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82. Research (Title I) and (232)
non-Federal contributions in cash and Includes costs associated with basic re in-kind, interest earned, and any insearch and related evaluation conducted to come from fees charged to program provide meaningful information for formu- beneficiaries. The financial records lating new programs and policies affecting
shall also include all expenditures from the poverty population in program areas not included elsewhere. Specifically excluded are
program funds; however, it is not necnutrition (29, 39, 48) energy (50, 53, 58) rural
essary, and in many cases it may not housing (31, 32, 33, 34, 35, 36) economic devel be feasible, to distribute expenditures opment (67, 68) and title IX (71, 73, 75, 78). between Federal and non-Federal con84. Demonstration (232)
(C) CSA recognizes that the accountIncludes costs associated with pilot or
ing system utilized in grantee organidemonstration projects designed to test or
zations will vary from a pure cash reassist in the development of new approaches or methods which will aid CSA's poverty
ceipt and expenditure system to a very population.
extensive accrual system. CSA will not
dictate the type and format of the sys98. Program Administration
tem to be used, since the interest of Includes costs incurred by Federal employ the Federal Government is satisfied if ees for the overall direction, management,
a system is established which is adecoordination and support of all CSA programs and related anti-poverty programs of
quate to account for program funds, other Federal, State and local agencies. This
which provides accurate and current 18 not a grantee activity.
information relating to program
progress, and which may be audited Subpart 1067.42-Establishing and without undo difficulty.
Maintaining Program AC (d) Such a system must meet the folcounts (CSA Instruction 6806 lowing criteria: 01)
(1) The accounting records shall pro
vide the information needed to identify SOURCE: 44 FR 56568, Oct. 1, 1979, unless adequately the receipt and expenditure otherwise noted.
of all program funds separately for
each grant. Expenditures shall be re$ 1067.42–1 Applicability.
corded by the component project and This subpart applies to all grantees budget cost categories shown in the apfinancially assisted under titles II, IV proved budget (CSA Form 325). and VI of the Economic Opportunity
(2) Each entry in the accounting Act of 1964, as amended, if such assist
records shall refer to the documentaance is administered by Community
tion which supports the entry and the Services Administration.
documentation shall be filed in such a $ 1067.42–2 Effective date.
way that it can be readily located.
(3) The accounting records shall proMay 10, 1971 (CSA Instruction 6806–
vide accurate and current financial re
porting information. $ 1067.42-3 Establishing and maintain
(4) The accounting system shall posing program accounts.
sess an adequate means of internal con(a) Each grantee shall maintain sepa
trol to safeguard the assets, check the rate accounting records for each grant.
accuracy and reliability of accounting The grantee shall establish a separate
data, promote operational efficiency, bank account for community action
and encourage adherence to prescribed program funds, but need not establish a
management policies. separate bank account for each grant,
(e) It is permissible for the grantee to provided all transactions are clearly maintain the record of non-Federal identified by grant in the accounting contributions in its regular accounts, records.
provided a complete series of reference (b) The accounting records shall in- memoranda or a summary list of nonClude all receipts that occur during the Federal contributions is incorporated grant period, including Federal grants, into the accounts quarterly.
Subpart 1067.43-Accounting for gate agency is adequate to meet the re
Delegated or Contracted Ac- quirements of the contract.
adequate accounting assistance com
mensurate with the size and complexSOURCE: 44 FR 56558, Oct. 1, 1979, unless ity of the contract. OR otherwise noted.
(iii) Provide on the grantee's staff, on
a full, part-time, or consultant basis as 8 1067.43–1 Applicability.
required, qualified persons to consult This subpart applies to all grantees
with the delegate agencies, keep essenfinancially assisted under titles II, IV,
tial accounts, perform such audits as VII, of the Economic Opportunity Act
are deemed necessary, and consolidate of 1964, as amended, if such assistance
and prepare appropriate reports to is administered by the Community
CSA. Grantees dealing with small priServices Administration.
vate organizations as delegate agencies 8 1067.43–2 Effective date.
may find it more economical and desirMay 10, 1971 (CSA Instruction 6806
able to use this approach than to at
tempt to require the delegate agency 04).
to hire professional help and establish 8 1067.433 Accounting for delegated its own accounting system. or contracted activities.
(3) In the case of a contract or agree(a) In every case where the conduct ment with an individual, the service to of all or part of the component is dele be performed is the accountable item. gated to another agency by the grant- No financial records are required on ee, the grantee is held responsible for the part of the person performing the performance of the program, including service unless it is performed on a cost proper accounting for expenditure of reimbursable basis, in which case the funds. The intention to make such a
grantee shall require appropriate delegation must be set forth in the ap
vouchers to be submitted. proved application for the grant or be subsequently approved by CSA, prior to
PART 1068-GRANTEE FINANCIAL the actual delegation. (b) The grantee organization shall re
MANAGEMENT quire that fiscal records be kept by the delegate agencies with which it con Subpart 1068.6-Grantee Compliance with tracts in accordance with the following IRS Requirement for Withheld Foderal guidelines:
Income and Social Securtty Taxes (1) If the delegate agency is a public (CSA Instruction 6810-1) body, the grantee shall stipulate that program funds be disbursed through
Sec. the chief financial officer of the public
1068.6–1 Applicability of this subpart.
1068.6–2 Purpose. body, make certain that these financial
1068.6-3 Policy. instructions are known to the chief fi
1068.6 4. General. nancial officer, and ensure that an ap propriate reporting system is estab APPENDIX A TO SUBPART 1068.6 lished so that the grantee can meet its obligation to CSA. Inclusion of the pro
Subpart 1068.20-Non-Federal-Share Regram expenditures of the delegate
quirements for title II, Sections 221, agency in the regular audit program of
222(a), and 231 Programs any public body which becomes a dele
1068.20-1 Applicability. gate agency should also be assured.
1068.20-2 Non-Federal-share requirements. (2) Where the delegate agency is a
1068.20-3 Waivers of non-Federal share reprivate organization, the grantee may
quirements and criteria. pursue one of the following courses in 1068.20 4. Pooling of non-Federal share. order to assure proper fiscal account. 1068.20-5 Maintenance of effort. ability: (1) Require appropriate certification
APPENDIX A THROUGH C TO SUBPART 1068.20 that the accounting system of the dele
Subpart 1068.30–Membership Duos and the Economic Opportunity Act of 1964,
Related Expenses Pald to Professional as amended, when the assistance is ad
Organizations (CSA Instruction 6803-6) ministered by OEO. 1068.30-1 Applicability.
8 1068.6-2 Purpose. 1068.30-2 Policy. 1068.30-3 Criteria for review.
The purpose of this subpart is to
state the necessity for strict compliATTACHMENT TO SUBPART 1068.30
ance with the provisions of Internal Subpart 1068.42-Grantor Fiscal Respon
Revenue Service regulations for withsibility and Auditing (CSA Instruction
holding Federal income and social se6801-1 and 6801-1 CH 1)
curity taxes from employees' wages,
and the timely and proper reporting 1068.42–1 Applicability.
and remittance of these withheld taxes 1068.42–2 Effective date.
to the appropriate IRS District Direc1068.423 Definitions. 1068.424 Policy. 1068.42–5 Accounting system certification. 1068.42-6 Auditor selection and responsibil
8 1068.6-3 Policy. ities.
(a) Any grantee receiving financial 1068.42–7 Required preliminary audit sur
assistance under the Economic Opporvey.
tunity Act of 1964 will comply with the 1068.428 Required annual audit. 1068.42–9 Federal, State and local audits.
applicable sections of the Federal tax 1068.42-10 Maintenance of records.
code by withholding taxes, filing the
appropriate tax returns and remitting APPENDIX A THROUGH C TO SUBPART 1068.42
taxes to the designated Internal ReveSubpart 1068.43–Grantoo Flocal Respon
nue Service District Office. sibility and Auditing (CSA Instruction
(b) Failure to comply with IRS re6801-1 CH 2)
quirements for reporting and remitting
the withheld taxes will result in IRS 1068.43–1 Applicability.
notifying OEO to suspend further pay1068.432 Effective date.
ments due the grantee and to refuse to 1068.43-3 Purpose. 1068.43 4
refund, make supplements, or provide Definition. 1068.43–5 Policy.
any other assistance, as prescribed in 1068.43-6 Grantees with predetermined fiscal
section 115 of the 1969 amendments to year.
the Economic Opportunity Act of 1964, 1068.43–7 Changes to CSA guidance.
until adequate provisions have been
made to satisfy tax obligations. Subpart 1060.50-Cost Principles
(c) The use of funds withheld from 1068.50-1 Applicability.
employee's wages for taxes, for pro1068.50-2 Purpose.
gram purposes, even with the intent to 1068.50-3 Implementation date.
later restore such funds from another 1068.50 4 Supersession.
source, is improper and is specifically APPENDIX TO SUBPART 1068.50
prohibited. ATTACHMENTS TO SUBPART 1068.50
(d) Section 115 of the Economic Op
portunity Act of 1964, as amended, proSubpart 1068.6–Grantee Compli
vides: ance With IRS Requirement for Upon notice from the Secretary of the Withheld Federal Income and
Treasury or his delegate that any person
otherwise entitled to receive a payment Social Security Taxes (CSA In
made pursuant to a grant, contract, agreestruction 6810-1)
ment, loan or other assistance made or en
tored into under the Economic Opportunity AUTHORITY: Sec. 628, 90 Stat. 806 (42 U.S.C. Act of 1964 is delinquent in paying or depos
iting (1) the taxes imposed on such person SOURCE: 36 FR 23065, Dec. 3, 1971, unless
under chapters 21 and 23 of the Internal Revotherwise noted.
enue Code of 1964, or (2) the taxes deducted
and withheld by such person under chapters $ 1068.6–1 Applicability of this subpart.
21 and 24 of such Code, the Director of the Of
fice of Economic Opportunity shall suspend This subpart applies to all grantees such portion of such payment due to such receiving financial assistance under person, which, if possible, is sufficient to sat
isfy such delinquency, and shall not make nor enter into any new grant, contract, agreement, loan or other assistance under such Act with such person until the Secretary of the Treasury or his delegate has notified him that such person is no longer delinquent in paying or depositing such tax or the Director of the Office of Economic Opportunity determines that adequate provision has been made for such payment * * *
(d) Circular E provides the detailed definitions, instructions, guidelines, and sample forms related to obtaining an Employer Identification Number, tables for computing tax amounts to be withheld from employees' wages, and depositing and reporting Federal income and social security taxes. At tached to this subpart are the essential procedures and requirements contained in Circular E.
(e) To avoid delay and insure timely processing of grant applications, all applicants, for OEO funds must record their “Employee Identification Number” on the following OEO forms:
CAP Form 3-Community Action Basic Information (section I, Item 6).
CAP Form 87–Delegate Agency Basic Information (section II, Item 6).
OEO Form 303 (Test) Applicant Agency Basic Information (section I, Item 6). The forms referred to in $1068.8 4(e) are available through normal OEO Supply channels. OEO Distribution Center, 5458 Third Street
NE., Washington, DC 20011.
APPENDIX A TO SUBPART 1068.6
8 1068.64 General.
(a) All OEO-funded organizations are required by IRS laws and regulations to withhold income taxes from their employees' wages. This includes those religious, educational or charitable or ganizations which are exempt from Federal income taxes by IRS ruling under section 501(c)(3) of the Internal Revenue Code.
(1) All grantees, except those who qualify as a 501(c)(3) organization, must provide mandatory social security coverage for their employees. These grantees are liable for taxes imposed under the Federal Insurance Contributions Act. Those agencies who qualify as 501(c)(3) organizations, are exempt from social security taxes (Federal Insurance Contributions Act) unless they elect to provide social security coverage for their employees; however, if they do waive their exemption, they must also deduct the employees' share of FICA taxes from their wages.
(2) Grantees should consult their local IRS Office in order to determine their particular responsibilities in regard to each of these tax liabilities.
(b) All OEO grantees must, if they have not already done so, obtain Form SS 4, “Application for Employer Identification Number," and IRS Publication No. 15, Circular E, “Employer's Tax Guide," from the nearest IRS District Office.
(c) Form 58-4 is to be completed by these organizations with the required information and returned to the appropriate IRS Office. The IRS Office will assign an “Employer Identification Number" and furnish the organization with reporting and deposit forms preinscribed with the address and identification number. The identification number is used by IRS to identify the organization's tax accounts and must be recorded on all reports, remittances and related correspondence.
PROCEDURES FOR OBTAINING EMPLOYER IDENTI
FICATION NUMBER AND DEPOSITING AND REPORTING WITHHELD FEDERAL INCOME AND 80CIAL SECURITY TAXES
Employer identification number. Each employer sball obtain Form 88 4, “Application for Employer Identification Number," and Internal Revenue Service Circular E, "Employer's Tax Guide,” The form and tax guide may be obtained from any office of the Internal Revenue Service or Social Security Administration. Instructions for completion are on the reverse side of Form SS 4. Upon completion, the forms must be filed with the District Director of Internal Revenue with whom Federal tax returns are filled. A copy of the form will be returned with the assigned “Employer Identification Number" recorded thereon. This identification number should be shown on all forms and attachments, and in all correspondence with the Internal Revenue Service and the Social Security Administration,
Payment of withheld income and social secuo rity taxes. In most cases, the employer is responsible not only for the employer's contribution of social security tax, but also for the employee tax and the income tax required to be withheld from the employee's wages. The amount of tax withheld by the employer becomes a special fund in trust for the United States. The employer is relieved
of liability to any other person for such umount.
In general, the withheld income and social security taxes must be deposited with an authorized commercial bank depository or a Federal Reserve Bank with a Federal Tax Deposit Form 501. Deposits are required to be made as follows.
(a) Every employer who holds more than 1100 in social security and withheld income taxes (reduced by any deposits for the quarter) must deposit these taxes on or before the last day of the month following the close of the quarter.
(b) Monthly deposits are required if the total of the social security and withheld in come taxes is more than $100 for that month.
(c) Any employer who has withheld more than $2,500 of social security and withheld income taxes for any month of a calendar quarter must make semimonthly deposits of the taxes for the next quarter regardless of the amount.
ing deposits should be made payable to the bank to which the completed Form 501 18 taken or sent.
Quarterly return of income tax withheld and social security taxes. Every grantee or delegate agency required to withhold Federal income and social security taxes from wages must file a quarterly return on Form 941, “Employer's Quarterly Federal Tax Return". The dates on which the return and tax payments are due, are as follows:
Records to be kept. Every employer subject to the employment taxes described in this attachment is required to keep all records pertinent to these taxes available for inspection by officers of the Internal Revenue Service if the need should arise. Such records should be kept for a period of at least 4 years after the date the related tax becomes due, or the date the tax is paid, whichever is later.
Share Requirements for Title II,
AUTHORITY: Sec. 602, 78 Stat. 530; 42 U.S.C. 2942.
SOURCE: 43 FR 52438, Nov. 9, 1978, unless otherwise noted.
8 1068.20–1 Applicability.
This subpart is applicable to grants funded under title II, sections 221, 222(a), and 231 of the Economic Opportunity Act as amended if the assistance is administered by the Community services Administration.
Form 941 must be filed with the Internal Revenue Service Center for the IRS region in which the grantee or delegate agency is located as prescribed in Circular E. No more than one calendar quarter may be reported on one Form 941. Instructions for preparation of Form 941 are included on its reverse side. Preaddressed forms will be furnished for use by the grantee or delegate agency. Taxes not required to be deposited must be remitted with the return, or at the option of the employer, deposited on Form 501.
Penalties. Both criminal and civil penalties are provided for the willful failure to make returns (Form 941) and payments (Form 501) of tax, or for willfully filing false or fraudulent returns (Form 941).
A penalty is provided for failure, without reasonable cause, to make timely required deposits of taxes.
How to make deposits of tares. Preinscribed Porms 501 will automatically be furnished the employer after he applies for an identification number.
The employer shall fill in a preinscribed Form 501, “Federal Tax Deposit,” in accordance with the instructions printed on the reverse side of that form. Each Form 501, and & single remittance covering the amount of the taxes to be deposited, should be sent or taken to any commercial bank qualified as a depository for Federal taxes, or to a Federal Reserve Bank. The names of authorized commercial bank depositories may be ascertained at a local bank or Federal Reserve Bank. Checks or money orders cover
8 1068.20-2 Non-Federal-share require
ments. (a) Legislative requirement (secs. 221 and 222(a)). All grants funded under sections 221 and 222(a) of the EOA which become effective on or after October 1, 1978 carry a requirement for a 20 percent matching share. for ongoing grants, the 80/20 matching requirement is applicable to that portion of the time remaining in the grant year. (See Appendix A, re procedures for prorating the non-Federal share for grants to which both the higher rate and the new requirements apply.)
(b) Administrative requirement (231). Beginning October 1, 1979 all grants funded under section 231 of the Eco