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UNIVERSITlpF ILLINOIS HAMPAIGN
NOV 2 41997
me New Work Opportunity and Welfare-to-Work Tax Credits: A
Summary of Major Changes in the Law
U.S. Department of Labor	v ...
October 1997
Profile
Name
The Work Opportunity and Welfare-to-Work Tax Credits
Features
P.L. 105-34 has reauthorized and expanded the WOTC and established a Welfare-to-Work Tax Credit to encourage employers to hire 9 groups of job seekers with barriers to employment
The Taxpayer Relief Act of 1997, signed by the President August 5:
Extends the Work Opportunity Tax Credit (WOTC) nine months, to
members of eight WOTC target groups of job seekers who begin work any time after September 30, 1997 (the last day of the former program) and before July 1, 1998,
Establishes a new employer tax credit for a new group of job seekers,“long-term family assistance recipients,” which will also be administered under the WOTC certification procedures established by the Small Business Job Protection Act of 1996 (P.L. 104-188)
Applies the new “Welfare-to-Work Tax Credit” to long-term family assistance recipients who begin work any time after December 31, 1997 and before May 1, 1999,
♦	Defines “long-term family assistance recipient” as a member of a family:
•	That received Aid to Families with Dependent Children (AFDC) or its successor program, Temporary Assistance to Needy Families (TANF), for at least 18 consecutive months before date of hire, or
•	Whose AFDC or TANF eligibility expired under federal or state law after August 5, 1997, or
•	That received AFDC or TANF for a total of at least 18 months beginning after August 5, 1997,
♦	Provides that the Welfare-to-Work Tax Credit is 35% of qualified wages for the first year of employment, if employed at least 180 days or 400 hours, and 50% for the second year
♦	Caps qualified wages at $10,000 per year; i.e., the maximum Welfare-to-Work Tax Credit is $3,500 the first and $5,000 the second year of employment, for a maximum tax savings of $8,500 per new hire
♦	Defines “qualified wages” more generously than the WOTC FUTA definition; e.g., includes tax-exempt amounts received under accident or health plans, educational assistance programs, arid dependent assistance programs
LIBRARY U. 07 L IIRBANA-CHAMPAIENModifies the WOTC in five ways:	3 0112 004810971
♦	Expands the definition of the WOTC AFDC/TANF recipient target group from members of a family receiving AFDC/TANF for nine consecutive months during the 18 months before date of hire to members of a family receiving AFDC/TANF for a total of any nine months during that 18-month period
♦	Changes the definition of the WOTC veteran target group to include only veterans who are members of a family receiving food stamps for at least three consecutive months during the 15 months before date of hire (veterans who are members of
... v. - . families receiving AFDC/TANF may now be eligible under the expanded WOTC , ^FDC/TANF target group)
♦	Establishes an eighth WOTC target group: Supplemental Security Income (SSI) recipients — individuals receiving SSI benefits for any month during the 60 days before date of hire
♦	Establishes a WOTC tax credit equal to 25% of qualified wages for members of all WOTC target groups employed at least 120 but fewer than 400 hours
♦	Increases the WOTC from 35% to 40% of qualified wages for all WOTC target groups employed 400 or more hours; i.e., increases maximum WOTC tax savings from $2,100 to $2,400 per new hire for all groups except 16-17 year-old Empowerment Zone/Enterprise Community (EZ/EC) residents hired as Summer Youth employees
Qualified WOTC wages remain capped at $6,000 in wages paid during the first year of employment, except for EZ/EC Summer Youth, which remain capped at $3,000
For More Information About the Welfare-to-Work and Work Opportunity Tax Credits for Employers
♦	Visit our WOTC website: http://www.doleta.gov/wotc.htm or call 202-219-9092
♦	Call Your State Employment Agency WOTC Coordinator (to get a directory of all State WOTC Coordinators, visit our website or call 202-219-9092)
♦	For information on the tax-related aspects of the WOTC and Welfare-to-Work Tax Credit, call Robert Wheeler at the Internal Revenue Service (IRS) at 202-622-6060
♦	For information about the Department of Labor’s Welfare-to-Work Grant Program, visit its website: http.wtw.doleta.gov or call 202-208-7281
♦	For information about the 105 federally designated EZ/ECs, visit their website: http://www.ezec.gov or call 1-800-998-9999
UNIVERSITY Or ILLINOIS LIBRARY
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