1. (a)

   1. (1) On August 19, 1996, the President of the United States signed into law the Work Opportunity Tax Credit (WOTC) program.
   2. (2) The Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, eliminated the Welfare-to-Work Tax Credit (WtWTC) by merging it into the WOTC and making the long-term Temporary Assistance for Needy Families participant another WOTC target group.
   3. (3) On May 25, 2007, the President of the United States signed into law the Small Business and Work Opportunity Tax Act of 2007, Pub. L. No. 110-28, § 5031.
   4. (4) The legislation extended the WOTC program and introduced new provisions to expand and streamline the WOTC program.
   5. (5) The reauthorization applies to new hires that began work for an employer after December 31, 2007, and before September 1, 2011.

2. (b)

   1. (1) WOTC is a federal tax credit that encourages employers to hire targeted groups of jobs seekers by reducing the employer’s federal income tax liability.
   2. (2) The WOTC is forty percent (40%) of the first year qualified wages (up to six thousand dollars ($6,000)) paid to eligible workers who are employed four hundred (400) or more hours and twenty-five percent (25%) for those employed at least one hundred twenty (120) hours, but less than four hundred (400).

3. (c)

   1. (1) The Welfare-to-Work Tax Credit is a federal tax credit that encourages employers to hire long-term family assistance participants.
   2. (2) The WtWTC is thirty-five percent (35%) of the first year qualified wages (up to ten thousand dollars ($10,000)) paid to eligible workers and fifty percent (50%) for the second year (up to ten thousand dollars ($10,000)).
4. (d) The current Work Opportunity Tax Credit program will run through August 31, 2011.

5. (e) Individuals who qualify for the WOTC benefits are:

   1. (1) A member of a family that is receiving or has received TEA for any nine-month period during the eighteen (18) months before the date of hire;

   2. (2) A member:

      1. (A) Of a family that received TEA/Aid to Families with Dependent Children for at least eighteen (18) consecutive months before the date of the hire;
      2. (B) Whose family’s eligibility expired under federal or state law after August 5, 1997; or
      3. (C) Whose family received Temporary Assistance for Needy Families benefits for at least eighteen (18) months after August 5, 1997;
   3. (3) An individual who received Supplemental Security Income benefits for any month during the sixty-day period before the date of hire;

   4. (4) A veteran who is:

      1. (A) In a family receiving assistance under the Supplemental Nutrition Assistance Program for at least a three-month period during the fifteen-month period ending on the hiring date;
      2. (B) Entitled to compensation for a service-connected disability and is hired not more than one (1) year after being discharged or released from active duty in the United States Armed Forces; or
      3. (C) Entitled to compensation for a service-connected disability and was unemployed for a period or periods totaling at least six (6) months, whether or not consecutive, in the one-year period ending on the hiring date;
   5. (5) An ex-felon whose hiring date is within one (1) year after the conviction or release date;
   6. (6) Any eighteen-to-thirty-nine-year-old, on hiring date, who resides within an empowerment zone, or rural renewal community;

   7. (7) Any vocational rehabilitation referrals, including:

      1. (A) An individual having a mental or physical disability constituting a substantial handicap to employment who was referred after completing or receiving rehabilitation services through a state plan, ticket to work program, or veterans program of vocational rehabilitation services; and
      2. (B) Referrals receiving services through a state plan qualify for up to two (2) years after receipt of last services;

   8. (8) A summer youth, which is an individual who:

      1. (A) Is sixteen (16) or seventeen (17) years of age on hiring date;
      2. (B) Resides within an empowerment zone; and
      3. (C) Has not been an employee of the employer during any period prior to the ninety (90) days between May 1 and September 15; and

   9. (9) An individual age eighteen (18) through forty (40) who is:

      1. (A) A member of a family who received food stamp benefits for a six-month period before the date of hire; or
      2. (B) No longer eligible for food stamps but received food stamps for at least three (3) months of the five-month period before the date of hire.

6. (f) Individuals who qualify for the Welfare-to-Work Tax Credit are:

   1. (1) Members of a family that received TEA for at least eighteen (18) consecutive months before the date of hire or whose family’s eligibility expired under federal or state law after August 5, 1997; and
   2. (2) Members whose family received Temporary Assistance for Needy Families benefits for any eighteen-month period and who are hired within two (2) years after the end of the earliest eighteen-month period.

7. (g) Other requirements.

   1. (1)

      1. (A) To qualify, an individual must either have been certified by the designated local agency as being WOTC eligible:

8. (i) Prior to the hire date; or

   1. (ii) On or before the day of the job offer.

      1. (B) A prescreening notice is completed by the employer for such individual.

   2. (2)

      1. (A) In the case of the latter, employers have twenty-one (21) days after the individual begins work to submit to the designated local agency the prescreening form.

      2. (B) Such request must:

         1. (i) Indicate why the employer believes the individual is eligible for the program; and
         2. (ii) Be signed, under penalty of perjury, by the employer and the employee.

   3. (3) Note.

      1. (A) If the individual was previously hired by the employer, the individual is considered a nonqualifying rehire.
      2. (B) Therefore, the employer is not eligible for the Work Opportunity Tax Credit for this rehired employee.

   4. (4) The employer then has six (6) months to:

      1. (A) Gather supporting documents from either the employee or government agency; and
      2. (B) Submit the same to the state job service office.

9. (h) The minimum work requirement is one hundred eighty (180) days (twenty (20) days for qualified summer youth) or four hundred (400) hours (one hundred twenty (120) hours for summer youth) of work.

   1. (i) An agreement with the Department of Human Services gives the Division of County Operations the authority to provide WOTC certification to TEA participants.

10. (j)

    1. (1) Participants may be certified by the Program Eligibility Specialist.

    2. (2) Certification should be done when the participant:

       1. (A) Enters an activity that may lead to employment;
       2. (B) Notifies the Program Eligibility Specialist he or she has a job interview or has been hired but has not started the job; or
       3. (C) Is referred to a job.

11. (k) When discussing WOTC with employers, emphasis should be placed on the time frames for submitting the vouchers to ensure the employer gets the tax credit and that the voucher is returned to the following address listed on the form, not to the TEA program: WOTC Unit, Department of Human Services Post Office Box 2981 Little Rock, AR 72203

    1. (l) See Work Opportunity Tax Credit Employer Guide for clarification and additional information.

Codification Notes: “TEA” means transitional employment assistance.