricultural 

labor for FUTA, use the same wages 

that are subject to the Social 

Security Tax (FICA) to figure the 

credit for that employee. Count 

only the first $6,000 of the 

employee's FICA wages for the 

calendar year. (A pay period is 

31 consecutive days or less during 

which the employer ordinarily pays 

wages to the employee.) 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-4 (R-6/02) 

(2.) Farm Labor Contractors. 

Except in cases where the 

farmer/grower pays wages directly 

to the laborers, the farm labor 

contractor is the employer and is, 

therefore, entitled to the tax 

credit on WOTC certified laborers, 

if the contractor has his/her own 

IRS employer identification 

number. 

(3.) Non-Eligibility of H-2A Workers. 

Non-resident aliens working in the 

U.S. under H-2A visas do not 

receive "wages" as defined in 

Section 3121(a), (i.e, the FICA or 

Social Security Tax). Employers of 

these workers are not eligible for 

Certifications from the SWAs/DLAs 

for employment of such H-2A 

workers. 

b.) Railroad Employees. 

If more than half of the wages paid to 

an employee during any year qualify 

under the Railroad Unemployment 

Insurance Act (RUIA), figure the credit 

by using wages subject to RUIA tax, but 

without RUIA dollar limitations. 

6. Trade or Business Employment Wages. 

To claim the credit on an employee's wages, 

the employee in an employer’s trade or 

business must earn over half of those wages 

paid during any tax year. Therefore, maids, 

chauffeurs and other employees who work only 

in the home are not qualified for the WOTC. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-5 (R-6/02) 

7. On-the-Job Training Payments. 

If, for any period, an employer receives 

Federally funded payments for on-the-job 

training (OJT) for an employee, none of the 

wages paid to that employee for the OJT 

period qualify for the WOTC. 

a.) While the wages paid to the employee 

during the OJT period do not qualify 

the employer for a tax credit, the time 

spent by the employee receiving on-thejob training qualifies the employer 

towards fulfilling the “minimum 

employment” period requirement (or 

retention period). 

Exception: An employer, while 

participating in the Veterans-OJT 

program under Title 38 USC, may claim 

the WOTC on qualified wages paid to 

certified employees because training 

assistance payments under this program 

are paid to the employee and not to the 

employer. 

Example: On January 1, 2001, a 

certified member of a targeted group 

begins work. From January 1 through 

March 31, 2001, the employee received 

on-the-job training, and the employer 

received federally funded payments for 

the on-the-job training for that 

period. In computing the Work 

Opportunity Tax Credit, an employer 

cannot use as qualified wages any wages 

earned by that employee for services 

between January 1 and March 31, 2001. 

However, the one-year WOTC eligibility 

period is calculated from January 1 and 

a Pre-Screening Notice for 

Certification must have been postmarked 

not later than January 22, 2001, for 

the employer to be subsequently 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-6 (R-6/02) 

eligible for the remainder of the 

year's credit. The retention period 

begins January 1, 2001. Wages paid for 

services from April 1, 2001 through 

December 31, 2001, are qualified wages. 

Wages earned during the OJT contract 

period do not count toward the $6,000 

limit on wages. 

8. Work Supplementation Payments. 

The amount of wages (which would otherwise 

be qualified wages) is reduced by the amount 

of any payments received by the employer 

with respect to the employee under a program 

established under Section 482(e) of the 

Social Security Act. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-7 (R-6/02) 

B. Special Rules - Tier 1.

1. Credit Allowed. 

Credit allowed for the tax year is twentyfive (25) percent of the qualified wages up 

to $6,000 ($3,000 for Summer Youth) for that 

year. 

Example 1. On April 1, 2002, A, a member of 

a target group begins work for X, a 

calendar-year taxpayer. A terminates the 

employment on June 1, 2002, after working 

320 hours. X pays A $2,000 in wages for the 

work performed during 2002. X’s WOTC for 

2002 with respect to A’s wages is $500. 

This is $2,000 x 25%. 

Under Tier 1, the WOTC for 2002 is $500 

because this employee worked less than 400 

hours for employer X. (See Table below) 

TIER 1 

Qualified first-year wages: $2,000

April 1 – June 1, 2002

Multiplied by 25 percent .25

WOTC Credit for 2002: $ 500

C. Special Rules - Tier 2

1. Credit Allowed. 

Credit allowed for the tax year is forty 

(40) percent of the qualified wages for that 

year. 

Example 2: On August 1, 2002, B, a member 

of a targeted group begins work for X. B 

works full time for X for the remainder of 

2002 and all of 2003. X pays B $1,000 a 

month in wages on the last day of each 

month. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-8 (R-6/02) 

Qualified first-year wages for B for 2002 are 

$5,000, the amount paid for service rendered from 

August 1, 2002. Accordingly, X’s WOTC for 2002 

with respect to B’s wages is $2,000 ($5,000 x 

40%). 

TIER 2 

Qualified first-year wages: $5,000 

August 1 - December 31, 2002 

Multiplied by 40 percent .40 

WOTC Credit for 2002: $2,000 

Qualified first-year wages for B for 2002 

are $5,000, the amount paid for service 

rendered from August 1, 2002, through July 

31, 2003. Because only the first $6,000 in 

qualified first-year wages can be taken into 

account (and $5,000 was taken into account 

in 2002), X’s WOTC for 2003 with respect to 

B’s wages is $400 ($1,000 x 40%). 

TIER 2 

Actual Wages for B 1/1/03–7/31/03 $7,000 

Qualified wages: (1/1-3/31/03) $1,000

Multiplied by 40 percent .40

Total WOTC Credit 2003 $ 400

Total WOTC Credit 2002 +2,000

Total WOTC for 2003 & 2002 $2,400 

Note. For certified employees who complete their 

minimum work requirement after the end of the 

employer's tax year but before the due date 

(including extensions) for the employer's federal 

income tax return for the tax year in which the 

employee began work, the employer may claim the 

credit at the appropriate rate, i.e., 25 percent 

(120-399 hours) or 40 percent (400 or more hours) 

even though all those hours were not worked until 

the succeeding tax year. Note. Qualified wages 

are always capped at $6,000 for the WOTC Credit, 

except for the Summer Youth target group. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-9 (R-6/02) 

2. Tax Liability Limitation. 

The WOTC, as a component of the general 

business credit, is subject to the net tax 

liability limitation of Section 38 of the 

Internal Revenue Code and the carryback and 

carryover rules of Section 39. 

3. Carryback and Carryover of Unused Credits. 

If, because of the tax liability limitation, 

an employer does not take the full amount of 

the WOTC credit arising in a taxable year 

beginning before January 1, 1997, he/she may 

claim a refund of all or part of the taxes 

paid in the three taxable years before the 

year the credit arose. This is done by 

carrying back the unused credit to the prior 

tax year. Any credit that cannot be taken in 

that year may be carried forward 15 years or 

until the credit is all used, whichever 

comes first. 

4. Limitation on Unused Credit in a Carryback 

or Carryover Year. 

Unused WOTC credits that can be taken in a 

carryback or carryover year cannot be more 

than the tax liability limitation for that 

year, less any WOTC tax credit that is: 

a.) earned in the carryback or carryover 

year, or 

b.) claimed in the carryover year from a 

year earlier than the current year. 

Caution: [Internal Revenue] Code Section 39(a), below, as amended 

by the Taxpayer Relief Act of 1997 (P.L. 105-34) applies to 

credits arising in tax years beginning after December 31, 1997. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-10 (R-6/02) 

5. In General: 

a.) 1-YEAR CARRYBACK AND 20-YEAR 

CARRYFORWARD. If the sum of the 

business credit carries forward to the 

taxable year plus the amount of the 

current year business credit for the 

taxable year exceeds the amount of the 

limitation imposed by subsection (c)of 

section 38 for such taxable year 

(hereinafter in this section referred 

to as the “unused credit year”), such 

excess (to the extent attributable to 

the amount of the current year business 

credit) must be: 

(1.) a business credit carryback to 

each of the taxable year(s) 

preceding the unused credit year, 

and 

(2.) a business credit carryforward to 

each of the 20 taxable years 

following the unused credit year, 

and, subject to the limitations 

imposed by subsections (b) and 

(c), must be taken into account by 

the provisions of section 38(a) in 

the manner provided in section 

38(a). 

b.) AMOUNT CARRIED TO EACH YEAR 

(1.) ENTIRE AMOUNT CARRIED TO FIRST 

YEAR. The entire amount of the 

unused credit year must be carried 

to the earliest of the 22 taxable 

years to which (by reference to 

paragraph (1)) such credit may be 

carried. 

(2.) AMOUNT CARRIED TO OTHER 21 YEARS. 

The amount of the unused credit 

must be carried to each of the 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-11 (R-6/02) 

other 21 years to the extent that 

the credit may not be taken into 

account under section 38(a) for a 

prior taxable year because of the 

limitations of subsections (b) and 

(c). (For legislative language 

see Appendix I. Internal Revenue 

Code of 1986, as amended, Sec. 

39(a), “Income Tax--Unused 

Credits--Carryback/Carryforward,” 

p. 4355) 

6. Nepotism. 

a.) No WOTC tax credit can be claimed for 

wages paid to relatives employed by a 

taxpayer-employer. The tax credit is 

not valid if the employer/employee 

relationship is any of the following: 

(1.) A son or daughter of the employer 

or descendant of a son or 

daughter; 

(2.) A stepson or stepdaughter of the 

employer; 

(3.) A brother, sister, stepbrother, or 

stepsister of the employer; 

(4.) A father or mother of the 

employer, or an ancestor of 

either; 

(5.) A stepfather or stepmother of the 

employer; 

(6.) The nephew or niece of the 

employer; 

(7.) The uncle or aunt of the employer; 

or, 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-12 (R-6/02) 

(8.) A son-in-law, daughter-in-law, 

father-in-law, mother-in-law, 

brother-in-law, or sister-in-law 

of the employer. 

b.) Also excluded is an employee who is a 

dependent of the employer who lives in 

his/her home, and is a member of the 

employer's household. 

c.) This rule also applies if the 

individual who is a member of a 

targeted group is: 

(1.) The employer, i.e., self-employed; 

(2.) A shareholder who owns more than 

50 percent of the value of the 

outstanding stock of the employing 

corporation; 

(3.) A beneficiary, grantor, or 

fiduciary of the employing estate 

or trust; 

(4.) A member of an employing 

partnership; or, 

(5.) A shareholder in a Subchapter S 

corporation that is the employer. 

d.) In addition, an employee of an estate 

or trust is not eligible for the credit 

if he or she is a grantor, beneficiary 

or fiduciary of the estate or trust. 

7. Non-qualifying Rehires. 

A person may not qualify an employer for the 

tax credit if, prior to the hiring date, the 

person was employed by the employer at any 

time during which he/she was not a member of 

a targeted group. The person must have been 

WOTC-qualified and certified as such only
WOTC - P.L. 107-147 ETA HANDBOOK 408 

III-13 (R-6/02) 

the first time she/he was hired by a 

particular employer. 

8. Breaks in Employment. 

A WOTC-certified individual may experience 

one or more breaks in employment, i.e., be 

laid off or quit and be re-hired by the same 

employer, and continue to qualify his/her 

employer for the tax credit. However, the 

employer may take the credit only on wages 

paid during the one-year period (or 90-day 

period for summer youth) beginning on the 

employment start date, including any breaks 

in employment. In determining whether an 

employee satisfies the "minimum retention" 

period, the employer totals the cumulative 

days or hours the employee actually worked 

during the employee's first year of 

employment. 

9. Successor Employers. 

If an employer acquires substantially all 

the property used in the business, or a 

separate unit of the business of another 

employer, the WOTC that can be taken on 

employees (of that employer) who continue 

work for the new successor employer, may be 

limited. Credit must be computed under 

section 51(k)(1), with respect to wages paid 

by such successor employer in the same 

manner as if such wages were paid by the 

predecessor employer. This means that the 

successor employer is entitled to claim only 

the remaining balance of the credit. 

Example: A worker receives $2,000 in wages 

from the predecessor employer and 

subsequently receives $4,000 in wages for 

the successor employer within one year from 

the date the worker started work for the 

predecessor employer; the successor employer 

may compute his credit on only $4,000. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

IV-1 (R-6/02) 

IV. THE WELFARE-to-WORK TAX CREDIT 

Background 

A. General. 

The Welfare-to-Work Tax Credit (WtWTC) was 

created by section 801 of the Taxpayer Relief Act 

of 1997, (P.L. 105-34). The WtWTC is available 

to employers who hire individuals certified by 

the SWA/DLA as Long-Term Family Assistance 

Recipients. The credit became effective on 

January 1, 1998. It was, initially, authorized 

for 18 months. This credit has been reauthorized 

and now applies to new hires that begin work for 

an employer before January 1, 2004. 

The amount of the credit is 35 percent of 

qualifying first-year wages and 50 percent of 

qualifying second-year wages. For this purpose, 

“wages” include amounts excludable from the 

employee’s gross income, including amounts 

received under accident and health plans, 

contributions by the employer to accident and 

health plans, amounts paid under certain 

educational assistance programs, and amounts paid 

under certain dependent care assistance programs. 

Up to $10,000 of wages, per year (for a two-year 

period), paid to these individuals may be 

considered in determining the amount of the 

Welfare-to-Work tax credit. 

B. Legislative History. 

Section 604 and 605, Title VI, of the Job 

Creation and Worker Assistance Act of 2002 (P.L. 

107-147); Section 801 of the Taxpayer Relief Act 

of 1997 (Public Law 105-34); Section 51A of the 

Internal Revenue Code of 1986, as amended; and 

Section 1003 of the “Tax and Trade Relief 

Extension Act of 1998” (P.L. 105-277). 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

V-1 (R-6/02) 

V. WELFARE-TO-WORK TAX CREDIT NEW PROVISIONS 

A. Group At-A-Glance. 

The following pages offer a complete and concise 

overview of the group created by P.L. 105-34, 

including the statutory definition, the specific 

WtWTC law, and the group's eligibility 

requirements. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

V-2 (R-6/02) 

Long-Term Family Assistance Recipient

Group Designation (I) 

This group refers to any recipient certified by the 

Designated Local Agency as one, who is a member of a family 

that: 

 has received family assistance (i.e., 

AFDC/TANF or a successor program) for 

at least 18 consecutive months ending 

on the hiring date; or

 has received family assistance for a 

total of at least 18 months (whether or 

not the 18 months are consecutive) 

beginning after the day of enactment 

(i.e., August 5, 1997), and has a 

hiring date that is not more than two 

years after the end of the earliest 18-

month period; or

 whose AFDC/TANF eligibility expired 

under a Federal or State law after the 

day of enactment (i.e., August 5, 

1997), for applicants hired within two 

years after their eligibility expired. 

Note. TANF means Temporary Assistance to Needy Families. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

V-3 (R-6/02) 

B. Essential Terms.

1. Minimum Employment Period. 

refers to the minimum number of hours and 

days an employer must retain the new hire to 

get the WtWTC. Before claiming the credit, 

an employer must employ the WtWTC eligible 

for a minimum of 400 hours of service. 

2. Qualified First-Year Wages. 

are wages that an employee earns during the 

first-year period, which begins the day the 

employee starts work. The maximum amount of 

wages to which the 35 percent credit may be 

applied during the first year must not 

exceed $10,000 for a maximum credit of 

$3,500. 

3. Qualified Second-Year Wages. 

are wages that an employee earns during the 

second-year period. During the second year, 

the maximum amount of wages to which the 50 

percent may be applied must not exceed 

$10,000 for a maximum credit of $5,000. 

Under the WtWTC, employers can claim up to 

$8,500 of combined tax savings per new hire. 

4. Certification Process. 

Before claiming the Welfare-to-Work tax 

credit, an employer must obtain 

certification of a worker’s eligibility as a 

member of a family receiving long-term 

family assistance benefits/payments. 

SWAs/DLAs are the “designated local 

agencies” responsible for issuing the 

required certification. The rules for 

certifying a worker as a Long-Term Family 

Assistance Recipient are the same as the 

rules for certifying target group membership 

under the WOTC. Also, the rules governing 

who is ineligible under the WOTC are the 

same for Long-Term Family Assistance 

Recipients. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

V-4 (R-6/02) 

There are two ways an employer can satisfy 

the requirement to obtain a certification 

that a worker is a member of a targeted 

group. The employer can, either: 

a.) obtain a certification from the 

SWA/DLA, on or before the day on which 

the individual begins work, stating 

that the individual belongs to a 

targeted group, or

b.) complete a “Pre-Screening Notice” (IRS 

Form 8850) with respect to the 

prospective employee on or before the 

day the individual is offered 

employment. 

Within 21 calendar days after the individual 

begins work, the employer submits IRS Form 

8850, to the SWA/DLA, as part of his/her 

request for certification. 

5. Coordination of the WOTC and the Welfare-toWork Tax Credit. 

The WtWTC is coordinated with the WOTC so 

that in any one taxable year an employer 

cannot claim both credits with respect to 

the same individual. 

For Example: “A” begins work for employer 

“X,” a calendar year taxpayer, on October 1, 

2002, and works at least 400 hours for “X.” 

“A” is certified as both a member of a WOTC 

target group and as a Long-Term Family 

Assistance Recipient. “X” pays wages of 

$1,000 per month on the last day of each 

month. “X” pays “first-year wages” for 

service performed from October 1, 2002, 

through September 30, 2003. “X” pays 

“second-year wages” for service performed 

from October 1, 2003, through September 30, 

2004. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

V-5 (R-6/02) 

For tax year 2002, “X” may claim either a 

WOTC credit of $1,200, ($3,000 x 40%) or a 

WtWTC of $1,050 ($3,000 x 35%). 

For tax year 2003, “X” also has choices. 

With respect to the first-year wages paid 

for service performed from January 1 through 

September 30, 2003, “X” may claim either a 

WOTC credit of $1,200 (the remaining $3,000 

x 40%) or a WtWTC of $2,450 (the remaining 

$7,000 x 35%). Note that, although “X” paid 

$9,000 in first-year wages during 2003, the 

WOTC limit is $6,000 in wages and the WtWTC 

limit is $10,000 in wages. If “X” claims 

the WtWTC for 2003, “X” may also claim the 

WtWTC with respect to the second-year wages 

paid for service performed by “A” from 

October 1, 2003, through December 31, 2003. 

The amount of the credit is $1,500 ($3,000 x 

50). 

For tax year 2004, “X” may claim a WtWTC 

with respect to the second-year wages paid 

to “A” for service performed from January 1, 

through September 30, 2004. The amount of 

the credit is $3,500 (the remaining $7,000 x 

50%). 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

VI. ROLES AND RESPONSIBILITIES 

A. Federal Level

1. The Employment and Training Administration 

(ETA) and the Internal Revenue Service (IRS)

have a Memorandum of Understanding (MOU), 

which delineates the responsibilities of 

each agency in conducting the WOTC program 

and the WtWTC. 

2. Department of Treasury. 

The Department of Treasury, the lead agency 

for the WOTC/WtWTC program, administers the 

tax credits' provisions through the IRS. 

The IRS: 

a.) has the sole responsibility for the 

design and issuance of the PreScreening Notice, IRS 8850 Form. 

b.) is the sole source of policy 

interpretations or rulings relating to 

tax provisions of the credits. 

c.) develops tax credit regulations, as 

needed, and related informational 

materials for employers. 

d.) reviews ETA policies and information 

materials for the WOTC program and 

WtWTC and participates in designing the 

processing, verification and 

Certification system. 

3. Department of Labor. 

The U.S. Department of Labor, through ETA, 

has the authority and responsibility for: 

VI-1

a.) Developing policy and program guidance 

for WOTC/WtWTC processing, verification 

and Certification processes, in 

collaboration with the IRS, to assure 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

proper administration of the tax 

provisions, including maintaining and 

distributing WOTC/WtWTC forms. 

b.) Providing interpretations of national 

policy and guidance as they affect 

WOTC/WtWTC verification, processing and 

Certification. 

c.) Managing, providing oversight of, and 

issuing basic operating guidelines for 

the WOTC program. This includes: 

(1.) Resolving policy issues raised at 

the National and Regional levels; 

(2.) Disseminating nationally 

determined policy and procedural 

decisions in a uniform manner; 

(3.) Overseeing program implementation 

at the Regional level, including, 

but not limited to: 

(A.) Ensuring that policies and 

procedures are disseminated 

to the States in a timely and 

effective manner; 

(B.) Participating in Regional onsite reviews of State operations to ensure uniformity 

and adherence to policy. 

(4.) Tracking, reviewing, and keeping 

Regions apprised of pending and 

recently enacted legislation, 

which has an actual or potential 

impact on the WOTC program; 

(5.) Providing national program 

statistics to the Regions and 

States on a regular basis and 

VI-2
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

other agencies and individuals, as 

requested; 

(6.) Allocating appropriated funds for 

program operations to the Regions 

for allocation to the States; 

d.) Developing agreements with other 

Department of Labor components, as well 

as other Federal agencies and national 

organizations; 

e.) Reporting annually to the Congress on 

the results of verification activities 

carried out by the States; and 

f.) Performing other functions as necessary 

to properly and efficiently administer 

the WOTC program and the WtWTC. 

4. Other Federal Agencies/Programs

Also, ETA is negotiating MOUs with other 

Federal agencies for administering the WOTC 

program and the WtWTC. The following Federal 

agencies/programs have or will enter into 

agreements with ETA/USES and ALMIS. These 

agreements address cooperation in 

facilitating the SWAs’ verification of 

eligibility determinations, issuing 

Conditional Certifications, and/or in the 

development and distribution of outreach 

information on the WOTC/WtWTC: 

 Department of Treasury 

 Department of Veterans Affairs 

 Rehabilitation Services Administration 

 Department of Health and Human Services 

 Department of Agriculture 

 Department of Housing and Urban 

Development 

 Social Security Administration 

 One-Stop Career Centers 

VI-3
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

5. ETA Regional Offices. 

ETA Regional Offices are responsible for 

ensuring that the SWAs/DLAs follow 

prescribed standards and requirements for 

administering the WOTC program and the 

WtWTC. Regional Administrators are 

responsible for: 

a.) Designating a Regional Coordinator for 

WOTC/WtWTC to direct and assist the 

SWAs/DLAs in administering the WOTC 

program and the WtWTC; 

b.) Ensuring that there is a WOTC/WtWTC 

Coordinator in each State, and that 

State and Regional staff are adequately 

trained; 

c.) Ensuring that the SWAs/DLAs are 

provided all ETA/USES/ALMIS guidance 

and instructions on the two tax 

credits; 

d.) Ensuring that the SWAs/DLAs implement 

and maintain certification and 

verification systems; and 

e.) Monitoring the SWAs’/DLAs’ 

administration of the WOTC/WtWTCs. The 

Regions have the primary Federal 

oversight responsibility on the states' 

implementation of the program, 

particularly on: 

(1.) Verification, eligibility 

determinations, verification and 

certification activities; 

(2.) Operational management of the 

program, including record-keeping, 

timely reporting and on-site 

monitoring and audit reviews of 

each office; 

VI-4
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

(3.) Communicating information on the 

operation of the tax credit 

program; and 

(4.) Educating SWAs/DLAs on how to 

enter into Cooperative Agreements 

with other state and local 

agencies. 

f.) Responding to special requests from the 

National Office for reports, analyses, 

studies, etc., in a timely manner; 

g.) Handling public complaints and 

inquiries concerning state 

administration of the program, and 

bringing to the attention of the 

National Office policy issues arising 

in the field, and 

h.) Allocating program funds to the states 

as available, and monitoring funds’ 

utilization. 

B. State Level

1. State Role. 

States, through state legislatures, 

designate the agency vested with the 

authority necessary to cooperate with the 

USES/ALMIS. Governors are responsible for 

coordinating the full participation of the 

SWAs/DLAs under the Wagner-Peyser Act in the 

WOTC program and WtWTC. Such participation 

includes assistance in negotiating state and 

local cooperative agreements. 

2. Designated Local Agency Role. 

VI-5

SWAs/DLAs are responsible for the 

operational management of the WOTC/WtWTC 

Certification process at the state and local 

level. Where a "SESA" no longer exists and 

the functions traditionally performed by the 

Employment Service are incorporated into 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

another state agency approved by the state 

legislature, that agency will then be the 

approved authority to issue Certifications. 

Certifications may take two forms: the 

Certification issued to employers who have 

properly completed all WOTC/WtWTC 

Certification requirements and Conditional 

Certifications to applicants who meet the 

basic WOTC target group requirements and/or 

those of the Long-Term Family Assistance 

WtWTC group. 

SWAs/DLAs operating walk-in WOTC/WtWTC 

programs may issue Conditional 

Certifications. Issuance of a Conditional 

Certification does not automatically 

guarantee a Certification to the employer 

hiring that individual. To obtain the 

Certification, the employer must submit a 

properly completed IRS Form 8850 with the 

completed Conditional Certification form 

(ETA Form 9062) in a timely manner. To be 

considered timely the IRS Form 8850 must be 

submitted not later than the 21st calendar 

day following the individual's employment 

start date. 

The SWAs’/DLAs’ responsibilities are to: 

a.) Determine the eligibility of 

individuals as members of targeted 

groups. 

b.) Issue employer Certifications for the 

two tax credits. 

c.) Establish and maintain a processing and 

forms review, quality control, recordkeeping and reporting capability; 

VI-6
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

d.) Establish a system for orderly 

management of WOTC/WtWTC job orders, 

applicant referrals, and records' 

retention. 

e.) Establish and maintain a systematic and 

orderly system for periodically 

verifying the eligibility of a randomly 

chosen sample of individuals certified 

under the WOTC program and the WtWTC 

Long-Term Family Assistance group; 

f.) Establish a record-keeping and 

reporting capability for such 

activities, and initiate effective 

corrective action when appropriate as 

indicated by the result of such 

activities. 

g.) Establish and maintain a system and 

procedures to regularly monitor 

cooperative agreements and initiate 

appropriate corrective actions. 

h.) Negotiate formal cooperative agreements 

with state and local agencies and 

organizations to assist in the 

WOTC/WtWTCs’ program by performing 

eligibility determinations to augment 

the SWA/DLA WOTC/WtWTC services. These 

cooperatives agreements may include 

issuing conditional certifications or 

procedures for verifying eligibility. 

i.) Train SWA/DLA and participating agency 

staff, as needed and appropriate. 

j.) Provide information to employers or 

their designated representatives, 

participating agencies, government 

agencies, applicants and the general 

public on the WOTC program and the 

WtWTC. 

VI-7
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

k.) Monitor formal cooperative agreements 

for WOTC/WtWTC eligibility determinations and/or public information. 

l.) Develop Certification forms if the 

state chooses not to utilize the 

Employer Certification, ETA Form 9063. 

3. Other State Agencies. 

Certain state agencies; e.g., Departments of 

Health and Human Services and Vocational 

Rehabilitation may, through formal 

agreements, participate in the WOTC/WtWTCs’ 

program. Such agreements will define any 

responsibilities for pre-eligibility 

determinations (i.e., issuing Conditional 

Certifications), referrals, reporting, 

records’ retention, publicity, and 

facilitating the SWAs’/DLAs’ verification 

activities. 

C. Local Participating Agencies. 

Local agencies serving targeted group populations 

as part of their regular functions may 

participate in the eligibility pre-determination 

(issuing Conditional Certification), referral 

and/or publicity related functions of the 

program. Formal agreements between the SWAs/DLAs 

and participating agencies are required in order 

to issue conditional certifications. 

Participating agencies/organizations may include, 

but are not limited to: 

1. Local Welfare 

2. One-Stop Career Centers 

3. Parole and Probation 

4. Veteran Organizations 

5. Food Stamp Program Agencies 

6. Vocational Rehabilitation, 

including agencies for the blind, 

7. ETA Grantees; 

(e.g., Native American and Farm Workers’ 

Groups). 

VI-8
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

VII. WORK OPPORTUNITY & WELFARE-TO-WORK TAX 

CREDITS’ CERTIFICATION PROCESS 

All eligibility criteria should be fully documented prior 

to the issuance of a Certification. All supporting 

documentation obtained should be retained in the WOTC or 

WtWTC files as instructed in this handbook. 

A. Administrative Forms

1. IRS Form 8850. 

“Pre-Screening Notice and Certification 

Request (PSN/CR) for the Work Opportunity 

and Welfare-to-Work Credits,” IRS Form 8850, 

revised October 2002, (copy included in 

Appendix IV), is to be used without 

modification of content by employers/ 

consultants to establish a record of their 

belief that a job applicant is a member of a 

WOTC target group and/or the Long-Term 

Family Assistance Recipient group under the 

WtWTC. However, employers may add their 

corporate logos, use a different color for 

this form, shade-in areas on the form and 

add notations, as long as there is no 

substantive change to the content of this 

form. Note. The SWA/DLA should not deny 

certification to employers who submit an IRS 

Form 8850 that contains these kinds of 

modifications or which does not include the 

instructions from the back of the form. 

Note. A properly submitted IRS Form 8850 is 

one completed in every relevant detail and 

signed, either, in pencil or in pen and ink

by the applicant and employer, and mailed 

(see pp. VII- 27-30) to the SWA/DLA by the 

21st calendar day after the applicant begins 

work for the employer. 

VII-1

The IRS recently granted employers and their 

consultants the option to file the PSN/CR 

electronically. The electronic filing mode 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

is strictly contingent on a SWA’s/DLA’s 

technical ability to design and implement 

such a system. 

2. USDOL ETA Form 9061. 

The “Individual Characteristics Form (ICF), 

Work Opportunity and Welfare-to-Work Tax 

Credits,” ETA Form 9061, is a U.S. 

Department of Labor, Employment and Training 

Administration (ETA) form required to be 

used without modification by all employers 

and their representatives. The purpose of 

the ICF is to expedite Certification 

processing by enabling the individual for 

whom Certification is requested to be 

identified with one or more target group 

categories --as the case may be-- under the 

WOTC and/or the WtWTC. The ICF also 

provides other information needed to support 

verification and reporting. 

Employers and their representatives must 

submit an ICF as part of the Certification 

process, except when an employer's 

Certification request is based on a valid 

Conditional Certification. Employers and 

their representatives are encouraged to 

submit the ICF together with the IRS Form 

8850 when requesting certification for a

target group. No ICF is required to be 

filed for employer Certification requests 

that are based on a valid Conditional 

Certification Form (i.e., ETA Form 9062). 

VII-2

For employer Certification requests that are 

not based on a Conditional Certification, 

the ICF may be executed at any time during 

the selection process. The ICF may also be 

executed after an employee begins work. 

Employers should be advised that the 

processing of a Certification request cannot

proceed without an ICF on file. Thus, 

SWAs/DLAs are advised to set processing 

guidelines that encourage employers (and 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

their representatives) to attach an executed 

ICF to each PSN/CR that is submitted. (The 

exception is an ICF that is filed 

electronically; and, therefore, cannot be 

attached to the PSN/CR. In this case, steps 

should be taken to match the ICF with the 

relevant PSN/CR.) 

Employers and their representatives may 

execute the ICF by interviewing job 

applicants and employees either in person or 

electronically; e.g., via telephone, or by 

using information obtained from records 

under the employer's and/or employer 

representative's control or other accessible 

records. Employers have the obligation to 

notify the job applicant or employee that 

the information and supporting documentation 

collected in executing the ICF will be used 

to qualify the employer for an employer tax 

credit available through the Work 

Opportunity Tax Credit program or the 

Welfare-to-Work Tax Credit. The ICF 

paragraph on page three of this form may be 

used for this purpose. 

The ICF may be signed by the person to whom 

the information on the form pertains; or by 

an authorized official directly employed by 

the employer; or by an employer's 

representative; or by a person having legal 

status to verify the information on the form 

in the case of a minor. Authorized officials 

of SWAs/DLAs and participating agencies may 

also sign the ICF. 

The ICF may be filed electronically; e.g., 

via fax, E-Mail, or the Internet if 

available. ICFs filed electronically are 

presumed to be "signed" by the individual or 

corporate entity under whose authorization 

the filing was made. 

VII-3

When the ICF is filed electronically, 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

employers and employer representatives are 

encouraged to take steps that enable the ICF 

to be matched with the relevant PSN/CR, IRS 

Form 8850. The state should notify the 

employers and employer representatives of 

the type of information needed for matching 

the IRS Form 8850 to the ICF. 

3. Agency Verification Forms. 

a.) “Agency Declaration of Verification

Results, Work Opportunity and Welfareto-Work Tax Credits,” ETA Form 9065, is 

an optional U.S. Department of Labor, 

ETA form for SWA/DLA use only. The 

SWA/DLA records the results of its 

verification activities. If the SWA/DLA 

elects to use an alternative form to 

record verification results, the 

alternative form must contain all of 

the information that appears on the 

optional ETA Form 9065. 

b.) “State Verification Form and/or Release 

of Information/Documentation Forms are 

optional state-designed forms that are 

used in verifying the individual's 

eligibility. These forms may grant an 

applicant's "release of information" so 

that the SWA/DLA, employer and/or 

employer representative may request 

documentation directly from the 

applicable state agency. 

VII-4

The Food Stamp Act, section 2020(e)(8) 

(also see Cumulative Supplement, May 

1977, USCS § 2011, Appendix I) limits 

the use and disclosure of recipient 

information to persons (and for that 

purpose) directly related to the 

administration or enforcement of this 

Act, regulations issued pursuant to 

this Act, other Federal Assistance 

programs, and certain federally-
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

assisted state programs. Case-file 

information about a recipient or 

household may not be disclosed to an 

employer, unless the recipient has 

provided the Food Stamp Program (FSP) 

agency, SWA/DLA, or local participating 

agency, as appropriate, written 

authorization to do so. 

Each SWA/DLA is responsible for 

contacting the FSP state agency and 

becoming familiar with that agency's 

disclosure policy. The SWA/DLA must 

negotiate with the FSP agency, as 

needed, to develop a mutually 

satisfactory process for the disclosure 

and safeguarding of necessary FSP 

recipient case-file information. 

4. Conditional Certification Form. 

The “Conditional Certification (CC), Work 

Opportunity and Welfare-to-Work Tax 

Credits,” ETA Form 9062, is a required U.S. 

Department of Labor form that must be used 

without modification by all SWAs/DLAs and 

all participating agencies and programs to 

which the SWA/DLA may delegate 

responsibility for Conditional 

Certification. This form establishes that 

the named individual has been tentatively 

determined eligible as a member of a WOTC 

and/or WtWTC target group(s) indicated; and, 

therefore, hiring this person may lead to an 

employer Certification under the WOTC 

program and/or the Welfare-to-Work Tax 

Credit. When the employer receives a 

Conditional Certification, the employer, to 

request Certification, submits this form, 

together with an executed PSN/CR, to the 

SWA/DLA. No ICF needs to be submitted by 

the employer when a valid Conditional 

Certification Form is filed with a PSN/CR. 

VII-5

If an employer seeks WOTC and/or WtWTC 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Certification for a job applicant who has a 

Conditional Certification when the PSN/CR is 

executed, the SWA/DLA may render a 

Certification decision based on the 

employer's timely submission of the PSN/CR 

and a copy of the Conditional Certification 

form that displays an expiration date 

confirming that the named individual 

qualifies as a member of the specified WOTC 

target group and/or WtWTC group given the 

hiring date indicated on the PSN/CR. The 

SWA/DLA must also ensure that the 

individual's status has not changed since 

issuance of the Conditional Certification. 

SWAs/DLAs may delegate Conditional 

Certification responsibility (but not final 

Certification) to a participating agency. 

Such delegation of authority must be made 

pursuant to a written agreement with the 

participating agency. The agreement must 

specify the scope of the participating 

agency or program's Conditional 

Certification arrangements and indicate 

whether the scope of conditional certifying 

authority extends to all WOTC target groups 

or only to a specific target group(s). 

5. Employer Certification Form. 

The “Employer Certification, Work 

Opportunity and Welfare-to-Work Tax 

Credits,” ETA Form 9063, is an optional U.S. 

Department of Labor, form. The form 

provides the employer with a record of 

results of the SWA’s/DLA's action on the 

employer's Certification request. Note. By 

law, this form can only be issued by the 

SWA/DLA. 

VII-6

If a SWA/DLA opts to develop and use a 

state-specific, Employer Certification form, 

the state-specific form must contain ALL of 

the information that appears on the optional 

ETA Form 9063. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Under the reauthorized WOTC and new WtWTC, 

SWAs/DLAs should issue dual certifications 

when the applicant qualifies under a WOTC 

target group and the Long-Term Family 

Assistance Recipient group. 

The national office has included specific 

language in the “Comments Box” of ETA Form 

9063, alerting employers who receive dual

certifications as follow: "employers are, 

hereby, informed that they cannot claim both 

the WOTC and the WtW credits for the same 

employee in the same taxable year."

Issuing an Employer Certification cannot be 

made contingent on the SWA/DLA conducting a 

personal or "walk-in" interview of the 

person whose employment establishes the 

employer's claim to the tax credit. 

Although personal or walk-in interviews may 

be used in conjunction with issuing a 

Conditional Certification, they may not be 

mandated, as part of the SWA’s/DLA's 

Certification process that follow an 

employer's submission of a Certification 

request. 

6. Miscellaneous State Addendum. 

VII-7

SWAs/DLAs may attach supplemental 

information to the ICF that causes it to 

contain state-specific information. Any 

supplementation of the ICF may provide 

information only. Supplemental information 

may not have the effect of adding new data 

elements to the information collection 

called for in the ICF. Examples of 

appropriate supplemental information include 

the address to be used to file the ICF, 

information that denotes Empowerment Zones, 

Enterprise and/or Renewal Communities in a 

state, and a person that may be contacted, 

or a "help number" that may be called, to 

have questions answered about the state's 

WOTC program or the WtWTC. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Supplemental information may also include 

material that expresses, in easy to 

understand terms, the characteristics that 

establish eligibility under the various WOTC 

target groups and/or the WtWTC group, or 

describes the supporting documentation that 

will be accepted as proof of eligibility 

under a WOTC category or the WtWTC Long-Term 

Family Assistance Recipient. 

7. WOTC/WtWTC Worksheet. 

This is a state developed form for use in 

the certification process. The form provides 

spaces for the eligibility reviewer and the 

“48-hour” reviewer to sign, date and 

indicate their determinations. 

B. Supporting Documentation. 

In specifying the supporting documentation that 

will be accepted as proof of eligibility under a 

WOTC/WtWTC category, SWAs/DLAs must accept the 

type of documentation indicated in this handbook 

and may not require additional documentation from 

employers (employers' representatives) that sets 

a higher standard of proof of eligibility. 

VII-8

Note. It is the responsibility of the SWAs/DLAs 

to take reasonable steps to assure that the 

documentation needed to make a Certification 

decision is available to them. While SWAs/DLAs 

may accept documentation provided by an employer/ 

representative, it may not rely solely on an 

employer's or his/her representative's efforts to 

secure documentation that establishes 

eligibility. The SWAs/DLAs are strongly 

encouraged to obtain adequate documentation from 

participating agencies (PAs), e.g., through a 

Memorandum of Understanding. If the SWA’s/DLA’s 

efforts fail to secure the needed documentation 

from the PAs after a reasonable effort conducted 

over a reasonable period of time, the SWA/DLA 

must deny Certification and inform the employer 

of the reasons for the Denial. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Employers may list, on the ICF, sources of 

information, i.e., parole officer's name or a 

welfare case number to aid the SWA/DLA in 

establishing eligibility in a timely manner. 

Employers also may obtain a letter from the 

agency that administers the relevant program 

indicating that the employee or a member of his 

or her household meets one of the eligibility 

requirements. For example, an employer may 

obtain the name of a caseworker. Employers may 

secure copies of the following documentation: 

birth certificates, driver's licenses, school 

I.D. cards, work permits, pay stubs, military 

discharge papers, and utility bills. 

Note. The employer should not request, obtain or 

provide the actual documentation for the 

remaining categories (i.e., for those receiving 

welfare and/or food stamp benefits). For example, 

it would not be appropriate for an employer to 

request the employee's food stamp benefit 

history. 

Section 2020, Administration (8), Cumulative 

Supplement in 7 United State Code Service (USCS), 

Agriculture, issued May 1977, regarding the Food 

Stamp (FS) Act and 7 USC 2020(6)(8) prohibits 

state agencies from disclosing participants/ 

recipients' information to employers or the 

SWAs/DLAs. However, the provisions in P.L. 104-

188, which authorize the WOTC program, also 

require that the Secretary of Treasury and the 

Secretary of Agriculture enter into an agreement 

to provide FS recipients' information to the 

SWAs/DLAs. Under these circumstances, the 

SWAs/DLAs or participating agencies cannot 

require employers to obtain FSP information or 

deny certifications if the employers fail to 

furnish the subject documentation. The SWA/DLA 

must take the necessary steps to obtain this 

documentation and process all employers' timely 

filed requests for certification. 

VII-9
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

SWAs/DLAs should advise employers and employer 

representatives regarding when supporting 

documentation should be received. Within 90 days 

of filing the PSN/CR and ICF is a suggested time 

standard. The objective of this standard is to 

expedite the SWA’s/DLA’s certification decision. 

However, SWAs/DLAs cannot cite failure to submit 

supporting documentation within 90 days of filing 

a PSN/CR and ICF as the reason for Denial of 

certification. 

C. Certification Process

1. General Provisions. 

The SWA/DLA will require and collect paper 

documentation that demonstrates WOTC and/or 

WtWTC eligibility. SWAs/DLAs must use the 

full documentation method to administer the 

WOTC program and the WtWTC. 

2. Participating Local Agency. 

A "participating agency" is a federal, 

state, county, or local government agency or 

a grantee of these agencies. A 

participating agency may include, but is not 

limited to, State Workforce Agencies, OneStop Career Centers, WIA grantees, Schoolto-Work Transition grantees, Vocational 

Rehabilitation agencies, city and county 

welfare offices, Veterans’ Affairs offices, 

and other veterans’-service organizations. 

3. Conditional Certification. 

This process may be triggered when the 

jobseeker comes to a local employment office 

or to a participating agency to perform a 

job search or in response to a positive 

recruitment. 

VII-10

a.) Process. To determine if a job-ready 

applicant is eligible and to issue a 

Conditional Certification for the WOTC 

program or the WtWTC group, the SWA/DLA 

or Participating Agency should: 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

(1.) Enter the Initiating Agency Code. 

This is a pre-determined code 

assigned to each agency that has a 

Memorandum of Understanding with 

the SWA/DLA granting them 

permission to issue Conditional 

Certifications. 

(2.) Enter the Control Number. It may 

be a Social Security No., Case No. 

or some other appropriate 

designation which permits easy 

filing, identification and 

retrieval of forms. 

(3.) Under "Type of Conditional 

Certification Determination", 

distinguish between "Original," if 

the applicant is being processed 

for the first time; or 

"Revalidation", if the eligibility 

process was performed within the 

previous 12-month period. 

Otherwise, the Conditional 

Certification is counted as 

original. 

(4.) Enter the date (month, day and 

year) in which the eligibility 

determination is completed. 

(5.) Enter the name and address of the 

State Workforce Agency (if known) 

that will issue the final 

Certification. 

(6.) Sign and date the ETA Form 9062, 

Conditional Certification. 

(7.) Enter the area code and telephone 

number of the agency issuing the 

Conditional Certification. 

 

VII-11
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

(8.) Enter the applicant's full name 

(last name, first name and middle 

initial). 

(9.) Enter the applicant's Social 

Security number. 

(10.) Enter the applicant's home 

address, including, apartment 

number, and zip code. 

(11.) Enter the Target Group code. 

(12.) Have the applicant sign the 

Conditional Certification Form. 

(13.) Collect all information and 

supporting documentation required 

for Conditional Certification to 

indicate the applicant's 

eligibility. 

(14.) Complete section 13 indicating 

the expiration date of this 

Conditional Certification (e.g., 

45-days). 

(15.) Make a copy of the Conditional 

Certification, attach all 

supporting documentation, or note 

location of electronic file and 

retain. The participating agency 

may be required to produce this 

information, e.g., during an 

audit. 

(16.) Provide the original Conditional 

Certification to the applicant to 

use in the job search. The 

participating agency may include a 

copy of the IRS Form 8850 and may 

assist in completion of the 

applicant section. 

VII-12
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

(17.) Upon the applicant's employment, 

the employer completes items 14, 

15, 16, and 17 on the Conditional 

Certification. The employer must 

also complete and submit an IRS 

Form 8850 in a timely manner. 

b.) Review and Certification. The issuance 

of a Certification begins with a review 

of the Conditional Certification, ETA 

Form 9062, by the SWA/DLA. This review 

begins the verification process of 

eligibility pre-determinations issued. 

The Conditional Certification should be 

submitted for final Certification in 

conjunction with an IRS Form 8850. 

During the review, these forms are 

screened for completeness, timeliness, 

and target group designation. This 

review should occur within 60-days of 

receipt of the forms. Since the 

supporting documents used to establish 

eligibility have been retained in the 

applicant's Conditional Certification 

file, no further documentation is 

necessary. 

c.) Issuance of Certifications and Denials. 

Upon completion of the review, the 

SWA/DLA will issue Certifications to 

employers, as appropriate. 

For Denials, the SWA/DLA will send a 

letter to the employer denying the 

Certification and stating the reason(s) 

for the Denial. In addition, retain 

copies of the Denial and/or ineligible 

ruling, along with all forms and 

documentation, as appropriate, for the 

specified retention period (see pp. 

VIII-3 and 4). 

VII-13
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

d.) Quality Assurance. 

During the required Audit Process for 

WOTC/WTWTC, certifications issued based 

on a Conditional Certification will be 

selected for verification. At this 

point, the SWA/DLA will be required to 

obtain all supporting documentation 

from the participating local agency 

used to establish the applicant's 

eligibility during the Conditional 

Certification process. Should any 

participating local agency be found to 

have an unusually high rate of error in 

their issuance of Conditional 

Certifications, they may be subject to 

corrective action plans at the state's 

discretion. This may include a "noplay" policy whereby the participating 

local agency in question may have its 

right to issue Conditional 

Certifications revoked. 

4. Pre-Screening Notice and Certification 

Requests. 

This process of certification is triggered 

when an employer sends a Pre-Screening 

Notice, IRS Form 8850, to the SWA/DLA for 

Certification. In addition to the IRS Form 

8850, the employer must submit to the 

SWA/DLA, an ICF and supporting documentation 

to support the applicant's eligibility. The 

certification process for those applicants 

who have been pre-determined as eligible 

(i.e., a Conditional Certification has been 

issued) is detailed in the preceding 

section. 

a.) Employer process. Employers should 

follow the process outlined below: 

VII-14

 Carefully interview prospective 

employees to determine WOTC and/or 

WtWTC eligibility before making 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

any offers to hire. A job 

applicant and employer have until 

the 21st calendar day after the 

applicant begins work to sign and 

date the IRS Form 8850. The 

employer has until the 21st 

calendar day AFTER the applicant 

begins work to mail a completed 

IRS Form 8850 to the appropriate 

SWA/DLA (see pp. VII-27-30). 

 Complete an ICF, or the bottom 

part of a Conditional 

Certification, as required. 

 If completing the ICF, collect 

available documentation to 

demonstrate WOTC and/or WtWTC 

eligibility. 

 Completely prepare and sign the 

Pre-Screening Notice, IRS Form 

8850. 

 Transmit the forms with copies of 

any supporting documentation to 

the SWA/DLA for processing. 

b.) State Workforce Agency/DLA Process. To 

determine eligibility and issue a 

Certification for the WOTC program and 

or the WtWTC, the SWA/DLA should: 

VII-15

(1.) Receive a properly completed PreScreening Notice, IRS Form 8850 

from the hiring employer or 

his/her representative. This 

document must be signed and 

postmarked not later than the 21st 

calendar day following the 

individual's employment-start 

date. If the IRS Form 8850 is not 

received with an ICF and 

supporting documentation, or the 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

completed bottom part of a 

Conditional Certification form, it 

should be filed pending the 

receipt of these items. Note. A 

“Needs Letter” should be sent to 

the corresponding employer or 

representative listing the missing 

information items and requesting 

them within a reasonable period of 

time set by the SWA/DLA. 

(2.) Collect additional information and 

supporting documentation as 

required to determine and 

substantiate eligibility. 

(3.) Record the date that the PreScreening Notice was postmarked 

(4.) Carefully verify timeliness, 

target group eligibility and all 

supporting documentation. If all 

aspects are in order and indicate 

eligibility, a certification must

be issued. States should initiate 

a procedure for quality reviews. 

(5.) Retain all original forms and 

documentation for files. 

(6.) Review of PSN/CR should occur 

within 60-days of receipt in the 

SWA/DLA. 

c.) Issuance of Denials. The steps for 

issuing Denials are basically the same 

as those outlined above. The exception 

is that the reason for the ineligible 

ruling should be notated. Keep copies 

of the ineligibility ruling, along with 

all forms and documentation, for the 

specified retention period, i.e., 1 

year (see p. VII-14). 

VII-16
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

5. Verification and Audits. 

a.) Procedures 

(1.) Documentation of Eligibility. To 

ensure the integrity of the 

program and provide a solid basis 

for subsequent verification 

activities, the materials and/or 

collateral contacts used to 

establish an applicant's 

eligibility must be documented 

using the “Agency Declaration of 

Verification Results, Work 

Opportunity and Welfare-to-Work 

Tax Credits,” ETA Form 9065, or an 

equivalent form at the time the 

eligibility determination is 

performed. 

The application must contain the 

information upon which WOTC and/or 

WtWTC eligibility is determined 

and is used to document/support 

verification in the audit process. 

While all items on the application 

should be examined for correctness 

and consistency, the documentary 

and collateral contact sources 

that are verified during an audit, 

are to be attached or annotated on 

the application. 

VII-17

Some applicants may not be able to 

provide complete documentary 

evidence or collateral contacts. 

In such cases, state-wage records, 

welfare and social service 

records, etc., should be used, 

where feasible, to verify the 

statements made by the applicant. 

This is discussed further in Audit 

Methodology later in this chapter. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

The completed application serves 

as a record of the type/source of 

information or documentation upon 

which the Conditional 

Certification was issued. It must 

become part of the record/file for 

each Conditional Certification 

issued. If a Certification is 

issued and later chosen for audit, 

the information identified or 

attached to the application will 

be used to identify the 

type/source of documentation or 

collateral contact needed for the 

audit. 

Whenever possible, the SWAs/DLAs 

should obtain photocopies of 

materials presented by the 

applicant; e.g., driver's license, 

military discharge papers, etc., 

and retain as part of the 

applicant's file to expedite a 

subsequent audit (see Audit

Methodology later in this 

chapter). 

b.) Quality Reviews

(1.) Frequency. A "quality review" is 

performed on each applicant's 

record file at certain “key 

points” in the eligibility 

determination and/or Certification 

process. A different individual 

than the one performing the 

initial screening must conduct 

this review. 

VII-18

Documentation of the 48-hour 

review should be recorded. Either 

the central or local office of the 

SWA/DLA must check all forms for 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

completeness, accuracy and 

consistency. Key review points in 

the eligibility determination 

and/or Certification process 

include a "48-hour review" within: 

 Completion of eligibility 

determination; and 

 Receipt by the SWA/DLA of 

copies of Pre-Screening 

Notices, IRS Form 8850s and 

supporting documents which 

were issued by participating 

agencies; and 

 Receipt of completed PSNs 

from employers; and, 

 Issuance of Certifications 

and/or Denials. 

c.) Procedures. The SWA/DLA will review 

each form as soon as practicable, upon 

receipt, to determine that: 

(1.) It is complete and internally 

consistent; 

(2.) The information related to 

eligibility complies with the 

criteria for the target group; 

(3.) The participating agency or local 

office is contacted immediately to 

obtain appropriate information 

when forms are incomplete or do 

not support the eligibility 

determination; and, 

VII-19

(4.) The file copy of the “PSNs, IRS 

Form 8850” is annotated regarding 

any contact with the certifying 

agency or local office. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

d.) When information received from the 

certifying agency is incomplete or does 

not support the eligibility 

determination, the certifying agency 

must, when notified: 

(1.) Send revised forms providing 

missing or corrected items to 

support the determination as soon 

as practicable to the SWA/DLA; or

(2.) Invalidate the Conditional 

Certification or Certification (in 

the case of an audit) when the 

required information cannot be 

obtained; 

(3.) Provide written notification of 

invalidation of the Conditional 

Certification or Certification to 

the applicant and the 

Participating Agency; and,

(4.) Notify any employer to whom the 

applicant was referred to that the 

Conditional Certification or 

Certification is invalid because 

of missing or incorrect items and 

that without such information no 

Certification can be issued or 

that the Certification is being 

revoked (in the case of an audit). 

VII-20

Completed Conditional 

Certifications returned by 

employers should be checked upon 

receipt to ensure that the 

"Employer Declaration" section was 

properly completed. If incomplete, 

the Conditional Certification 

should be returned to the employer 

with a request to supply the 

missing information. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

The completed Certification and 

supporting documentation should be 

given a final review for 

completeness and consistency 

before the Certification is mailed 

to the employer. It must include 

the name, social security number, 

employment start date, job title, 

and wage of the eligible, newly 

hired employee. 

At such time as all requested 

information is returned and 

completed correctly, a 

certification or Denial should be 

issued by the SWA/DLA within 14 

days. 

6. Audit Methodology

a.) General. Preferably during, or 

immediately following the end of each 

quarter, the SWA/DLA will draw, for the 

purposes of auditing, a 10 percent 

sample of all Certifications issued 

during the quarter, including those for 

qualified summer youth employees. This 

audit will be conducted to establish 

the credibility and reliability of the 

eligibility determination and 

Certification process. A SWA/DLA staff 

person other than the originator must 

examine the certifications in the 

sample. Unless results call for a 

wider-scope examination of 

Certifications, the audit sample will 

suffice as the "test" of WOTC, WtWTC or 

dual Certifications as required. 

VII-21

The SWAs/DLAs are encouraged to use UI 

and/or other available wage records or 

files to review all Certifications 

issued. Quality control is important 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

and computerized runs of Certifications 

against UI wage records reduce the 

chances of erroneously certifying 

ineligible persons for the tax credits. 

However, the SWAs/DLAs may find that 

the availability of UI wage records may 

delay the audit sample. 

Note. It is not the responsibility of 

the SWAs/DLAs to verify that a 

certified targeted employee has worked 

the required numbers of hours for the 

employer. SWAs/DLAs are only 

responsible for verifying and 

certifying an applicant’s eligibility 

in a specific WOTC and/or WtWTC target 

group. The responsibility for 

verifying the required number of hours 

a certified targeted group member 

employee works, rests with the IRS, the 

only enforcement agency.

b.) Sample Size. The sample size must be 

based upon the total number of 

Certifications issued; i.e., universe 

size, in the state during the preceding 

quarter, including, if applicable, 

those issued for the Qualified Summer 

Youth target group. The table, which 

follow, serves as a guide for selecting 

the required sample size. 

VII-22
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

SAMPLE SIZES FOR 

QUARTERLY VERIFICATION

Universe Size Sample Size

Below - 1,200 10% Sample 

1,200 - 1,300 129 

1,301 - 1,400 130 

1,401 - 1,500 131 

1,501 - 1,700 132 

1,701 - 1,900 133 

1,901 - 2,100 134 

2,101 - 2,300 135 

2,301 - and above 142 

Examination of Certifications and 

Conditional Certifications. 

Verification of entries on the 

application for the purpose of an audit 

requires re-examining photocopied 

documentation; e.g., copy of driver's 

license or veteran's discharge, 

attached to the application, or recontacting the collateral source(s) 

listed in the application; e.g., local 

welfare agency, vocational 

rehabilitation agency. 

It should also include checking statewage records or the records of welfare 

agencies, etc., to confirm the 

statements of the applicant. If the 

applicant provided a "no income" 

affidavit, this may also be verified by 

checking state-wage records. Unless a 

problem is evident, there is no need to 

verify the documentation or collateral 

sources by contacting the individual. 

VII-23

If, however, any material contained in 

the file is contradictory or does not 

support the individual's eligibility, 

the individual may be contacted to 

verify his/her eligibility. In 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

contacting the individual for 

verification audit purposes, the 

SWA/DLA has three options: 

(1.) It can ask the individual to 

resubmit copies of documentation, 

or 

(2.) It can ask individuals to submit 

further documentation, or 

(3.) It can interview the applicant 

again. To secure maximum 

cooperation, individuals should be 

informed of the reason for the 

request; i.e., normal auditing 

procedures and be reminded that 

the penalty for fraudulent 

statements, documentation, or 

collateral contacts applies as it 

did for the original eligibility 

interview. 

Employers may assist in locating 

individuals to obtain their cooperation 

for audits. When contacting employers 

for this purpose, SWAs/DLAs should 

stress that the auditing process 

ensures the integrity of the WOTC 

program. 

It is understood that despite good 

faith efforts to obtain copies of 

income documentation or sources of 

collateral contact and to locate 

employees when necessary, some audits 

will result in a finding of "not able 

to establish that the certified 

individual is eligible." However, too 

large a proportion of such findings may 

call audit results into question. A 

substantial effort should be made to 

avoid such a finding. 

VII-24
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

For those found to be ineligible, the 

SWAs/DLAs must notify the employer, and 

the IRS of this finding as soon as 

possible, by certified mail. This 

notification must be made within 5 days 

of a determination of ineligibility. 

Employer eligibility for the tax 

credits does not cease until the date 

that the employer is notified that the 

Certification(s) has been invalidated. 

c.) Second Audit Sample. If the number 

ineligible in the original quarterly 

audit sample is 5% or more, a second 

sample of equal size must be drawn. If 

the second sample confirms an error 

rate of 5% or more, a corrective action 

plan is required. 

Corrective Action Plan. Corrective 

action plans must be developed and 

carried out by the SWAs/DLAs. Such 

plans should be sufficiently detailed 

and prescribed to ensure that necessary 

corrective actions are taken and should 

result in adequate improvements. 

Corrective action plans, when indicated 

by audit results, must be described in 

the "Comments" section of ETA Form 

9059, "Verification Results." 

d.) Qualified Summer Youth Employees. 

Certifications issued for members of 

the qualified summer youth target group 

will be included in the total universe 

from which the audit sample is drawn 

for the subject quarter. 

VII-25

By definition, most Certifications for 

this group will be issued during the 

months of June, July and August and 

sampled during the following quarter. 

Under no circumstances must this target 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

group be excluded from regular audit 

procedures. 

e.) Reporting Verification Results. After 

all Certifications selected in the 

quarterly audit samples are reviewed, 

the results of the review must be 

reported quarterly to the National 

Office via the Regions, on ETA Form 

9059, “Verification Results, WOTC and 

WtWTCs - Report No. 3.” This report is 

due at the Regional Office by the 20th 

day of the 5th month following the 

closing date of each quarter. 

Federal Role. The Department of 

Labor/ETA is responsible for reporting 

annually to the Congress on the WOTC 

program and WtWTC, including 

verification results, oversight, and 

other functions necessary to properly 

administer the program. Regarding 

quality control audits of WOTC/WtWTC 

Certifications, the DOL will fulfill 

its oversight and guidance 

responsibilities by participating in a 

representative number of quarterly 

audits and compliance reviews at the 

state level each year. 

D. Mailed WOTC and WtWTC Documents.

1. Evidence of Mailing.

a.) The IRS has interpreted evidence of 

mailing to require either: 

 a U.S. Postmark; 

 the original of a U.S. Postal 

Service (USPS) "Certificate of 

Mailing" (PS Form 3817); or 

VII-26

 other equivalent U.S. Postal 

Service approved authorized 

evidence of the mailing date. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Since the purpose of the Certificate of 

Mailing is to furnish evidence of 

timely submittal, when properly 

accepted and postmarked at an accepting 

Post Office, printed Certificates of 

Mailing forms, will supersede an 

incorrect postmark. 

b.) The SWA/DLA date stamp, if used as a 

record of receipt in lieu of 

postmarking, must indicate a date which 

is not later than the day the person 

started work; e.g., if the employer 

request is date stamped and annotated 

by the SWA/DLA on May 6, the target 

group individual could begin work no 

sooner than May 6. 

Use of other formats in lieu of USPS 

Certifications of Mailing (PS Form 

3817) at the mailer's expense or of 

Firm Mailing Book form, must comply 

with guidelines in Section 931.22 of 

the U.S. Postal Manual. The new format 

must identify the: 

(1.) prospective employee(s); 

(2.) employer on whose behalf the 

Certificate is sought; and, 

(3.) date the individual is scheduled 

to begin work. 

2. Recording by the Designated Local Agency. 

VII-27

a.) As appropriate, the date of the 

postmark or the Certificate of Mailing 

must be recorded on the PSN/CR. The IRS 

8850 Form should be retained as a file 

copy, along with all other supporting 

documentation used to make and/or 

substantiate an eligibility 

determination. Employers may, in the 

same envelope, include more than one 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

PSN/CR, but must identify each worker 

listed on the Certificate of Mailing. 

b.) Where the SWA/DLA receives a PSN/CR, or 

multiple PSN/CRs submitted in one 

envelope or wrapper, and based on the 

postmark on the envelope the submission 

is determined to be timely, the SWA/DLA 

may date stamp the PSN/CRs and need not 

retain the original envelope or 

wrapper. 

Exception: In the case where the 

submission date is in question or under 

dispute, the SWA/DLA must, for audit 

and appeal purposes, retain the 

original envelope or wrapper bearing 

the postmark. In this circumstance, 

but where multiple submissions are 

received in a single envelope or 

wrapper, the SWA/DLA may either (1) 

attach a copy of the original envelope 

or wrapper to each relevant application 

or (2) record the file location of the 

original envelope or wrapper on each 

application or file copy received in 

that packet. 

3. Timely Mailing Treated As Timely Filing. 

a.) USPS regulations require that a 

document must be deemed to be filed on 

the date of the postmark stamped on the 

cover in which such document was 

mailed. 

Thus, if the cover containing such 

document bears a timely postmark, the 

document will be considered filed 

timely, although it is received after 

the last date, or the last day of the 

period, prescribed for filing. 

VII-28
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Note: In cases where there are multiple 

USPS postmarks, the earliest postmark is 

used to determine the filing date, e.g., 

mail that is forwarded from the receiving 

office to the certifying office. 

For WOTC/WtWTC purposes a "document" 

means the PSN/CR, IRS Form 8850 filed 

by the employer to request 

Certification. This document is 

required to be filed/received by the 

SWA/DLA, not later than the 21st 

calendar day following the individual's 

start date. For this purpose, a 

document is deposited in the mail in 

the United States when it is deposited 

with the domestic mail service of the 

USPS. 

4. Mailing Requirements. 

The document must be deposited within the 

prescribed time in the mail in the United 

States with sufficient postage prepaid. 

5. Acceptability of Postmarks

a.) If the USPS makes the postmark on the 

envelope or wrapper, such postmark must 

bear a date that falls not later than 

the 21st calendar day following the 

individual's employment start date. If 

the postmark bears a date later than 

the 21st calendar day after the 

individual's start date, the document 

will be considered not timely filed. 

VII-29

Note: When a SWA/DLA date-stamps a Form 

8850 upon receipt, the date-stamp is not 

later than the 21st calendar day after the 

job applicant began work, and the SWA/DLA 

has no reason to suspect that there is any 

problem with the dates on page 2 of the 

8850, there is no need for a [USPS] 

postmark. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

b.) If the postmark on the envelope is not 

legible, and the SWA/DLA has no 

evidence of receipt within reasonable 

mail delivery time, beginning with the 

21st calendar day following the 

employment start date, the employer or 

the employer representative who is 

required to file the document has the 

burden of proving the time when the 

postmark was made. If the cover 

containing a document bearing a timely 

postmark made by the USPS is received 

after the time when a document 

postmarked and mailed at such time 

would ordinarily be received, the 

sender may be required to prove that it 

was timely mailed. To establish that 

proof, the employer or his/her 

representative must show: 

(1.) that it was actually deposited in 

the mail before the last 

collection of the mail from the 

place of deposit not later than 

the 21st day following the start 

date of the employee; 

(2.) that the delay in receiving the 

document was due to a delay in the 

transmission of the mail; and, 

(3.) the cause of such delay. 

c.) If the envelope has a postmark made by 

the USPS in addition to another 

postmark, the postmark, which was not 

made by the USPS, must be disregarded, 

and whether the envelope was mailed in 

accordance with this subdivision must 

be determined solely by applying the 

rule in D.4., above. 

VII-30
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

d.) If the document is sent by U.S. 

Registered mail, the date of 

registration of the document must be 

treated as the postmark date. 

e.) If the document is sent by U.S. 

Certified mail and the postal employee 

to whom such document is presented 

postmarks the sender’s receipt, the 

date of the U.S. postmark on such 

receipt must be treated as the postmark 

date of the document. Accordingly, the 

risk that the document will not be 

postmarked in the day that it is 

deposited in the mail may be overcome 

by the use of registered mail or 

certified mail. 

f.) A timely postmark or equivalent from a 

private delivery service serves as 

sufficient evidence of timely filing if 

the SWA/DLA receives IRS Form 8850 

after the deadline. For a list of 

acceptable private delivery services 

for purposes of submitting IRS Form 

8850 to the SWAs/DLAs, see Notice 2001-

62, Internal Revenue Bulletin No. 2001-

40, dated October 1, 2001. 

VII-31
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

E. Examples of Documentary Evidence. 

The following list of documentation is not allinclusive. SWAs/DLAS may use other document 

sources that they deem appropriate to verify and 

establish target group eligibility. Note. The 

Form I-9 is no longer an acceptable piece of 

documentary evidence. An ETA/USES directive, 

dated March 1998, officially rescinded authority 

to use this form as proof of age and residence. 

AGE/BIRTHDATE

(required for High Risk, Summer 

Youth & Food Stamp) 

 Birth Certificate 

 Driver's License 

 School I.D. Card/School 

Records 

 Work Permit 

 Federal/State/Local 

Government I.D. 1

 Hospital Record of Birth 

FAMILY INCOME

(required for Ex-felon) 

 Pay Stubs 

 Employer Contacts

 W-2 Forms 

 UI Documents 

 Public Assistance Records 

 Family Members' 

Statements 

 Parole Officer Statements 

EX-FELON STATUS

 Parole Officer's

Name/Statement

 Correction Institution 

Records 

 Court Record, Extract, 

Contact

FOOD STAMP RECIPIENT

 Food Stamp Benefit History 

 Signed statement from 

authorized individual with

specific description of

months benefits were 

received.

 Case Number/Identifier 

SSI RECIPIENT

 SSI Record or Authorization 

 SSI Contact

 Evidence of SSI Issuance 

NUMBER IN FAMILY

(required for Ex-felon) 

 Public Assistance 

 Social Service Agencies 

 Family Members' 

Statements 

 Parole Officer's Statements 

VETERAN STATUS

 DD-214 

 Reserve Unit Contacts

 Discharge Papers 

VOCATIONAL REHABILITATION

REFERRAL

 Voc. Rehab. Agency 

Contact

 Social Services Agency 

 Veteran's Administration 

Contact

AFDC/TANF & Long-Term 

Assistance Recipient

 AFDC Benefit History 

 Signed statement from 

authorized individual with

specific description of

months benefits were 

received.

 Case Number/Identifier 

EMPOWERMENT ZONE/ 

ENTERPRISE/RENEWAL 

COMMUNITIES 

 Driver's License 

 Work Permit 

 Utility Bills

 Lease Documents 

 Voter Registration Card 

 Computer Printout From 

Other Government

Agencies 

 Food stamp Award Letter 

 Housing Authority 

Verification

 Landlord's Statement

 Letter From Social Service 

Agency or School 

 Library Card 2

 Medicaid/Medicare Card 

 Property Tax Record 

 Postmarked Envelope 

Addressed to Applicant

 Public Assistance Records 

 Rent Receipt

 School I.D. Card 

 Selective Service 

Registration Card 

 W-4 

1 Where any item of documentation such as a Federal I.D. Card does not 

contain age or birth date, the SESA/SWA must obtain another documentary 

source to verify the individual's age. 

2

 Where any item of documentary evidence, such as a Library Card does 

not contain the holder's address, the SESA/SWA must obtain other 

documentary evidence issued in the jurisdiction where the EZ/EC or RC 

is located showing the holder's address. 

VII-32
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

F. Special Rules for Conditional Certifications 

1. Validity Period of Conditional 

Certifications

a.) Because of the specific language in the 

IRC, the validity period for 

Conditional Certifications requiring an 

economic determination is generally 45 

days. This applies to the qualified ExFelon target group. Conditional 

Certifications that do not require an 

economic determination have no 

predetermined validity period; i.e., 

Vocational Rehabilitation Referrals and 

Recipients of AFDC/TANF payments, but 

are required to meet the specific 

requirements for their target group at 

the time of their hire and/or start 

date. 

b.) The applicant may continue to search 

for employment even after the validity 

period expires. However, revalidation 

is required if an employer wants to 

hire the applicant and take advantage 

of the tax credit. 

c.) Since an Ex-Felon’s Conditional 

Certification (CC) requires an economic 

determination, it is valid for only 45 

days. The eligibility of a hired person 

with an expired CC of this type must be 

redetermined before the Certification 

can be issued again. Redetermination 

of eligibility involves recalculating 

and annualizing family income for the 

6-month period immediately preceding 

the month in which the employee starts 

work. 

VII-33

d.) The annualized income rate must be 70 

percent or less of the current LLSIL. 

The participating agency or the SWA/DLA 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

must also determine that the individual 

still meets the rest of the Ex-Felon’s 

target group requirements. 

e.) This information is recorded on a new 

Conditional Certification and marked 

"Revalidation." Updated applicant 

characteristics also must be entered as 

part of the revalidation process. 

f.) Photocopies of applicant-provided 

documentary evidence and/or collateral 

sources for establishing eligibility 

must be those used to establish the 

person's eligibility for the 

"revalidation," which may or may not be 

the same as those used to issue the 

original Conditional Certification. 

g.) If a person with a revalidated 

Conditional Certification is selected 

as part of the verification sample, 

information used to complete the 

revalidated Conditional Certification 

as recorded on the new application 

should be verified, rather than that 

used for the original determination. 

G. Special Rules for Timeliness.

1. When the last day of the 21-calendar day 

period ends on a Saturday, Sunday or legal 

holiday, the next succeeding business day, 

which is not a Saturday, Sunday or legal 

holiday will be treated as the last day of 

the period. PSN/CRs, which are postmarked 

according to this rule, will be considered 

timely. 

2. By mailing the documents to the SWA/DLA in a 

timely manner, the employer has fulfilled 

the "timely request" requirement, even if 

the ETA documents are incomplete. 

VII-34
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

H. Employer Representatives. 

An employer may use an intermediary; e.g., a 

management services firm, to serve as an 

authorized representative/consultant for all or 

some WOTC and WtWTC program activities. The 

following general guidelines apply: 

Power of Attorney - 

The IRS has recognized that any employer 

representative/consultant must be properly 

designated. Therefore, the original Power-ofAttorney (POA), or a notarized copy of a duly 

authorized POA, designating an employer 

representative/consultant must be provided to the 

appropriate SWA/DLA. 

Note. IRS Form 2848, "Power-of-Attorney and 

Declaration of Employer Representative" may be 

used for this purpose. An equivalent document 

acceptable by the SWA/DLA may also be used. 

Note. There is no requirement to notarize the 

signature on an original IRS Form 2848, “Power of 

Attorney and Declaration of Representatives.” 

Any equivalent document, however, that the 

SWAs/DLAs accept must have the signature 

notarized (i.e., signature, date and seal). 

When the SWAs/DLAs require a “notarized copy” of 

an IRS Form 2848, “notarized copy” means the 

notary has seen the original IRS Form 2848 and is 

attesting that the copy is a true and exact copy 

of the original IRS Form 2848. 

Photocopies of the original Power-of-Attorney 

should also be on file at appropriate SWA/DLA 

local offices. States should not impose 

additional requirements for documenting Powersof-Attorney. 

VII-35
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

When the Power-of-Attorney is properly filed, the 

SWA/DLA is obligated to honor it and conduct WOTC 

and/or WtWTC business with the representative as 

though she/he were the employer. It is the 

responsibility of the SWA/DLA and not of the IRS 

to track Powers of Attorney, whether or not the 

IRS Form 2848 is used, and make sure they are 

updated upon expiration. The SWA/DLA should make 

all efforts to have valid and active POAs on 

file. A SWA/DLA should not conduct any WOTC/WtWTC 

business with employer representatives/ 

consultants whose POAs have expired. 

VII-36
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

VIII. ADMINISTRATION AND REPORTING REQUIREMENTS 

A. Cooperative Agreements at State and Local Levels. 

The role of "participating agencies" is 

recognized in WOTC law. In recognizing 

participating agencies (PAs), SWAs/DLAs are 

required to negotiate formal cooperative 

agreements, also known as Memoranda of 

Understanding, with state or local agencies, 

which may then participate in the administration 

of the program. 

State and local agreements need not follow a 

prescribed pattern. Specific elements of such 

agreements should be the result of negotiations 

between the SWA/DLA and participating agencies. 

Agreements should be mutually reviewed at least 

annually and should include the following: 

1. Procedures that minimize the number of 

contacts and processing stages for 

applicants and employers or their 

representatives; 

2. Procedures to establish a system for the 

orderly management of WOTC/WtWTC job orders, 

applicant referrals, verification activities 

and records; 

3. Procedures for establishing an eligibility 

determination process consistent with 

procedures outlined in Chapter V; 

4. Procedures for providing training, review 

and verification by the SWA/DLA of 

eligibility pre-determinations conducted by 

the participating agency; 

5. Procedures for minimizing paperwork 

requirements; and, 

VIII-1

6. Procedures, mutually developed, to allow the 

SWA/DLA to meet its monitoring 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

responsibilities of WOTC and WtW Tax Credit 

activities. 

B. WOTC Funding

1. Authorization. 

ETA distributes funds to the SWAs/DLAs, 

through the Regional Offices (ROs), using a 

formula based on Civilian Labor Force, 

WOTC/WtWTC workload and welfare population. 

2. Accounting Costs. 

The SWAs/DLAs will account for costs 

associated with administering the WOTC 

program and the WtWTC. Costs for 

verification activities will be reported 

separately from all other costs. The 

SWAs/DLAs must report both quality review 

and auditing costs under verification 

activities. 

C. Identifying WOTC and WtWTC Job Orders. 

When a job order is received from an employer who 

requests only individuals pre-certified under 

WOTC/WtWTC or expresses a preference for 

individuals pre-certified under WOTC and/or 

WtWTC, state agency records must show the request 

and this data should be reported in accordance 

with the SWA’s/DLA's instructions. 

D. Liability. 

The Department of Labor cannot immunize the 

SWAs/DLAs and/or the participating local agencies 

from a possible judicial finding of liability 

based on circumstances of a given case. To 

minimize potential liability and/or damages, the 

ETA and the IRS have established standard 

criteria for determining and verifying 

eligibility. 

VIII-2

These criteria permit employers to claim the tax 

credit on qualified wages paid until the employer 

or the employer's representative receives an 

invalidation notice from the SWA/DLA. This notice 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

is based on the discovery of error and/or fraud 

in the eligibility determination process. As long 

as a SWA/DLA or participating agency establishes 

a system in compliance with applicable 

regulations, directives and agreements, the 

potential for liability is further minimized. 

When applicants, employers and employer 

representatives make and/or accept documentation 

in which no fraud was willfully intended, a 

determination of liability must be made on a 

case-by-case basis. An applicant, employer or 

employer's representative is responsible for 

his/her own actions. 

Recovery procedures will be instituted against an 

applicant who fraudulently attested to facts on 

his/her eligibility as shown on the application. 

Falsifying or concealing information requested is 

a crime violating 18 U.S.C. 1001 and is 

punishable by a fine or imprisonment of not more 

than five years or both. Action to recover from a 

WOTC participant any credit granted (based on the 

participant's fraudulent documentation) is solely 

within the discretion of the IRS, based on the 

SWAs’/DLAs’ revocations of Certifications (i.e., 

invalidations). 

E. Records’ Retention 

1. Designated Local Agencies

VIII-3

a.) Eligibles. The SWAs/DLAs are required 

to keep WOTC and WtWTC records 

(applications, supporting 

documentation, etc.), including all 

records for withdrawn Certifications, 

for a period of four (4) years from the 

date of Certification, or from the date 

of issuance of the determinations which 

do not result in Certification. This 

time period conforms to the IRS "record 

retention requirements" for employment 

taxes, which specifies that records be 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

kept for four (4) years after 

employment taxes are due. 

In spite of the WOTC/WtWTC carryover 

provisions, the four-year record

retention period still applies. Note. 

However, prior to the expiration of the 

four-year retention period, should any 

litigation or audit be initiated or 

should any claim be instituted 

involving the records, the records must 

be kept beyond the four-year period 

until the litigation, claim or audit 

findings are finally resolved. 

b.) Ineligibles. The SWA/DLA must keep 

applications for ineligibles or 

invalidated applications, including 

pertinent documentation and supporting 

forms, for at least one year, but 

longer if further action or an appeal 

is pending and the SWA/DLA has been 

notified in writing. 

2. Participating Agencies

a.) Responsibility of the SWA/DLA for 

Record Retention. As part of the MOU 

between a participating agency and a 

SWA/DLA, the SWA/DLA may retain, if 

mutually agreeable, the responsibility 

for record retention of the complete 

file. This includes documentary 

evidence used by the participating 

agency to determine eligibility. 

b.) Record Retention by the Participating 

Agency will be the same as for the 

SWA/DLA. 

VIII-4
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

F. Policy Clarification/Appeals Resolution. 

It is expected that questions, especially those 

pertaining to eligibility determinations, 

procedural issues, Certifications and/or Denials 

will be resolved at the SWA/DLA level. Those 

policy issues that cannot be resolved at the 

SWA/DLA level should be submitted in writing to 

the ETA Regional Office for response. 

To maintain uniformity in resolving policy 

issues, questions and questioned determinations 

that cannot be resolved at the Regional level, 

and policy matters, appeals and waiver requests 

involving IRS issues must be submitted in writing 

to the National Office, ETA, by the ETA Regional 

Office, Attn: National Coordinator via the Office 

of Workforce Investment. A suggested format is in 

the appendices of this handbook. The USES/ALMIS 

National Office staff will respond to Regions on 

ETA policy issues and will refer to the IRS 

National Office, matters that fall within its 

jurisdiction. 

The ETA National Office will report ETA and IRS 

joint responses to appropriate ROs for 

transmittal to the SWAs/DLAs. Further, joint ETA 

and IRS policy direction that reflects national 

concerns will be issued in directives, revisions 

or supplements to this handbook to ensure program 

consistency. In instances where a final 

resolution to a policy issue may be delayed, the 

National Office will provide an interim 

acknowledgment or status report. 

G. WOTC/WtWTCs’ Appeals’ Guidelines. 

VIII-5

In cases where a SWA/DLA has issued a Denial on a 

certification request, the employer or the 

representative/consultant may appeal this 

decision. This appeal should be based on sources 

other than those used in issuing the original 

Denial, unless it can be established that the 

original Denial was issued in error because of a 

misinterpretation of information. Where an 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

employer or the representative/consultant 

supplies the “Appeal Documentation” listed below 

and the information supports eligibility, such 

documentation should supersede the original 

Denial notice and a Certification will be issued. 

H. Documentation That Can Be Used for Employers’ 

Appeals.

Category A. AFDC/TANF Recipient. 

Caseworker’s signed statement with the 

applicant’s name, social security number, hire 

date indicating the number of months that the new 

hire was on welfare before the employment start 

date. The caseworker’s telephone number and 

address should also be included. 

Category B. Veteran. 

If no DD-214 is available, a verification letter 

from the Veteran’s Administration with the 

applicant’s name, social security number, branch 

of service, and active duty dates. Each 

statement should be signed by a Veteran’s 

Administration representative, and be on a 

Veterans Administration Form. These forms could 

possibly include but are not limited to, a Reply 

to National Personnel Record Center form, a 

Summary of Military Service form, a Certificate 

of Military Service form, or a Freedom of 

Information Act (FOIA) Release statement. 

VIII-6
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Category C. Ex-Felon. 

Parole Officer’s signed statement verifying the 

new hire was convicted and/or released from 

prison for a felony within the past year or on 

work release from a felony or conviction. The 

statement should include the applicant’s name, 

Social Security Number, hire date, the conviction 

and release dates, and the Parole Officer’s name 

and telephone number. Also needed would be a 

statement from the applicant or the Parole 

Officer indicating the 6 months income for the 

household is below the Lower Living Standard 

Income Levels (LLSILs) --for the appropriate 

county if income amount is in question. 

Category D. Empowerment Zone/Enterprise/Renewal 

Communities. 

Signed statement from an official of the 

empowerment zones and/or urban or rural 

enterprise or renewal communities in which the 

applicant’s address is located that verifies that 

the address is in the EZ/EC or RC. 

Category E. Vocational Rehabilitation. 

A signed statement from the Vocational 

Rehabilitation counselor with the applicant’s 

name and social security number and the agency 

name from which the assistance was received. 

Category F. Summer Youth. 

Signed statement from a representative of the 

county in which the address is located that 

states the address is in an EZ/EC or RC. If no 

other proof of age is available, a signed 

statement from a parent or guardian attesting to 

the new hire’s date of birth is acceptable. 

VIII-7
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Category G. Food Stamps. 

A signed caseworker statement with the 

applicant’s name, social security number, start 

date, indicating number of months on food stamps 

and verification of age. Statements must include 

caseworker’s name, telephone number and address. 

Category H. Supplemental Security Income. 

Printout from SSI or signed statement from 

caseworker with applicant’s name, social security 

number, hire date indicating the individual 

received SSI benefits any time in the 60 days 

ending on the hire date. Statements should 

include caseworker’s telephone number and 

address. 

Category I. Welfare-to-Work Long Term Assistance 

Recipient. 

Caseworker’s signed statement with the 

applicant’s name, social security number, hire 

date and a statement that the new hire was on 

welfare for the required number of months before 

the employment start date. Also included must be 

the caseworker’s telephone number and address. 

Employer Information is Incomplete. 

When the employer submits an IRS Form 8850 with 

complete applicant information, but with some of 

the employer information in question, (e.g., a 

transposed FEIN number), the SESA may request the 

corrected information and consider the IRS Form 

8850 as received in a “timely” basis. 

IRS Form 8850, Denied for Failure to Submit in a 

Timely Manner. 

VIII-8

In cases where a miscount of days due to weekend 

or holidays, the employer may submit a letter 

addressing the fact and requesting review of that 

record. In the case of a lost IRS Form 8850, an 

employer may submit a copy of the IRS Form 8850 

with proof of the mailing date (e.g., the 

original of a U.S. Postal Service (USPS) 

“Certificate of Mailing” (PS Form 3817). 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

I. Program Reporting Requirements. 

In order to effectively meet its management 

responsibilities and to have adequate data with 

which to evaluate the Work Opportunity and 

Welfare-to-Work Tax Credits, ETA must impose 

minimum reporting requirements upon the 

SWAs/DLAs: 

1. On a quarterly basis, SWAs/DLAs must extract 

data either from Conditional Certifications, 

ICFs, or from Certifications. The data 

sources will depend upon each state's 

processing procedures. This information is 

reported to the USES/ALMIS Division, Office 

of Workforce Investment (OWI), on a 

quarterly basis. Note. Effective November 

2002, the EIMS, Tax Credit Reporting System 

(TCRS) replaces the paper reporting process. 

(For instructions on how to use this 

electronic reporting system, please consult 

the TCRS User’s Guide) 

2. Data will be forwarded to the USES/ALMISOWI, National Office, through the 

appropriate Department of Labor (DOL) 

Regional Office in three separate reports, 

consisting of the following sets of data: 

a.) The number of eligibility 

determinations (Conditional Certifications) issued, by participating 

agency and by target group. Note.

Because some individuals may be 

eligible for both tax credits, thereby 

receiving dual certifications, all data 

must be reported by dual certification, 

as well as by WOTC and WtWTC (See newly 

revised “Quarterly Report No. 2,” and 

its Instructions, Appendix III); 

VIII-9

b.) The certification workload and 

characteristics of certified individuals by target group, hourly wage 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

and occupation reported by dual 

certification, as well as by WOTC and 

WtWTC; and 

c.) Results of agency quarterly 

verification (quarterly audits of 

Certifications made) activities, 

including universe size, sample size, 

and the number and percentage of 

ineligible Certifications identified. 

J. Reporting Procedures. 

All SWA/DLA, WOTC/WtWTC Coordinators must prepare 

quarterly reports during the calendar year. The 

reports must include information collected from 

throughout the state. Data will be reported 

beginning with a zero balance for each reporting 

quarter. This change from the accumulation of 

data throughout the fiscal year was necessary 

because of additional requirements to respond to 

various inquiries using quarterly data in various 

annualized configurations. 

1. Submitting the Reports

VIII-10

Effective November 2002, all quarterly 

reports’ data must be entered in the newly 

designed electronic Tax Credit Reporting 

System or TCRS. The new system allows the 

transfer of the WOTC and WtWTC quarterly 

reports to ETA’s Enterprise Information 

Management System (EIMS) via the Internet. 

The TCRS allows the states to meet their 

reporting responsibilities in a more 

efficient manner while reducing the 

reporting burden on the state, regional, and 

national office levels. Through this 

system, states will enter the required 

quarterly program data for Report 1, ETA 

Form 9057, "Conditional Certifications 

Issued, Work Opportunity and Welfare-to-Work 

Tax Credits;” Report 2, ETA Form 9058, 

"Certification Workload and Characteristics 

of Certified Individuals, Work Opportunity 

and Welfare-to-Work Tax Credits;” and Report 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

2, Addendum, 2002, “New O*NET Job Families;” 

and Report 3, ETA Form 9059, "Verification 

Results, Work Opportunity and Welfare-toWork Tax Credits.” Reports 1 and 2 are to 

be certified 45 days following the closing 

date of each reporting period. 

a.) ETA Form 9059, (Report #3) must be 

certified by the 45th calendar day of 

the 6th month following the closing 

date of the report period. The Regional 

Coordinators must accept/deny the 

reports of the states within their 

regions by the 55th calendar day of the 

6th month following the closing date of 

the report period. 

States must select a statistically 

random sample and initiate verification 

activities on a quarterly basis, but 

not later than the month immediately 

following the report period. The delay 

in reporting the results allows for the 

lag-time in obtaining UI wage records 

commonly used in verifying certain 

employer and employee information. The 

delay will afford the States ample time 

to review documents, verify information 

sources, and, if necessary, verify a 

second sample of data. 

2. Completing the Forms. 

Complete the items common to all three 

reports uniformly and ensure that all 

information is legible and accurate on all 

forms: 

a.) State. Enter the name of the State. 

b.) Period Ending. This is the last day 

covered by the report; e.g., September 

30, 2001. 

VIII-11
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

c.) Name and Title of Responsible Official. 

The name and title of the person 

authorized to sign the report. 

d.) Signature. Responsible official's 

signature. 

e.) Date Signed. The date the report is 

signed by the responsible official. 

f.) General Approach. Prepare reports based 

on data from processing forms; e.g., 

PSN/CRs, ICFs, Conditional Certifications and Certifications. Include the 

number of individuals served in each 

target group, data on tax credits 

authorized, starting wages and 

occupations in which individuals were 

hired. 

g.) ETA Form 9057, Report #1. This report 

is designed to collect the number of 

Conditional Certifications (ETA Form 

9062s) issued during each reporting 

quarter by the SWAs/DLAs and 

participating agencies and by target 

group. The report should be prepared 

using data collected from ETA Form 

9062. 

VIII-12

This report also reflects the changes 

introduced by P.L. 105-34. In addition 

to reauthorizing the WOTC and expanding 

WOTC target groups to include certain 

SSI recipients, P.L. 105-34 also 

established a second tax credit, the 

Welfare-to-Work Tax Credit, for certain 

Long-Term TANF recipients. Therefore, 

this report collects quarterly data on 

conditional certifications by each tax 

credit. Further, because some 

individuals may be eligible for both 

tax credits, and because such 

individuals must be issued dual 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

certifications, all data collected on 

conditional certifications must be 

reported by dual certification, as well 

as by WOTC and WtWTC. Note. This 

report has been updated to reflect the 

introduction of Renewal Communities per 

the Community Renewal Tax Relief Act of 

2000, P.L. 106-554, December 31, 2001

for the WOTC High-Risk and Summer Youth 

target groups. 

The report is divided into two 

sections. The first section, entitled 

“I. By Issuing Agency,” reports the 

number of WOTC conditional 

certifications (CCs), the number of 

WtWTC CCs, and the number of dual 

(WOTC/WtWTC) CCs issued by SWAs and all 

participating agencies (boxes 1-11). 

Where no CCs have been issued, please 

enter “0.” 

The second section, entitled “II. By 

WOTC Target or Long-term IV-Recipient 

Group,” reports the same information -- 

the number of WOTC CCs, the number of 

WtWTC CCs, and the number of dual 

(WOTC/WtWTC) CCs, by WOTC target group 

and by Long-Term TANF Recipient (boxes 

12-22). 

Where no CCs have been issued, please 

enter “0.” 

The quarterly and year-to-date 

(cumulative) totals in Sections I 

(boxes 10-11, respectively) should 

equal the quarterly and year-to-date 

(cumulative) totals in Section II 

(boxes 21-22, respectively). 

VIII-13

Note. This form no longer reports 

conditional certifications by type, 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

i.e., by whether they are original or 

revalidated (box 3 of ETA 9062). 

Therefore, counts of CCs in boxes 1-9 

and 12-19 should not distinguish 

between original and revalidated CCs. 

For example, if in the first quarter of 

fiscal year 2001, an agency issued 70 

original and 30 revalidated CCs, that 

agency issued 100 CCs. 

Note also that this form no longer 

reports conditional certification 

invalidations. 

h.) ETA Form 9058 - Report # 2. PART I of 

this report has been redesigned to 

clarify and simplify data reported on 

certifications and to indicate 

SWA/DLA/SESA workload during each 

reporting quarter. Part II continues 

to collect data on selected 

characteristics of individuals with tax 

credit certifications. 

VIII-14

Background. The purpose of ETA Form 

9058 (Rev. June 2001) is to provide 

SWAs/DLAs with a standardized reporting 

format that accurately reflects the 

Work Opportunity Tax Credit (WOTC) and 

Welfare-to-Work Tax Credit (WtWTC) 

program activity levels and outcomes. 

It is important for SWAs/DLAs to 

maintain programmatic reporting 

procedures that account for each tax 

request (IRS Form 8850) received and 

its subsequent outcome (issuance of a 

tax certification or of a Denial 

notification). A properly completed 

ETA Form 9058 (Rev. June 2001) 

accurately reflects program use at the 

employer level, program outcome 

activity at the SWA/DLA level, and the 

level of any programmatic backlog that 

may exist. To ensure that the 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

WOTC/WtWTC program can be accurately 

evaluated at the national level, it is 

critical that all SWAs/DLAs report in a 

standardized manner. 

The revisions made to ETA Form 9058 

(Rev. June 2001), build on the 

framework established by the existing 

ETA Form 9058 (Rev. March 1998). The 

form itself remains largely the same. 

However, technical changes have been 

made to Part I, to ensure consistent 

and accurate reporting of all 

WOTC/WtWTC activities during the 

reporting quarter. Part II reflects 

adjustments, which are necessary to 

ensure conformity with changes in 

federal minimum wage requirements. 

SWAs/DLAs should be aware that 

transition to the revised June 2001, 

ETA Form 9058, may artificially inflate 

the number of “New Requests” reported 

in Part I, Item (C) for the initial 

report period since it will capture 

those requests (IRS 8850s) which may 

have been received by a SWA/DLA prior 

to the reporting quarter, but for some 

reason were not entered into the 

SWA’s/DLA’s WOTC/WtWTC system. 

INSTRUCTIONS FOR COMPLETING THIS FORM. 

State. Enter the name of the state 

submitting ETA Form 9058. 

Quarter Ending Period. Enter ending 

date of the quarter represented by ETA 

Form 9058. 

VIII-15

Part I. “Certification Workload.” 

SWAs/DLAs must identify from Part I, 

Item F on the previous reporting 

quarter’s ETA Form 9058 (Rev. 03/98), 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

the number of requests (IRS Form 8850s) 

determined to be Incomplete or Needing 

Action, as defined below: 

(A) Number of Requests Incomplete. 

Enter the total number of requests (IRS 

Form 8850s) received by the SWA/DLA 

prior to the beginning of the current 

report period, but for which no 

applicant eligibility determination 

action (excluding the 48-hour review) 

has been taken. This total is to be 

entered into Part I, Item (A) of ETA 

Form 9058 (Rev. June 2001). 

(B) Number of Requests Needing Action 

Enter the total number of requests (IRS 

Form 8850s) received by the SWA/DLA 

prior to the beginning of the current 

report, but for which no review and or 

action was taken to determine applicant 

eligibility. This total is to be 

entered into Part I, Item (B) of 

recently revised ETA Form 9058. 

(C) New Requests. Enter the total 

number of requests (IRS Form 8850s) 

received by the SWA/DLA during the 

current reporting quarter. Note. Some 

states may have received requests (IRS 

Form 8850s) that were not previously 

recorded and/or reported on any prior 

quarterly report ETA 9058 for various 

reasons. It is important for the 

SWA/DLA to report all requests (IRS 

Form 8850s) received. Therefore, any 

request received outside of the current 

reporting quarter, which has not 

previously been reported, should be 

included with the number of requests 

received during the current reporting 

period. That total should be entered 

as the number of “New Requests”. This 

VIII-16
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

total is to be entered into Part I, 

Item (C) of ETA Form 9058. 

(D) Total Requests to be Processed 

Enter the sum of Items A, B & C. This 

total represents the number of requests 

(IRS Form 8850s) received by the 

SWA/DLA that are available to be 

processed. This total is to be entered 

under Part I, Item (D) of ETA Form 

9058. 

(E) Requests Certified. Enter the 

total number of WOTC certifications 

issued during the current report 

period, plus the number of WtWTC 

certifications issued during the 

current report period that are not the 

product of a dual certification, (WtWTC 

ONLY). 

(F) Requests Denied. Enter the total 

number of requests (IRS Form 8850s) 

denied by the SWA/DLA during the 

current report period. 

Note. A Denial is a request (IRS Form 

8850) determined by the SWA/DLA to be 

ineligible for both tax credits. 

(G) Number of Requests Incomplete. 

Enter the total number of requests (IRS 

Form 8850s) received and reviewed by 

the SWA/DLA, but for which the SWA/DLA 

could neither approve nor deny due to 

such things as, but not limited to, the 

need for additional eligibility 

documentation for which the SWA/DLA has 

made a formal request to the employer, 

authorized tax consultant, or other 

third party entity, ETA Form 9061 not 

submitted, etc. Note. This number 

will also be entered in Part I, Item A, 

VIII-17
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

of the subsequent quarterly report ETA 

Form 9058. 

(H) Number of Requests Needing Action. 

Enter the number of requests (IRS Form 

8850s) received by the SWA/DLA, but for 

which no review and or action was taken 

to determine applicant eligibility. 

Note. This value will also be entered 

in Part I, Item B, of the subsequent 

quarterly report ETA Form 9058. 

Part I, Item H is the sum of Item D, 

minus Item E, minus Item F, minus Item 

G. 

Part I Completion Formula: 

Items (A + B + C) = (D – E – F – G) = H 

Part II. “Characteristics of Certified 

Individuals by Tax Credit.” This part 

is divided into three sections (Section 

I, Section J, and Section K). 

Section I, reflects the number of 

requests (IRS Form 8850s) certified by 

the SWA/DLA during the current report 

period by WOTC/WtWTC target groups. 

Section J, reflects the number of 

requests (IRS Form 8850s) certified by 

the SWA/DLA during the current report 

period by starting hourly wage. 

Section K, reflects the number of 

requests (IRS Form 8850s) certified by 

the SWA/DLA during the current report 

by occupation. 

VIII-18
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Section I

Section I, Column (a) Enter the total 

number of certifications, by target 

group, issued by the SWA/DLA during the 

current report period, which resulted 

from the issuance of a conditional 

certification. 

Section I, Column (b) Enter the total 

number of WOTC certifications 

(including dual certifications) issued 

by the SWA/DLA during the current 

report period, by target group. 

Section I, Column (c) Enter the total 

number of WtWTC (ONLY) certifications 

issued by the SWA/DLA during the 

current report period. 

Section I, Column (d) Enter the total 

number of WOTC certifications issued by 

the SWA/DLA during the current report 

period, by target group, which are the 

product of a dual certification. 

Section I, Line #10 Enter the sums of 

columns (a), (b), (c) & (d). Note. The 

total of Section I, Line #10, columns 

(b) & (c) should equal the total 

entered in Part I, Item E, Requests 

Certified. 

Section I, Line #11 Enter the 

cumulative federal program year-to-date 

totals of columns (a), (b), (c) & (d). 

Note. The first quarterly report of 

the federal program year (October 

01/December 31), the totals of Section 

I, Line #10 and Line #11 should be the 

same. 

VIII-19
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

Section J

Section J, Column (a) Enter the total 

number of WOTC certifications issued by 

the SWA/DLA during the current report 

period, by starting hourly wage. Note. 

The total for Section J, Column (a), 

Line #18 is the sum of the column and 

must equal the total for Section I, 

Column (b), Line #10. 

Section J, Column (b) Enter the total 

number of WtWTC certifications 

(including duals) issued by the SWA/DLA 

during the current report period, by 

starting hourly wage. Note. The total 

for Section J, Column (b), Line #18 is 

the sum of the column and must equal 

the totals for Section I, Column (c) & 

(d), Line #10. 

Convert as follow: 

Unit of Time Calculated Hourly Wage

Day Amount divided by 8 

Week Amount divided by 40 

Month Amount divided by 172 

Section K

Section K, Column (a) Enter the total 

number of WOTC certifications issued by 

the SWA/DLA during the current report 

period, by occupation. Note. The 

total for Section K, Column (a), Line 

#28 is the sum of the column and must 

equal the total for Section I, Column 

(b), Line #10. 

VIII-20

Section K, Column (b) Enter the total 

number of WtWTC certifications 

(including duals) issued by the SWA/DLA 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

during the current report period, by 

occupation. Note. The total for 

Section K, Column (b), Line #28 is the 

sum of the column and must equal the 

totals for Section I, Column (c) & (d), 

Line #10. 

The occupational data reported in boxes 

19-26 are derived from the job titles 

reported on ETA Forms 9061 or 9062. To 

prepare this report, SWAs/DLAs may use, 

either, the job titles for certified 

individuals assigned the one-digit DOL 

Dictionary of Occupational Titles (DOT) 

or the new O*NET, Families of 

Occupations (See Addendum, Report 2, 

ETA Form 9058, “New O*NET Families of 

Occupations”). Either system can be 

reported through December 31, 2003. 

The following labels are the DOT codes: 

DICTIONARY OF OCCUPATIONAL TITLES

LABEL CODE

 Professional, Technical, Managerial 0/1 

 Clerical and sales 2 

 Service 3

 Farm, Forestry, Fishery 4 

 Processing 5

 Machine Trades 6 

 Bench Work 7 

 Structural 8

 Miscellaneous 9

The entry for each line will be a count of the 

certifications with the corresponding category.

VIII-21

All SWAs/DLAs should transition to the 

O*NET classifications as soon as 

possible to keep pace with the rest of 

the workforce development system. Note. 

Effective the date of any future tax 

credits’ reauthorizing legislation 

i.e., after December 31, 2003, only the 

O*NET families of occupations and their 

two-digit corresponding codes (as 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

illustrated in the following table) 

should be reported. The Addendum to ETA

O*NET SOC JOB FAMILIES 

Name Code Name Code

Management Occupations 11 Food Preparation & Serving 

Related 35 

Business & Financial Operations 13 Bldg. & Grounds Cleaning & 

Maintenance 

37 

Computer& Mathematical 

Occupations 15 Personal Care & Service 39 

Architecture & Engineering 17 Sales & Related Occupations 41 

Life, Physical & Social Sciences 19 Office & Administrative Support 43 

Community & Social Services 21 Farming, Fishing, & Forestry 45 

Legal Occupations 23 Construction & Extraction 47 

Education, Training, & Library 25 Installation, Maintenance & 

Repair 49 

Arts, Design, Entertainment, 

Sports and Media Occupations 27 Production Occupations 51

Healthcare Practitioner & 

Technical 29 Transportation & Material 

Moving 

53 

Healthcare Support Occupations 31 Military Specific Occupations 55

Protective Service Occupations 33 

Form 9058, Report No. 2, should be used 

to report the new O*NET two-digit 

codes. (See Appendix III for this 

form). 

Name and Title of Responsible Official

Enter the name and title of the 

authorized signatory official. 

Signature Enter the signature of the 

authorized signatory official. 

Date Enter the date of the authorized 

signatory official’s signature. 

i.) ETA Form 9059-Report #3. After all 

Certifications selected for the 

audit/verification sample are reviewed, 

the results of the review must be 

reported on ETA Form 9059. 

VIII-22

ETA Form 9059 was designed to report 

the results of the quarterly audit of a 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

randomly chosen sample (See Table - 

Sample Sizes, p. VII-23 in the 

Handbook) of all the certifications 

issued for that quarter. Pursuant to 

P.L. 105-34, as of October 1, 1997, the 

universe of certifications to be 

audited includes all Welfare-to-Work 

and dual (WOTC/WtWTC) certifications as 

well as all individual WOTC 

certifications issued for the reporting 

quarter. 

(1.) Line 1 - Universe Size. Enter the 

total number of certifications 

issued during the reporting 

period. This number should be the 

same as the total number of 

certifications reported in Part 

I., Certification Actions (System 

Outputs), Column D of ETA Form 

9058 (Report No. 2) for the same 

quarter. 

(2.) Line 2 - Sample Size. Enter the 

total number of certifications in 

the audit sample for which 

verification data was acquired for 

the audits. This number must equal 

or exceed the appropriate number 

shown in the table (p. VII-76) on 

sample size in the Handbook. 

(3.) Line 3 - Number Invalid. Enter the 

number of certifications in the 

sample that, after verification, 

were determined to be invalid. 

(4.) Line 4 - Percent Invalid. 

Calculate and enter the percentage 

of the sample 

VIII-23
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

(5.) determined to be invalid using the 

following formula: 

Number of Invalidations 

 X 100 

 Sample Size

Note: If this percentage is less 

than 5 percent do not complete 

lines 5 and 6. If the percentage 

of Line 4 is 5 percent or more, a 

second sample equal in size to the 

first must be drawn and verified 

in the same manner. The Number 

Invalid and Percent Invalid from 

the second sample must be entered 

in Lines 5 and 6. If the Percent 

Invalid in the second sample is 5 

percent or more, corrective action 

must be initiated according to 

instructions in Chapter VII of the 

Handbook. 

(6.) Lines 7-12 must be completed to 

perform a separate quarterly 

verification for economic 

determinations. (Ex-Felon only) 

(7.) Line 7 - Universe Size. Enter the 

total number of certifications 

issued for the Ex-Felon target 

group during the reporting period. 

This number should be the same as 

the total number of certifications 

reported in Part II., Sec. (1), 

Line 3 of ETA Form 9058 (Report 

No. 2) for the same quarter. 

VIII-24

(8.) Line 8 - Sample Size. Enter the 

total number of certifications in 

the audit sample for which 

verification data was acquired for 

the audits. This number must equal 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

or exceed the appropriate number 

shown in the table (p. VII-63) on 

sample size in the Handbook. 

(9.) Line 9 - Number Invalid. Enter the 

number of certifications in the 

sample, which after verification, 

were determined to be invalid. 

(10.) Line 10 - Percent Invalid. 

Calculate and enter the percentage 

of the sample determined to be 

invalid using the following 

formula noted above. If this 

percentage is less than 5 percent, 

do not complete lines 11 and 12. 

If the percentage of Line 10 is 5 

percent or more, a second sample, 

equal in size to the first must be 

drawn and verified in the same 

manner. 

Note: If the Percent Invalid in 

the second sample is 5 percent or 

more, corrective action must be 

initiated according to 

instructions in Chapter V of the 

Handbook. 

(11.) Lines 11 & 12 - Percent Invalid & 

Number Invalid. Enter 

corresponding number from the 

second sample. 

(12.) Line 13 - Name and Title of 

Responsible Official; Signature 

and Date Signed. Print or type 

complete name of official 

reporting the verification 

results; Signature, sign your 

name, legibly and enter the date 

(month, day, year) in which report 

was completed and signed. 

VIII-25
WOTC - P.L. 107-147 ETA HANDBOOK 408 

(R-6/02) 

K. Paperwork Management

1. Forms. 

The following WOTC Forms must be used 

without modification: 

 IRS Form 8850, “The Work Opportunity 

Tax Credit and Welfare-to-Work Tax 

Credit Pre-Screening Notice and 

Certification Request.” 

 ETA Form 9061, “The Individual 

Characteristics, Work Opportunity and 

Welfare-to-Work Tax Credits.” 

Note. See Chapter VII, Section A, item 

1 for exceptions related to use of this 

form. 

 ETA Form 9062, “Conditional 

Certification, Work Opportunity and 

Welfare-to-Work Tax Credits.” 

 ETA Form 9057, “Conditional 

Certifications by Target Group and 

Participating Agency, Work Opportunity 

and Welfare-to-Work Tax Credits - 

Report #1 (per TCRS User’s Guide).” 

 ETA Form 9058, “Certification Workload 

and Characteristics of Certified 

Individuals, Work Opportunity and 

Welfare-to-Work Tax Credits - Report 

#2.” (per TCRS User’s Guide) and, 

 ETA Form 9059, “Verification Results, 

Work Opportunity and Welfare-to-Work 

Tax Credits - Report #3 (per TCRS 

User’s Guide).” 

VIII-26
WOTC - P.L. 107-147 ETA HANDBOOK 408 

States have the option of using or modifying 

the following forms: 

 ETA Form 9063, Employer Certification, 

Work Opportunity and Welfare-to-Work 

Tax Credits; and, 

 ETA Form 9065, Agency Declaration of 

Verification Results, Work Opportunity 

and Welfare-to-Work Tax Credits. 

The appendices of this handbook provide a 

suggested format designed to simplify the 

Conditional Certification and Certification 

processes. States may use the suggested 

form layout and design or may use one of 

their own, provided that the chosen form 

includes ALL the required information and 

satisfies the requirements of documentation 

as required. 

2. Reporting. 

The reporting and data collection 

requirements in this Third Edition of the 

WOTC and WtWTCs' Handbook have been approved 

by the Office of Management and Budget (OMB) 

according to the Paperwork Reduction Act of 

1995. The OMB approval number (OMB No. 1205-

0371) is effective through December 31, 

2004. 

VIII-27 (R-6/02) 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Appendix - i (R-6/02) 

APPENDIX I – Current Legislation

1. Job Creation and Worker Assistance Act of 2002 (P.L. 107-

147), Title VI., Secs. 604, “Work Opportunity Tax Credit,” 

605, “Welfare-to-Work Tax Credit,” and 1400L, “New York 

Business Employee.” 

2. Community Renewal Tax Relief Act of 2000, (P.L. 106-554), 

December 31, 2001. 

3. Tax and Trade Relief Extension Act of 1998, part of the 

Omnibus Consolidated and Emergency Supplemental 

Appropriations Act of 1999, P.L. 105-277 , Sec.1002, “Work 

Opportunity Tax Credit” and Sec. 1003 Welfare-to-Work 

Tax Credit.” 

4. Conference Report to H.R. 4328, Making Omnibus 

Consolidated and Emergency Appropriations for Fiscal Year 

1999. 

5. Taxpayer Relief Act of 1997, P.L. 105-34, Title VI. 

Extensions, Sec. 603. "Work Opportunity Tax Credit" and 

Title VIII, Sec. 801. "Incentives for Employing Long-Term 

Family Assistance Recipients." 

6. Small Business Job Protection Act of 1996, P.L. 104-188, 

Subtitle B -- Extension of Certain Expiring Provisions, Sec. 

1201. "Work Opportunity Tax Credit." 

7. Internal Revenue Code of 1986, Secs. 39(a), 51, 51A, 52 & 

1400L, Subsection (a) only, as amended, 26 USC ' 51 and 

51A. 

8. United States Code Service, (Lawyers’ Edition) Cumulative 

Supplement, 7 USCS, Agriculture, Secs. 1551-2200, May 

1997. 

APPENDIX II - WOTC/WtWTC Administrative/Processing Forms

1. ETA Form 9061 - Individual Characteristics Form (ICF), Work 

Opportunity and Welfare-to-Work Tax Credits.

2. ETA Form 9062 - Conditional Certification (CC), Work 

Opportunity and Welfare-to-Work Tax Credits. 

3. ETA Form 9063 - Employer Certification (EC), Work 

Opportunity and Welfare-to-Work Tax Credits. 

4. ETA Form 9065 - Agency Declaration of Verification Results 

(ADVR), Work Opportunity and Welfare-to-Work Tax 

Credits. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Appendix - ii (R-6/02) 

APPENDIX III - WOTC/WtWTC Report Forms

1. ETA Form 9057 - Report #1: “Conditional Certifications 

Issued,” Work Opportunity & Welfare-to-Work Tax Credits; 

2. ETA Form 9058 – Report #2: “Certification Workload and 

Characteristics of Certified Individuals,” Work Opportunity 

and Welfare-to-Work Tax Credits; 

3. Revised Instructions for Quarterly Report No. 2, ETA Form 

9058; 

4. Addendum to ETA Form 9058, Report No. 2: “Certification 

Workload and Characteristics of Certified Individuals,” 

Work Opportunity and Welfare-to-Work Tax Credits, “New 

O’NET Job Families.” 

5. ETA Form 9059 - Report #3: “Agency Declaration of 

Verification Results,” Work Opportunity and Welfare-toWork Tax Credits. 

APPENDIX IV - IRS Forms/Publications

1. IRS Form 8850, “A Pre-Screening Notice and Certification 

Request for the Work Opportunity and Welfare-to-Work 

Credits” and Instructions.

2. IRS Form 2848 and Instructions, "Power of Attorney and 

Declaration of Representative." 

3. Announcement 2002-44, “Electronic Submission of Form 

8850,” [2002-17 I.R.B. 809], April 29, 2002. 

4. Internal Revenue Service, “Revenue Procedure,” 2002-3; 

2002-1, IRB 117, January 7, 2002. 

5. Internal Revenue Service, “Revenue Procedure,” Section 

15, Item 9: “Tax Credit Issues,” page 34. 

6. “21-Day Requirement for Submitting Form 8850 and 

Disaster Relief” IRS Memorandum, November 13, 2001. 

7. IRS News Release, No. IR-2001-105, “IRS Expands Tax Relief 

got Those Affected by the Sept. 11th Attack,” November 2, 

2001. 

8. IRS Bulletin No. 2001-40, October 1, 2001. 

9. Notice 2001-61: 2001-47, Part III, IRB, “Disaster Relief for 

Taxpayers Affected by the September 11, 2001 Terrorist 

Attack,” October 1, 2001. 

10. Notice 2001-63: “Additional Relief for Taxpayers on 

Account of the September 11, 2001, Terrorist Attack,” 

October 1, 2001. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Appendix - iii (R-6/02) 

11. Publication 954, “Tax Incentives for Empowerment Zones 

and other Distressed Communities,” June 2001. 

12. Notice 99-51, “Work Opportunity and Welfare-to-Work Tax 

Credits,” [1999-40 I.R.B. 447], October 4, 1999. 

13. IRS Bulletin - No. 1996-46, "Date of Birth, IRS Form 8850," 

November 12, 1996, Announcement 96-116, page 12. 

APPENDIX V - Miscellaneous

1. Lower Living Standard Income Levels (LLSILs), 2003. 

2. Memoranda to SWA/DLA Coordinators with Instructions for 

use of the Spanish Versions of IRS Form 8850 and ETA Form 

9061. 

3. Spanish Version of IRS Form 8850. 

4. Spanish Version of ETA Form 9061. 

5. Sample Letter To Be Sent to Employer (Notice of 

Invalidation (NOI) of Certification Work Opportunity and/or 

Welfare-to-Work Tax Credit(s). 

6. Policy Resolution/Appeals Submission Suggested Format. 

APPENDIX VI - Tools/Resources

1. TA and Compliance Review Guide, OMB No. 1205-1301. 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Sample - i (R-6/02) 

(Sample Letter To Be Sent To Employer - Return Receipt Requested) 

NOTICE OF INVALIDATION OF CERTIFICATION 

WORK OPPORTUNITY AND/OR WELFARE-TO-WORK TAX CREDITS

Re: Employer’s Name 

IRS Identification No.: 

Address: 

Dear (Employer's Name) : 

The individual identified above was certified as meeting the eligibility criteria 

of the Work Opportunity Tax Credit Program, and/or the Welfare-to-Work Tax 

Credit, Section 51 and 51A respectively of the Internal Revenue Code 1986, as 

amended) on (date of certification). Subsequent review, however, reveals that 

this employee, (name of employee) is ineligible for purposes of the WOTC 

or the WTWTC tax credit. Accordingly, you are, hereby, notified that the 

Certification for the above named employee has been invalidated, effective 

upon receipt of this notice. A copy of this notice has also been forwarded to 

the Internal Revenue Service in your state. for their records and action. 

(Authorized SWA Official's Signature) 

cc: Internal Revenue Service 

Participating Agency 

SWA 

File 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Sample - ii (R-6/02) 

(Policy Resolution/Appeals Submission - Suggested Format) 

WORK OPPORTUNITY AND WELFARE-TO-WORK TAX CREDITS' INQUIRY

REGION: STATE: DATE: 

CONTACT PERSON:

TELEPHONE #: 

REFERENCES: 

(You may cite as many as are necessary. For example: Handbook, Legislation, 

IRS Rules/Notices/Publications, etc.) 

ISSUE: 

RESOLUTION/COMMENTS: 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Index - 1 (R-6/02) 

I N D E X 

(P.L. 107-147),, I-2 

9058, VIII-10, VIII-14, VIII-15, VIII-16, VIII-17, VIII-18, VIII-23, VIII-24, VIII-26, ii 

90-day (summer) period, II-10 

able-bodied adult without dependents, II-12 

Accounting Costs, VIII-2 

Agency Declaration of Verification Results (ETA 9065), II-16 

Agricultural and Railroad Employees, III-3 

appeal, I-3, VII-29, VIII-4, VIII-5 

APPENDIX I, i 

APPENDIX II, i 

APPENDIX III, ii 

APPENDIX IV, ii 

APPENDIX V, iii 

Audit, II-16, VII-14, VII-18, VII-19, VII-22, VII-25 

Breaks in Employment, III-13 

Carryback and Carryover of Unused Credits, III-9 

Certificate of Mailing" (PS Form 3817), VII-27, VIII-8 

Certification (ETA 9063), II-16 

Certification Process, V-3, VII-11 

Certifications and Denials, VII-14 

Completing the Forms, VIII-11 

Conditional Certification (ETA 9062), II-16 

Cooperative Agreements at State and Local Levels, VIII-1 

Coordination of the WOTC and the Welfare-to-Work Tax Credit, V-4 

Corrective Action Plan, VII-26 

Deferred Adjudication, II-17 

Department of Treasury, VI-1, VI-3 

Departments of Treasury and Labor, I-3 

Designated Local Agencies (DLAs), I-3 

Designated Local Agency Role, VI-5 

Dictionary of Occupational Titles, VIII-21 

Dishonorably Discharged, II-3 

Documentation of Eligibility, VII-17 

Documentation That Can Be Used for Employers’ Appeals, VIII-6 

dual certifications, VII-7, VIII-9, VIII-13, VIII-19 

economically disadvantaged family., II-5 

Eligibility of Resident Aliens and Non-Citizens, III-2 

Eligibles, VIII-3 

Employer process, VII-15 

Employer Representative, II-17, VII-36 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Index - 2 (R-6/02) 

Employer Representatives, VII-36 

Employment and Training Administration (ETA), I-3, VI-1, VII-2 

Employment Start Date, II-17 

empowerment zone (EZ), II-7 

Empowerment Zone/Enterprise/Renewal Community, II-17 

enterprise community (EC), II-7 

ETA Form 9057, VII-12, VIII-10, VIII-12, VIII-26, ii 

ETA Form 9059, VII-26, VIII-10, VIII-11, VIII-22, VIII-26, ii 

ETA Form 9062, VII-5, VII-14, VIII-12, VIII-26, i 

ETA Form 9063, VI-8, VII-7, VIII-27, i 

ETA Form 9065, II-16, VII-4, VII-18, VIII-27, i 

ETA Forms 9057, VIII-10 

ETA Regional Offices, VI-4 

Evidence of Mailing, VII-27 

Examples of Documentary Evidence, VII-33 

Excludable” Income, II-22 

Extended Active Duty, II-18 

EZ, EC or RC, II-7 

EZ/EC/RC High-Risk Youth (D), I-2 

EZ/EC/RC Qualified Summer Youth Employee (F), I-2 

family, II-2, II-3, II-5, II-12, II-18, II-20, II-21, V-2, V-3, VI-6, VII-8, VII-34 

Family Income, II-21 

Family Size, II-21 

Family/Member of a Family, II-18 

Farm Labor Contractors, III-4 

Federal Level, VI-1 

Food Stamp Act, II-3, II-12, II-13, VII-5, i 

Food Stamp Program, II-3, II-12, II-18, VI-9 

Frequency, VII-19 

Funding, VIII-2 

HHH’s Method for Counting Months, II-2 

High-Risk Youth, I-2, II-7 

Hiring Date, II-19 

Includable” Income, II-21 

Individual Characteristics Form, II-19, i 

individualized written plan of employment, II-8 

individualized written plan of employment (IWPE), II-8 

Ineligibles, VIII-4 

Internal Revenue Service (IRS), I-3, VI-1 

IRS Form 2848, VII-36, VII-37, ii 

IRS Form 8850, II-10, II-16, II-19, II-20, V-4, VI-6, VII-1, VII-2, VII-4, VII-13, VII14, VII-15, VII-16, VII-29, VIII-8, VIII-14, VIII-17, VIII-26, ii, iii 

Issuance of Denials, VII-17 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Index - 3 (R-6/02) 

IV-A Successor Program, II-18 

Job Corps, VI-9, VII-11 

Job Creation and Worker Assistance Act of 2002, vi, I-1, I-2, i 

Legislative Authority WOTC/WtW., I-2 

Legislative Intent, I-3 

Liability, III-9, VIII-2 

Limitation on Unused Credit in a Carryback or Carryover Year, III-9 

Local Participating Agencies, VI-8 

Long-Term Family Assistance Recipient, V-2, V-3, VII-7 

Lower Living Standard Income Levels, II-5, VIII-7, iii 

Member of a Target Group, II-19 

member of an economically disadvantaged family, II-5 

Minimum Employment Period, II-19, V-3 

Miscellaneous State Addendum, VII-8 

Nepotism, III-11 

New York Liberty Zone, I-1, I-2 

New York Liberty Zone Business Employee, I-2 

New York Liberty Zone Business Employee (NYLZBE), I-1 

nine (9) target group designations, I-2 

Non-Certified Individual, II-19 

Non-Eligibility of H-2A Workers, III-4 

Non-qualifying Rehires, III-12 

Note. A IV-A Recipient, II-2 

O*NET, VIII-21, VIII-22 

On-the-Job Training Payments, III-5 

Other State Agencies, VI-8 

Participating Local Agency, II-19, VII-11 

Percent Invalid, VIII-23, VIII-24, VIII-25 

Policy Clarification/Appeals Resolution, VIII-5 

postmarks, VII-32 

Power of Attorney, II-17, VII-36, ii 

Pre-Screening Notice & Certification Request (PSN/CR), II-20 

principal place of abode, II-7, II-10 

Principal Place of Abode, II-20 

Qualified Ex-Felon, II-5, II-20 

Qualified Ex-felon (C), I-2 

qualified first-year wages, II-2, II-4, II-6, II-7, II-9, II-13, II-14, III-1 

Qualified Food Stamp Recipient, I-2, II-12 

Qualified Food Stamp Recipient (G), I-2 

Qualified IV-A Recipient, I-2, II-2 

Qualified IV-A Recipient (A), I-2 

Qualified Summer Youth Employee, I-2, II-10 

Qualified Summer Youth Employees, VII-26 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Index - 4 (R-6/02) 

Qualified Supplemental Security Income (SSI), II-14 

Qualified Supplemental Security Income Recipient (H), I-2 

Qualified Veteran, I-2, II-3, II-24 

Qualified Veteran (B), I-2 

qualified wages, II-7, II-10, II-11, II-16, III-1, III-2, III-5, III-6, III-7, III-8, VIII-2 

Quality Assurance, VII-14 

Quality Review, II-24 

Quality Reviews, II-25, VII-19 

Railroad Employees, III-4 

Record Retention by the Participating Agency, VIII-4 

Records’ Retention, VIII-3 

Rehabilitation Act of 1973, II-8 

renewal community (RC), II-7, II-10 

Reporting Requirements, VIII-9 

Retention Period, I-2, II-24 

Sample Size, VII-23, VIII-23, VIII-24 

SESA, vi, I-3, II-12, II-17, V-4, VI-5, VII-30, VII-33, VIII-8, VIII-14 

Social Security Disability Income (SSDI) Recipient, II-14 

Special Rule for Continued Employment, II-10 

Special Rules - Tier 2, III-7 

Special Rules for Timeliness, VII-35 

State Level, VI-5 

State Workforce Agencies (SWAs), vi, I-3, VIII-14 

State Workforce Agency/DLA Process, VII-16 

Submitting the Reports, VIII-10 

Successor Employers, III-13 

Supporting Documentation, VII-8 

SWA, vi, I-3, II-19, II-21, VI-8, VII-2, VII-4, VII-5, VII-6, VII-7, VII-9, VII-10, VII-11, 

VII-14, VII-15, VII-16, VII-17, VII-19, VII-20, VII-21, VII-22, VII-24, VII-27, 

VII-28, VII-29, VII-30, VII-31, VII-33, VII-34, VII-35, VII-36, VII-37, VIII-1, 

VIII-2, VIII-4, VIII-5, VIII-11, VIII-14, VIII-15, VIII-16, VIII-17, VIII-18, VIII19, VIII-20, iv 

TANF, II-2, II-18, V-2, VII-33, VII-34, VIII-6 

tax credit, I-1, I-2, II-2, II-4, II-6, II-7, II-9, II-11, II-13, II-14, II-16, II-24, III-3, 

III-4, III-5, III-9, III-11, III-12, III-13, IV-1, VI-1, VI-4, VI-5, VI-8, VII-3, VII7, VII-34, VIII-2, VIII-9, VIII-12, VIII-14, iv 

Tax Liability Limitation, III-9 

Taxpayer Relief Act of 1997, I-1, III-9, IV-1, i 

Tier 1, I-2, II-24, III-7 

U.S. Postmark, VII-27 

Universe Size, VII-23, VIII-23, VIII-24 

USDOL ETA Form 9061, VII-2 

Validity Period of Conditional Certifications, VII-34 
WOTC - P.L. 107-147 ETA HANDBOOK 408 

Verification, II-16, II-25, VII-4, VII-17, VII-18, VII-24, VII-26, VII-33, VIII-10, VIII26, VIII-27, i, ii 

vocational rehabilitation program, II-8 

Vocational Rehabilitation Referral, I-2, II-8 

Vocational Rehabilitation Referral (E), I-2 

Wages, III-1, III-3, III-4, III-6, V-3 

Work Release, II-25 

Work Supplementation Payments, III-6 

WOTC, vi, I-1, I-2, I-3, I-4, II-1, II-2, II-5, II-16, II-17, II-19, II-20, II-24, III-1, III3, III-4, III-5, III-7, III-8, III-9, III-11, III-12, III-13, V-3, V-4, VI-1, VI-2, VI3, VI-4, VI-5, VI-6, VI-7, VI-8, VII-1, VII-2, VII-5, VII-6, VII-7, VII-8, VII-10, 

VII-11, VII-14, VII-15, VII-16, VII-18, VII-22, VII-25, VII-26, VII-27, VII-29, 

VII-36, VII-37, VIII-1, VIII-2, VIII-3, VIII-4, VIII-5, VIII-9, VIII-10, VIII-12, 

VIII-13, VIII-14, VIII-15, VIII-17, VIII-18, VIII-19, VIII-20, VIII-23, VIII-26, 

VIII-27, i, ii, iv 

WtWTC, vi, I-1, I-2, I-4, II-19, VII-1, VII-11, VII-15, VII-18, VII-22, VII-27, VII-36, 

VIII-2, VIII-4, VIII-10, VIII-15, VIII-17, VIII-18, VIII-19, VIII-20 

Index - 5 (R-6/02)