IRS document 2009-28

Part III - Administrative, Procedural, and Miscellaneous
Section 51 - Work Opportunity Tax Credit
Notice 2009-28
PURPOSE
Section 51 of the Internal Revenue Code (the Code) provides for a Work Opportunity
Tax Credit (WOTC) for employers who hire individuals who are members of targeted
groups. Section 1221 of the American Recovery and Reinvestment Tax Act of 2009
(ARRTA), enacted February 17, 2009, Div. B, Tit. I of Pub. L. No. 111-5, amended § 51
to add two new targeted groups for purposes of the WOTC. New § 51(d)(14) provides
that unemployed veterans and disconnected youth who begin work for an employer
during 2009 or 2010 shall be treated as members of a targeted group for purposes of
the WOTC.
This notice provides sets forth the statutory definitions of “unemployed veteran” and
“disconnected youth,” and provides guidance on the definition of “disconnected youth.”
It also provides transition relief for employers who hire unemployed veterans or
disconnected youth after December 31, 2008, and before July 17, 2009.
I. STATUTORY DEFINITION OF UNEMPLOYED VETERAN
For purposes of § 51(d)(14), the term “veteran” means any individual who is
certified by the designated local agency (as defined in § 51(d)(12) as a State
employment security agency established in accordance with the Act of June 6, 1933, as
amended (29 U.S.C. § 49-49n)) as:
(1) having served on active duty (other than active duty for training) in the Armed Forces
of the United States (Armed Forces) for a period of more than 180 days; or
(2) having been discharged or released from active duty in the Armed Forces for a
service-connected disability.
Section 51(d)(14)(B)(i) provides that the term “unemployed veteran” means any veteran
who is certified by the designated local agency as:
(1) having been discharged or released from active duty in the Armed Forces at any
time during the 5-year period ending on the hiring date; and
(2) being in receipt of unemployment compensation under State or Federal law for not
less than four weeks during the one-year period ending on the hiring date.

II. DISCONNECTED YOUTH
A. Statutory Definition
Section 51(d)(14)(B)(ii) provides that the term “disconnected youth” means any
individual who is certified by the designated local agency:
(I) as having attained age 16 but not age 25 on the hiring date;
(II) as not regularly attending any secondary, technical, or post-secondary school during
the 6-month period preceding the hiring date;
(III) as not regularly employed during such 6-month period; and
(IV) as not readily employable by reason of lacking a sufficient number of basic skills.
The Conference Agreement on ARRTA, H.R. Rep. No. 111-16, at 554, states:
For purposes of the disconnected youths, it is intended that a low level of
formal education may satisfy the requirement that an individual is not
readily employable by reason of lacking a sufficient number of skills.
Further, it is intended that the Internal Revenue Service, when providing
general guidance regarding the various new criteria, shall take into
account the administrability of the program by the State agencies.
B. Not regularly attending any secondary, technical or post-secondary school
For purposes of § 51(d)(14)(B)(ii)(II), the term “not regularly attending” means that the
individual states in writing that during the six months preceding his or her hiring date, he
or she has not attended a secondary, technical or postsecondary school for more than
an average of 10 hours per week, not counting periods during which the school is
closed for scheduled vacations.
For purposes of § 51(d)(14)(B)(ii), the term “secondary school” means:
(1) A secondary school as defined in 20 U.S.C. § 7801(38); or
(2) a for-profit secondary school that otherwise meets the definition in 20 U.S.C. §
7801(38).
A General Education Development (GED) program is not a secondary school for
purposes of § 51(d)(14)(B)(ii).
For purposes of § 51(d)(14)(B)(ii) and § 51(d)(14)(B)(ii)(IV), the terms “technical school”
and “post-secondary school” mean institutions of higher education as defined in 20
U.S.C. §§ 1001; 1002(a)(1), (b) and (c); and 1059c(b)(3).

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C. Not regularly employed
For purposes of section 51(d)(14)(B)(ii)(lll), an individual was not regularly employed if,
during each consecutive three-month period within the six months preceding his or her
hiring date, the individual earned less than an amount equal to the gross amount he or
she would have been paid at the minimum wage if he or she worked 30 hours every
week during the three-month period.
For purposes of the preceding sentence, "minimum wage" is the higher of (1) the
federal minimum wage (as defined in 29 U.S.C. section 206(a)(1)) or (2) the generally
applicable State minimum wage (if any).

D. Not readily employable by reason of lacking a sufficient number of basic skills
For purposes of § 51(d)(14)(B)(ii)(IV), an individual is not readily employable by reason
of lacking a sufficient number of basic skills if the individual states in writing that he or
she does not have a certificate of graduation from a secondary school or a GED
Certificate. For purposes of § 51(d)(14)(B)(ii)(IV), an individual also is not readily
employable by reason of lacking a sufficient number of basic skills if the individual
states in writing that he or she has a certificate of graduation from a secondary school
or a GED Certificate that was awarded no less than 6 months preceding his or her hiring
date and has not held a job or been admitted to a technical school or post-secondary
school since receiving the certificate.

EFFECTIVE DATE
New § 51(d)(14) is effective for individuals who begin work for the employer after
December 31, 2008, and before January 1, 2011.
TRANSITION RELIEF
Section 51(d)(13) provides that an individual shall not be treated as a member of a
targeted group unless the employer obtains certification from a designated local agency
on or before the day the individual begins work that the individual is a member of a
targeted group or completes a pre-screening notice (IRS Form 8850) on or before the
day the individual is offered employment and submits such notice to the designated
local agency to request certification not later than 28 days after the individual begins
work. However, under this notice, any employer who hires an unemployed veteran or a
disconnected youth (as defined in § 51(d)(14)) after December 31, 2008, and before
July 17, 2009, will be considered to satisfy the deadline in § 51(d)(13)(A)(ii)(II) if the
employer submits the pre-screening notice to the designated local agency to request
certification not later than August 17, 2009.

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DRAFTING INFORMATION
The principal author of this notice is Robin Ehrenberg of the Office of Division
Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However,
other individuals participated in its development. For further information regarding this
notice contact Ms. Ehrenberg at (202) 622-6080 (not a toll-free call).

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