a-00-58.pdf

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Announcement 2000-58
The Internal Revenue Service announces today a settlement initiative under which
taxpayers may resolve an issue under the Targeted Jobs Tax Credit (the ATJTC@), formerly
section 51 of the Internal Revenue Code of 1986, as in effect prior to January 1, 1995
(Asection 51"). The issue relates to whether a taxpayer may claim the TJTC with respect to an
employee for whom it has not received a certification or denial from a designated local agency
that the employee is a member of a targeted group.
The purpose of the settlement initiative is to relieve both taxpayers and the Service
from the burdens associated with further development or litigation, and to permit a quick
resolution of this issue. See Perdue Farms, Inc. v. United States of America
, No. Y-97-3571
(D.C. MD June 14, 1999), and H.E. Butt Grocery Co. v. United States
, No. SA-98-CA-336-
EP (W.D. Tex. July 30, 1999; February 9, 2000).
The settlement initiative is available only to taxpayers who have timely claimed (or
may timely claim) the TJTC and can satisfy all of the section 51 requirements, other than the
certification requirement (Noncertified Employee Claims). If a timely claim is not currently
pending (and the statute of limitations within which to make the claim is open), the taxpayer
should submit its claim with the Indication of Interest described below. Under the settlement
initiative, taxpayers may take a credit for 50% of the Verified Noncertified Employee Claims,
as described below.
Steps to Follow to Participate in the Settlement Program for Taxpayers whose
Claims are Pending with the Internal Revenue Service (including Appeals and Tax
Court)
Step 1: An eligible taxpayer, whether or not currently under examination, before
Appeals, or in Tax Court litigation, must first indicate in writing its interest in accepting the
offer under this settlement initiative by mailing the following Indication of Interest to the
address listed below:
Indication of Interest in TJTC Settlement Program
Taxpayer=s Name:

Taxpayer=s Address:

Taxable Years Involved:

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Employer Identification Number
Amount of Claim: $ x 50% = Settlement: $
If Applicable:
Name, address and telephone number of I.R.S. employee responsible for claim year(s):

On behalf of the above-named taxpayer, I am interested in accepting the settlement offer
described in Announcement 2000-58, 2000-30 I.R.B. (July 24, 2000), relating to the TJTC
and Noncertified Employee Claims.
By
Date
Title
Mailing Address of Signatory __________________________________________
The taxpayer should mail the completed Indication of Interest to the following address
no later than 120 days after this Announcement appears in the Internal Revenue Bulletin to:
Internal Revenue Service
Kansas City, Missouri 64999
Attention: QMSS, Stop 4100, Annex 2.
If the taxpayer is under examination or before Appeals or in litigation before the Tax
Court for the taxable year(s) listed in the Indication of Interest, the taxpayer should also
provide a copy of their Indication of Interest to the IRS employee who is responsible for the
examination or other consideration of the year(s). (The taxpayer should also state the name,
address and telephone number of the I.R.S. employee responsible for the year(s) of the claim
on the Indication of Interest.)
Step 2: Upon receiving the Indication of Interest, the IRS will send to the taxpayer
instructions on how to accept the settlement offer.

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These instructions will direct taxpayers to assemble the information that will be used
to determine the Verified Noncertified Employee Claims. In order to accept the settlement
offer, the taxpayer will be required to provide, and certify under penalties of perjury, the
following information regarding the Noncertified Employee Claims for each taxable year: (1)
the name and social security number of each employee included in the claim; (2) the targeted
group in which it claims the employee belongs (e.g. economically disadvantaged youth, etc.);
(3) the employee=s start date; (4) the employee=s end date, if any; (5) the amount of eligible
wages; (6) the amount of the credit claimed for that employee; and (7) that the employer
timely submitted a request for certification. Timely filing means: (a) a written request
submitted to the designated local agency on or before the day the individual began work, or
(b) if the individual presented the employer with a written preliminary determination from the
designated local agency that the individual was a member of a targeted group, a written
request submitted to the designated local agency no later than five days after the individual
began work. The Service may also require the taxpayer to provide additional information to
confirm the accuracy of any information submitted. Once the Service has confirmed to its
satisfaction the accuracy of the information, that the statutory requirements for minimum
hours are met, and that there are not duplicate claims, it will determine the amount of Verified
Noncertified Employee Claims subject to the 50% settlement offer.
Step 3: The taxpayer will execute a closing agreement (Form 906) to document the
resolution of this issue and appropriate adjustment of related matters (e.g., section 280C).
Steps to Follow to Participate in the Settlement Program For Taxpayers whose
Claims are under the Jurisdiction of the Department of Justice
The settlement initiative does not apply to cases in litigation before the United States
district courts or the United States court of appeals. Settlements of those cases should be
discussed with the U.S. Department of Justice attorneys handling them.

No taxpayer, including one currently under examination, in Appeals, or in Tax Court
litigation, is required to accept the terms of the settlement initiative. If a taxpayer does not
believe that the offer is appropriate for its case, the taxpayer may decline to participate in the
settlement initiative, and the case will be handled under normal procedures. If participation is
declined, the final result in a case could be either more or less favorable than the settlement
offer, depending on the merits of the taxpayer=s position.
For cases that are not resolved through the settlement initiative, the Service will
continue to advance the legal argument that a taxpayer may not claim the TJTC with respect
to an employee for whom it has not received a certification from a designated local agency
that the employee is a member of a targeted group. The Service will also consider whether, as
a factual matter, an employee is a member of a targeted group and the other statutory

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requirements are met. In addition, the Service believes that the Work Opportunity Tax Credit
(WOTC), section 51 of the Code as in effect after September 30, 1996, also requires that an
employer receive a certification before it is entitled to this credit. Accordingly, the Service
will rely on the certification process required by the WOTC before allowing this credit.
Please contact the Retail ISP Specialist at (763) 549-1020 x 328 (not a toll-free
number) if there are any questions regarding the initiative. The settlement initiative is also
described at the ATax Professional=s Corner@ of the IRS Web site at
The principal author of this announcement is Robert G. Wheeler. Mr. Wheeler can be
reached at (202) 622-6060 (not a toll free number).