incurred to borrow funds. This prohibition does not apply to the use of grant funds to defray interest costs incurred in approved business investment programs under Title I-D and other economic development grants. Grantees that run short of funds as a result of a delay in receiving a refunding grant are expected to, where possible, take the following steps to obtain temporary relief:

(1) Use their unexpended and carryover balances;

(2) Use other available OEO funds on a temporary basis;

(3) Arrange for temporary use of any other funds they may have;

(4) Postpone payment of all but fixed expenses, such as salaries;

(5) Obtain an interest free loan, if possible, or pay the loan cost from nongrant funds.

(b) If a grantee must obtain a loan to continue an approved program, and if the loan will accrue interest or incur other charges to be paid from grant funds, the grantee must obtain written permission from the appropriate OEO granting office to make such payments from grant funds. However, OEO normally will not give permission to use grant funds for this purpose if the:

(1) Time for which the grantee will have to borrow funds is less than ten (10) days; or

(2) Delay in the timely refunding of the grant is the fault of a grantee; or

(3) Grantee receives more than 50 percent of its funds from sources other than the Federal government.

(c) Permission to charge costs to a grant shall not be given to a grantee until the:

(1) Refunding grant has been signed by OEO and accepted by the grantee;

(2) Approvals required by section 232 (d) and 242 of the Economic Opportunity Act have been obtained, when required; and

(3) Grantee has been notified that costs may be incurred against the grant.

(d) Grantees shall not be given permission to charge to their OEO grant interest and costs incurred to borrow funds to begin a new program.

66-100 0-7230

§ 1068.4-2 (b) and (c) have been met, field representatives shall advise the grantee of the approximate time that may elapse before the funds are released. If a grantee finds it necessary to request authorization to charge borrowing costs to its grant as a result of this notification, a written request should be submitted to the processing unit to which the signed acceptance copy of the grant was returned.

§ 1068.4-4 Processing procedure.

(a) The following procedure is suggested for the use of OEO granting offices when processing requests for authorization to incur borrowing costs.

(b) When a processing unit receives a request to charge the cost of borrowing funds to a grant, it must verify that the conditions of § 1068.4-2 (b) and (c) have been met. For regional grants, the Regional Office will estimate the number of days that may elapse between the effective date of the refunding grant and the date when funds will be released. Consideration should then be given to the amount of carry-over funds (if any) the grantee estimated it would have before deciding whether to approve the request.

(c) For Headquarter's administered grants, the program analyst, program director and chief of the processing unit will be responsible for determining whether to recommend approval of borrowing requests.

(d) When a decision to recommend approval of a borrowing request is made, the granting office involved should estimate the maximum amount of funds that the grantee will need and which he may be authorized to borrow. The estimate should be based on: (1) knowledge of the grantees usual level of fixed monthly expenditures, and (2) discussions with the grantee. Generally, the estimate should only include funds needed for payment of fixed expenses such as salaries which cannot be deferred for a short period.

(e) A memorandum recommending approval of the request should be prepared and forwarded for the approval of the regional or headquarters official that authorized the grant (Regional Director for grants administered by the regions and Director of the Community Action Program for all other grants.)

(f) Grantees should be notified in writing or by telegram of the action

taken on the request. The notification should include the following, if the request is approved:

(1) The maximum amount of funds that may be borrowed;

(2) The length of time for which interest or other charges may be incurred;

(3) The earliest date that interest charges may be incurred (prior interest is not chargeable to a grant);

(4) A statement that the interest rate may not exceed the current prime interest rate for commercial loans in the area where the grantee is situated;

(5) A statement that the CAA must have in its record a certification that no other funds are available for temporary transfer nor were interest-free loans available.

§ 1068.4-5 Accounting.

Authorized interest payments on loans and other expenses incident to borrowing will be charged as an item under "Other Expenditures" in grantee's financial record. Allowable costs connected with obtaining loans, such as travel expenses, should be charged to the usual accounts used to record these expenditures. Interest charges that are paid from other sources may not be credited as a nonFederal share contribution.

§ 1068.4-6 Record of requests.

Regional Offices and Headquarters Program Offices shall maintain a list of the grantees that request authorization to charge interest on loans to their grants. The list should be annotated to show the following information:

(a) Grantee name and grant number; (b) Effective date of new program year and date grant action signed;

(c) Date grantee informed that costs could be incurred under the grant;

(d) Earliest date interest charges could be incurred and for how long;

(e) Maximum amount of loan; (f) Whether it was necessary to extend the authorization for a longer period;

(g) Reason for the delay in releasing funds.

§ 1068.4-7 Delegate agency borrowing. Interest payments on loans and other expenses incident to borrowing incurred by delegate agencies of grantees will not be allowed as charges against an OEO grant.

Subpart-Allowances and Reimbursements for Members of Policy Making Bodies

AUTHORITY: The provisions of this Subpart issued under secs. 244(1), 602, 78 Stat. 530, 21 Stat. 707; 42 U.S.C. 2836, 2942.

SOURCE: The provisions of this Subpart appear at 34 F.R. 11496, July 11, 1969, unless otherwise noted.

§ 1068.5-1 Applicability of this subpart.

This subpart applies to all members of policy making bodies of grantees funded under Titles I-B, I-D, II, and III-B of the Economic Opportunity Act of 1964, as amended, if the assistance is administered by OEO. This includes members of principal representative boards, delegate agency governing bodies, area policy boards or councils, county boards of multicounty CAAs, governing boards of neighborhood-based organizations, policy advisory committees for particular types of projects and committees of a CAA or neighborhood or area board as these boards are defined in section 1068.5-2. § 1068.5-2 Definitions.

As used in this subpart:

(a) "Allowance" means a payment made to an individual for actual attendance at a meeting to assure and encourage his attendance at this meeting.

(b) "Reimbursement" means a payment made to an individual to cover the cost of certain expenses actually incurred as a result of attendance at a meeting or in the performance of other official duties and responsibilities in connection with a community action program.

(c) A "Meeting" is considered to take place when proper notification has been made inviting the participants to attend.

(d) "Policy Making Body" includes the following representative boards of grantees:

(1) Principal representative boards.

(2) Delegate agency governing bodies if the delegate agency's activities are solely or substantially financed with OEO funds as part of the community action program and at least one-third of its governing body is composed of representatives selected by the poor persons whom the delegate agency serves.

(3) Area policy boards or councils, county boards of a multicounty CAA, or neighborhood based organizations which perform a major policy-making function with regard to a subarea of the com

(a) General. Allowances and reimbursements may be paid to certain members of grantee policymaking bodies for attendance at meetings, when such payments serve to assure and encourage the maximum feasible participation of members of groups and residents of the areas served. The grantees' principal representative board shall exercise discretionary power in determining the extent to which this policy will be applied in its agency. This subpart lists the categories of policymaking bodies which are eligible to receive allowances and reimbursements. If a grantee has not budgeted funds for allowances or reimbursements as part of its normal budget submission, funds may be reprogramed for this purpose (if the grantee determines it is a priority) through the normal amendment procedure (see OEO Instruction 6710-1, section V, pages 3-24). A record of the principal representative board's decision regarding the payment or nonpayment of allowances and reimbursements, and reasons for this decision, should be maintained by the grantee.

(b) Allowances. (1) Any person who is a member of a grantee's policymaking body is eligible to be paid an allowance as long as his family income falls within OEO Poverty Guidelines and as long as he is not a Federal employee, not an employee of a CAA or delegate agency, and not an employee of a State or local public agency.

(2) Allowances should not exceed $5 per meeting unless the grantee's principal representative board determines a higher payment more suitable. Allowances in excess of $5 may be paid only if justified by CAP grantees on the basis of comparability with similar fees paid to the poor by antipoverty programs administered by non-CAP grantees and funded from sources other than OEO

means that the allowance plus the reimbursements paid by the CAP grantee would be commensurate with the total payments made to the poor by other agencies.) Grantees should consult with other antipoverty programs in their area to determine if the fees being paid to the poor by the various programs are comparable.

(3) No person shall be paid an allowance for attendance at more than two meetings per month, regardless of whether the meetings are for the same or different policy making bodies.

(c) Reimbursements. (1) Any person, including a Federal employee or an employee of a State or local public agency, whose family income falls within OEO Poverty Guidelines and who is a member of a grantee's policy making body is eligible to be paid a reimbursement. Receiving an allowance does not preclude receiving a reimbursement for actual expenses incurred in attending that meeting. Nonpoor members of a grantee's policy making body may receive reimbursements for travel (under certain circumstances)

and may receive per diem (see subparagraph (3)(ii) of this paragraph).

(2) No person shall be reimbursed for more than two meetings per month, regardless of whether the meetings are for the same or different policy making bodies.

(3) The following expenses incurred as the result of actual attendance at meetings, or in the performance of other official duties and responsibilities in connection with a community action program, may be reimbursed.

(i) Travel. Reimbursement may be made for transportation to and from official meetings or other official appointments by the least expensive, convenient means of transportation. This shall be public transportation, or, when no public transportation is available, by taxi, or by private automobile travel at a rate not to exceed 10 cents a mile. Women traveling unescorted to meetings after dark may be reimbursed for actual taxi fare paid even when convenient public transportation is available. Where the community served by the community action program covers a large geographic area, such as a multicounty CAA or a statewide grantee, reimbursements may also be made to those nonpoor members of a policymaking body who must travel a "substantial dis

tance" from their home to attend meetings within the community. The grantee's principal respresentative board shall determine what constitutes a "substantial distance" in their community. Such payments shall accord with the Standardized Government Travel Regulations and with Part 1069 of this chapter. In cases where there is group riding, only the board members providing the vehicle shall be reimbursed.

(ii) Per diem. Per diem may be paid to both poor and nonpoor members of policy making bodies when attendance at a meeting requires overnight lodging Such payments shall accord with the Standardized Government Travel Regulations (current per diem rate is $16 a day) and with Part 1069 of this chapter. (A per diem allowance is paid in lieu of meals and lodging.)

(iii) Meals. When per diem is not in effect, reimbursement for the actual costs of meals may be paid to the poor, only, when the time of an official meeting or other official appointment is such as to require attendance during a meal hour and when the meal is not otherwise provided. Such reimbursement shall be for the actual cost of the meal, but may not exceed $1.50 per person for lunch and $3.50 per person for dinner.

(iv) Baby-sitting expenses. The poor, only, may be reimbursed for the actual costs necessarily incurred for the care of their young children while they attend an official meeting. The hourly rate paid must be comparable to that usually paid in the area for such services. In no event shall the rate of compensation exceed $1.25 per hour.

(v) Lost wages. When attendance at a meeting involves loss of wages, the poor may be reimbursed for actual wages lost up to $15 a day. This would be in addition to per diem if the meeting involved overnight travel.

(vi) Other expenses. Calls made on private telephones will not be allowed as a reimbursable expense. A grantee or delegate agency may make available to board members the use of telephones in the offices of the agency.

(4) The eligibility for reimbursement of expenses incurred in attendance at meetings by board members as limited in this subpart apply only to meetings held within the area served by the community action program. Reimbursement for travel and per diem outside this area is covered in Part 1069 of this chapter.

§ 1068.5-4 Administration.

(a) Applying for funds. Funds to pay allowances and reimbursements as defined in this subpart may be requested as part of any community action program application, but approval is subject to availability of budget funds.

(b) Accounting for funds. Payments made under the policy set forth in this subpart are subject to audit and to disallowance by OEO if not in accord with OEO Instructions and regulations. Individuals requesting reimbursement shall submit appropriate documentation of actual expense incurred (a listing of expenses and amounts is sufficient). Minutes of the meeting indicating the lowincome members who were present and who received an allowance will be sufficient documentation of allowances paid for audit purposes. This material shall be made a part of the accounting records of the grantee.

(c) Non-Federal share. The allowances and reimbursements herein permitted may not be credited as a nonFederal share contribution in lieu of making such payments to eligible board members.

(d) Public records. The accounting records of allowable payments and expense reimbursements are required to be available for public inspection under the rules set forth in Part 1070 of this chapter.

Subpart F-Grantee Compliance With IRS Requirements for Withheld Federal Income and Social Security Taxes

AUTHORITY: The provisions of this Subpart F issued under section 115 of the 1969 amendments to the EOA, 83 Stat. 833, 42 U.S.C. 2705.

SOURCE: The provisions of this Subpart F appear at 36 F.R. 23065, Dec. 3, 1971, unless otherwise noted.

§ 1068.6-1 Applicability of this subpart.

This subpart applies to all grantees receiving financial assistance under the Economic Opportunity Act of 1964, as amended, when the assistance is administered by OEO. § 1068.6-2

Purpose.

The purpose of this subpart is to state the necessity for strict compliance with the provisions of Internal Revenue Serv

(a) Any grantee receiving financial assistance under the Economic Opportunity Act of 1964 will comply with the applicable sections of the Federal tax code by withholding taxes, filing the appropriate tax returns and remitting taxes to the designated Internal Revenue Service District Office.

(b) Failure to comply with IRS requirements for reporting and remitting the withheld taxes will result in IRS notifying OEO to suspend further payments due the grantee and to refuse to refund, make supplements, or provide any other assistance, as prescribed in section 115 of the 1969 amendments to the Economic Opportunity Act of 1964, until adequate provisions have been made to satisfy tax obligations.

(c) The use of funds withheld from employee's wages for taxes, for program purposes, even with the intent to later restore such funds from another source, is improper and is specifically prohibited.

(d) Section 115 of the Economic Opportunity Act of 1964, as amended, provides:

Upon notice from the Secretary of the Treasury or his delegate that any person otherwise entitled to receive a payment made pursuant to a grant, contract, agreement, loan or other assistance made or entered into under the Economic Opportunity Act of 1964 is delinquent in paying or depositing (1) the taxes imposed on such person under chapters 21 and 23 of the Internal Revenue Code of 1954, or (2) the taxes deducted and withheld by such person under chapters 21 and 24 of such Code, the Director of the Office of Economic Opportunity shall suspend such portion of such payment due to such person, which, if possible, is sufficient to satisfy 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 * *

withhold income taxes from their employees' wages. This includes those religious, educational or charitable organizations 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 SS-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.

(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. Attached 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: