DOL Finalizes Certification Regulations for New WOTC Category

Certifications for “Disconnected Youth” are beginning to trickle in from the state agencies. It took over 15 months, but the US Department of Labor has issued final regulations and forms for documenting eligibility of the “Disconnected Youth” Category of WOTC that was passed as part of the ARRA “Stimulus” Bill in February 2009.The final regulations and forms became available in late May 2010.

Congress created this new category to offer the core WOTC Credit for hiring 16 to 24 year olds who are “not readily employable by reason of lacking a sufficient number of basic skills.”  The Congressional intent was to cover high school dropouts and “social graduates” with few skills.  However, the subjective nature of the category description lead to drawn out discussions between the DOL and IRS to establish standards around the category’s definition.  Early on, it was decided to establish requirements:

  • Individuals aged 16-24 on their hire date; AND
  • Individuals who were high school drop-outs or had a diploma or GED that was granted more than six months ago, AND
  • Had individual earnings no greater than the equivalent of the minimum wage for 30 hours a week for the 6 month period prior to hire.

Once the category standards were established, documentation requirements beyond proof of age had to be determined.

For the earnings test, the IRS agreed to use Unemployment Insurance records available to the Certifying Agencies to look up individual earnings.  But because those records are reported quarterly, which statistically would only be symmetrical for one-third of hires, the kinder and gentler IRS eventually agreed to have the states only look at the UI records for one full calendar quarter preceding the individual’s hire date.

Because of the cumbersomeness of getting documentation from High Schools about a document they may or may not have, the IRS and DOL also agreed to use an “Attestation” form as proof of educational status.  Initially, they decided to let the individual certifying agencies design the attestation forms.  This resulted in a potential nightmare for employers who would have had to file different forms by state.  It also meant that qualified individuals would be attesting to different statements, depending on the state.

As a result, the procedures were once again revised and a uniform, national “Youth Attestation” form was crafted, and the rules for phasing it in were finalized.  And, because the law took effect in February of 2010 with a firm 28 day 8850 requirement and no official direction on other documentation required of the individual or employer, many employers and consultants devised their own attestation forms, which were in use until the national form became official.  Instructions on accepting Employer or Consultant Attestation forms meeting certain standards for a designated time frame also had to be put out to the Certifying Agencies.

With everything finally in place, the State Certifying Agencies are now able to issue Certifications and address their backlogs.  If you are a NTCI WOTC client and would like more information about this category or have other WOTC questions, please contact Janice San Filippo at (732) 657-5030 or email: Janice.sanfilippo@ntlci.com.  If you are a Thomas and Thorngren WOTC client, contact Alexis Plaener at (615) 242-8246 or email: aplaener@tntnash.com

If you are not yet a client but want to learn more about WOTC, contact us at (615) 767-0970.