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									Government And Vendor F/EAs: Key
Components, Issues And IRS Update
                  Presented at:

US DHHS/OASPE Sponsored Government and Vendor
         Fiscal/Employer Agent Workshop


                  Presented by:

        Susan A. Flanagan, Ph.D., M.P.H.
         Westchester Consulting Group

               November 1, 2007
                9:15-10:15 am
                                                1
I.   Why Are Fiscal/Employer Agent Services
Important?

   Managing the employer-related tasks associated with self-directed
    support services can be a challenge for individuals and
    representatives.

   Initially, state program agencies and individuals tried to reduce the
    employer-related burden by classifying support workers as independent
    contractors.

   However, the IRS has determined, in general, that home-based
    workers (e.g., support service workers) are employees and not
    independent contractors (see FY 2001 IRS National Taxpayer
    Advocate Report and IRS Notice 2003-70).

   Under IRS common law rules, anyone who performs services for an
    entity is the entity’s employee if the entity can control what will be done
    and how it will be done even if the entity gives the employee freedom of
    action. What matters is that the entity has the right to direct and control
    the details of how the services are provided and the outcomes (IRS
    Publication 15A, 2006).

                                                                                  2
I.   Why Are Fiscal/Employer Agent Services
Important? (continued)

     In response to IRS findings, states have implemented a variety of types
      of Financial Management Services (FMS), to reduce the employer-
      related burden associated with self-directed service programs while
      ensuring compliance with federal, state and local program, tax and
      labor rules and regulations.

     This presentation will focus on Government and Vendor Fiscal/
      Employer Agent (F/EA) issues.




                                                                                3
II.  What Is A Vendor Fiscal/Employer
Agent?

   Under the Vendor Fiscal/Employer Agent (F/EA) model, a vendor
    entity may apply for and receive approval from the IRS (under IRS
    Revenue Procedure 70-6 and Proposed Notice 2003-70) to act as an
    employer agent on behalf of individuals/representatives performing all
    that is required of the employer (individual/representative) for wages
    paid on the employer’s behalf and, as applicable, all that is required of
    the payer for requirements of back-up withholding. Vendor F/EAs also
    provide other services including:

     -   Establish and provide ongoing customer service to individuals and
         representatives;

     - Acting as a bank for individuals public benefits; invoicing a state for
       public funds and receiving, disbursing and tracking these funds;




                                                                                 4
II.  What Is A Vendor Fiscal/Employer
Agent? (continued)
    - Establishing and maintaining individual, worker, vendor and F/EAs
      files;

    - Preparing and distributing individual enrollment and worker
      employment packets and collecting the required information;

    - Developing, distributing, collecting and processing worker
      timesheets;

    - Verifying worker information (SSNs) and citizenship and legal alien
      status;

    - Processing payroll including managing Federal and state income
      tax withholding and employment taxes and locality taxes and
      preparing and distributing payroll checks;

    - Managing Federal Advanced Earned Income Credits (EIC), for
      eligible workers;

    - Processing and paying vendor invoices for approved goods and
      services;                                                             5
II.  What Is A Vendor Fiscal/Employer
Agent? (continued)

    - Processing and paying qualified independent contractors and
      issuing IRS Forms 1099, as appropriate;

    - Processing and disbursing cash payments to individuals per
      program requirements;

    - Processing and distributing IRS Forms W-2 and W-3, as
      appropriate;

    - Processing and distributing refunds of over collected FICA as
      appropriate;

    - Processing wage information requests from federal and state
      agencies and other qualified entities;

    - Facilitating the receipt and processing the payment of workers’
      compensation and health insurance policies and premiums;


                                                                        6
II.  What Is A Vendor Fiscal/Employer
Agent? (continued)

       - Submitting unclaimed funds for all entities to the state treasury
         department in accordance with a state’s unclaimed property act;
         and

       - Generating reports for individuals/representatives and state
         agencies, as required.

     The Vendor F/EA model provides individuals/representatives with a
      high level of choice and control while providing them with employer-
      related supports and assuring them and state program agencies of
      federal and state tax and labor law compliance.

     The May 2007 IRS Form 2678 has clarified that Vendor F/EAs may
      delegate tasks to a reporting agent.

     The Vendor F/EA continues to be the most popular FMS model used
      by states implementing self-directed service programs.


                                                                             7
III. What Is A Government Fiscal/ Employer
Agent?

   Under the Government Fiscal/Employer Agent (F/EA) model, a state
    or local government agency may apply for and receive approval from
    the IRS (under IRS Revenue Procedure 80-4 and Proposed Notice
    2003-70) to act as an employer agent on behalf of individuals/
    representatives performing all that is required of the employer (the
    individual/representative) for wages paid on the employer’s behalf and,
    as applicable, all that is required of the payer for requirements of back-
    up withholding. Other tasks performed are the same as described for a
    Vendor F/EA.

   This FMS model allows a state or local government agency to perform
    the payroll function for individuals/representatives as their employer
    agent without being considered the common law employer of their
    support service workers.




                                                                                 8
III. What Is A Government Fiscal/ Employer
Agent? (continued)

     Government F/EAs may perform the F/EA tasks directly or delegate
      F/EA tasks to a reporting agent or subagent it contracts with (IRS
      Proposed Rev. Proc.2003-70).

     IRS Proposed Rev. Proc. 2003-70 provides Government F/EAs, and
      their reporting agents and subagents, with paperwork economies
      regarding filing federal tax forms and paying federal income tax
      withholding and employment taxes that are not available to Vendor
      F/EAs.

     The Government F/EA model provides individuals/representatives with
      a high level of choice and control while providing then with employer-
      related supports and assuring them, their support service workers and
      state program agencies of federal and state tax and labor law
      compliance.



                                                                               9
III. What Is A Government Fiscal/ Employer
Agent? (continued)

   Historically, this was not a popular FMS model for states. It was
    primarily used by the IRS as a way to address federal tax
    noncompliance related to states treating support service workers as
    independent contractors.

   However, since IRS has allowed Government F/EAs to delegate agent
    tasks to, and contract with, a reporting or subagent, the number of
    states using this model has increased.

    -    There are at least three advantages to states in implementing
         Government F/EAs:

          1. Only one IRS Form 2678 has to be filed with the IRS and
             authorization received for the entire program;

          2. IRS has issued written documentation allowing Government
             F/EAs to file and pay both FICA and FUTA in the aggregate;
             and

          3.   No mid-year switching issue and limited affects as a result of
               switching reporting agent or subagent.                           10
IV. Obtaining Federal and State Approval To
Be A Government F/EA

   Government F/EA Requirements

    Filing the IRS Form SS-4, Application for Employer Identification
    Number and Obtaining a Separate FEIN for F/EA to File and Pay
    Certain Federal Tax Forms and Taxes (See Handout)

    -    New IRS Form SS-4 effective July 2007

    -    New IRS Online Form SS-4 process available

    -    Preparing the IRS Form SS-4 and Receipt of FEIN

    -    Retiring the F/EA’s separate FEIN when the F/EA no longer
         performs the function


                                                                        11
IV. Obtaining Federal and State Approval To
Be A Government F/EA (continued)

  Filing the IRS Form SS-4 and Obtaining a FEIN for Program
  Participants/Representatives (See Handout)

     -    Preparing and submitting the IRS Form SS-4 and receipt of FEIN

     -    New IRS Online Form SS-4 option not available; fax and
          phone options only

     -    Retiring FEIN when program participant is no longer an employer,
          (permanently)




                                                                           12
 IV. Obtaining Federal and State Approval To
 Be A Government F/EA (continued)

IRS Form 8821, Tax Information Authorization (See Handout)

   -    Preparing and submitting the IRS Form 8821 for each individual/
        representative

        • When using a reporting agent or subagent, include the entity as
          a second appointee on the Form

   -    Renewing IRS Forms 8821

   -    Revoking IRS Forms 8821 when F/EA no longer represents a
        program participant

   -    Having an IRS Form 8821 on file at the IRS is extremely
        beneficial to a Government or Vendor F/EA in resolving issues
        with the IRS.



                                                                            13
IV. Obtaining Federal and State Approval To
Be A Government F/EA (continued)

  Government F/EA Using a Reporting Agent (See Handout)

      -   Preparing and submitting an IRS Form 8655, Reporting Agent
          Authorization

      -   Revoking IRS Form 8655 when Government F/EA changes
          subagent

  I   -   It is recommended that the Vendor F/EA obtain an informed
          consent statement from each individual/representative saying
          he/she knows a reporting agent is being used, the tasks it will
          perform and he/she concurs with this.




                                                                            14
IV. Obtaining Federal And State Approval To
Be A Government F/EA (continued)

  Government F/EA Using a Subagent

    -    New May 2007 IRS Form 2678 and issues

    -    Preparing and submitting one IRS Form 2678 to IRS

         • Forms 2678 must be executed with each program participant
           and representative and maintained on file, not submitted to the
           IRS.

    -    Preparing and submitting an IRS Form 2678 between the
         Government F/EA and subagent – Makes the subagent the
         employer agent for the Government F/EA.

    -    Revoking the IRS Form 2678, when Gov F/EA changes subagent

    -    Obtaining signed informed consent statements from each
         program individual/representative the F/EA represents stating
         he/she knows a subagent is being used, the tasks it will perform
         and he/she concurs with this.                                       15
IV. Obtaining Federal And State Approval To
Be A Government F/EA (continued)

  Procedure for Obtaining Required State Powers of Attorney

     -    State income tax and unemployment insurance agencies often
          require F/EAs to obtain their power of attorney (PoA) to file and
          pay these taxes, receive correspondence and forms and
          communicate with these agencies.

     -    Government F/EAs need to determine with whom state PoAs
          should be executed, the Government F/EA, its reporting agent or
          subagent or both and what they cover.

     -    Also need to determine if any other documents are needed to
          receive all forms and correspondents on behalf of the individual
          or representative-employer (in addition to a PoA).




                                                                              16
IV. Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)

   Vendor F/EA Requirements

    Filing the IRS Form SS-4, Application for Employer Identification Number
    and Obtaining a Separate FEIN for F/EA to File Certain Federal Tax Forms
    (See Handout)

    -    Preparing the IRS Form SS-4 to obtain the Vendor F/EA’s separate
         FEIN

    -     New IRS Online Form SS-4 process available

    -    Retiring the F/EA’s separate FEIN when the F/EA no longer performs
         the functions for the service program




                                                                               17
IV. Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)

  Filing the IRS Form SS-4 and Obtaining a FEIN for Individuals/
  Representatives (See Handout)

  -    Preparing and submitting the IRS Form SS-4 for individuals/
       representatives

  -    New IRS Online Form SS-4 process not available; phone
       and fax options only

  -    Retiring FEIN when individual/representative is no longer an
       employer




                                                                      18
V.   Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)

  IRS Form 2678, Employer Appointment of Agent (See Handout)

     -    Preparing and submitting an IRS Form 2678 for each individual/
          representative the F/EA represents

     -    Issues related to the new May 2007 IRS Form 2678

     -    Revoking the IRS Form 2678 when individual/representative is no
          longer represented by the F/EA, permanently




                                                                            19
V.   Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)

 IRS Form 8821, Tax Information Authorization (See Handout)

    -    Same preparation, submission, renewal and revocation
         processes as for Government F/EAs

    -    If the Vendor F/EA uses a reporting agent, it should report the
         reporting agent as a second appointee on the Form.




                                                                           20
V.   Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)
IRS Form 2848, Power of Attorney and Declaration of Representative

   -    Allows the F/EA to represent the individual/representative before
        the IRS – can’t do this with an IRS Form 8821.

   -    An F/EA can obtain a “blanket” Federal POA if filing as a CPA but
        not as an unenrolled preparer

Vendor F/EA Using a Reporting Agent (See Handout)
   -    Same requirement and procedures as used by Government F/EA

Procedure For When an Individual/Representative Switches F/EA Mid
Year or Stops Being an Employer and Using the F/EA (Permanently)

   -    Revoking IRS Form 2678 with the old F/EA and executing the Form
        with new F/EA, when appropriate

   -    Revoking IRS Form 8821 with the old F/EA and executing the
        Form with new F/EA when appropriate
                                                                            21
V.   Obtaining Federal And State Approval To
Be A Vendor F/EA (continued)

 Procedure for Obtaining Required State Powers of Attorney

    -    States often require F/EAs to obtain state income tax or
         unemployment insurance power of attorney (PoA) or both to
         receive correspondence and forms and communicate with these
         agencies.

    -    Vendors need to determine if the POA is the only necessary
         authority needed to obtain all correspondence and forms from
         state taxation agencies or if other documentation is required.

    -    Revoking state tax POAs




                                                                          22
VI. IRS Requirements For Government
F/EAs Related To The Payroll Process

    Government F/EA Requirements

     Filing and Depositing FUTA Using the IRS Form 940, Employer’s
     Annual FUTA Tax Return

     -    FUTA is filed when a household employer pays wages of $1,000
          or more in a calendar quarter.

     -    The IRS Form 940 was revised effective 1/1/2006. The
          IRS Form 940 EZ was eliminated.

     -    Part 4 of the Form allows for reporting of a third party designee
          (subagent F/EA or reporting or subagent). Should be completed
          and consistent with the appointee information reported on the IRS
          Form 8821 - reinforces appointee authority.

     -    Government F/EA needs to determine if a paid family member is
          exempt from paying into FUTA and SUTA and process
          appropriately (IRS Publication 15a).
                                                                              23
VI. IRS Requirements For Government
F/EAs Related To The Payroll Process (continued)

    -   Government F/EA or its reporting or subagent files FUTA
        annually in the aggregate using the Government F/EA’s separate
        FEIN and contact information.

    -   Government F/EAs and reporting agents deposit FUTA in
        the aggregate using the Government F/EA’s separate FEIN and
        contact information when FUTA is filed per IRS Proposed Notice
        2003-70.

    -   Subagents must deposit FUTA quarterly in accordance
        with IRS depositing rules per IRS Proposed Notice 2003-70.

    -   Maintaining documentation in the aggregate and individual



                                                                         24
VI. IRS Requirements For Government
F/EAs Related To The Payroll Process (continued)

    Federal income tax withholding and Medicare and Social Security
    (FICA) Filing and Depositing Using the IRS Form 941, Employer’s
    Quarterly Tax Return

    -    The IRS does not require employers to withhold Federal income
         tax withholding, however, state self-directed service programs
         require F/EAs to withhold and deposit on support service workers’
         behalf for their benefit.

    -    The wage threshold for domestic service workers to pay into
         FICA is $1,500, however, F/EAs must withhold as if the support
         service worker is going to earn $1,500 or more in the calendar
         year.

    -    Government F/EA needs to determine if a paid family member is
         exempt from paying into FICA and process appropriately (IRS
         Publication 15, Chapter 3, Family Employees).



                                                                          25
VI. IRS Requirements For Government
F/EAs Related To The Payroll Process (continued)

    -   The IRS Form 941 was revised in 2005. IRS may require a
        Schedule R to disaggregate the aggregated filing.

    -   Government F/EAs and their reporting agents or subagents file
        FICA quarterly in the aggregate using the Form 941 and the
        Government F/EA’s separate FEIN and contact information.

    -   Part 4 of the Form allows for reporting of a third party designee.
        Should be completed and consistent with the appointee
        information reported on the IRS Form 8821 - reinforces
        appointee authority.

    -   Government F/EAs and reporting agents deposit FICA in the
        aggregate using the Government F/EA’s separate FEIN and
        contact information when FICA is filed per IRS Proposed Notice
        2003-70.

    -   Subagents must deposit FICA in accordance with IRS depositing
        rules per IRS Proposed Notice 2003-70.

    -   Maintaining documentation in the aggregate and individual.           26
VII. IRS Requirements For Vendor F/EAs
Related To The Payroll Process
     Vendor F/EA Requirements

      FUTA Filing and Payment Using the IRS Form 940, Employer’s Annual
      Tax Return

      -    Same wage threshold for filing as described for Government
           F/EAs

      -    The appropriate entity should complete Part 4-third party
           designee.

      -    The Vendor F/EA needs to address paid family member
           FUTA/SUTA exemption.

      -    Currently, Vendor F/EAs and their reporting agents are filing
           FUTA in the aggregate using the Vendor F/EA’s separate FEIN
           per IRS staff’s verbal instructions at December 5, 2005 F/EA
           Workshop. This may change for 2008 forward.


                                                                           27
VII. IRS Requirements For Vendor F/EAs
Related To The Payroll Process (continued)

 -   Currently Vendor F/EAs and reporting agents are depositing FUTA in
     the aggregate using the Vendor F/EA’s separate FEIN per IRS verbal
     instructions and quarterly in accordance with IRS depositing rules per
     IRS staff’s verbal instructions at December 5, 2005 F/EA Workshop.
     This may change for 2008 forward.

      • Effective 1/1/05 the FUTA minimum deposit threshold is $500 for
        quarterly depositing for employers with eight or fewer employees.

      • It has been proposed in the small business new project section of
        the IRS website that the Service will address the FICA/FUTA
        matching issue by implementing an IRS Schedule R to be filed with
        the IRS Form 941 each quarter. No final notice issued yet.

      • The preferred method is to allow FUTA to be filed and paid in the
        aggregate and have agents file the Form 940 with a Schedule R
        annually.

      • It is not clear how IRS’ approach will affect electronic filing of IRS
        Forms 940 and 941 and depositing of Federal income tax
        withholding, FICA and FUTA.                                              28
VII. IRS Requirements For Vendor F/EAs
Related To The Payroll Process (continued)

    Federal income tax withholding and Medicare and Social Security
    (FICA) Filing and Depositing Using the IRS Form 941, Employer’s
    Quarterly Tax Return

    -    Vendor F/EAs and their reporting agents file FICA in the
         aggregate using the IRS Form 941 and Vendor F/EAs’ separate
         FEINs quarterly. As of 2008, IRS may require a Schedule R to be
         filed with the Form 941 quarterly to disaggregate the aggregate
         filing.

    -    Maintaining documentation in the aggregate and individual.

    Process For When Government F/EA Switches Subagent or Reporting
    Agent Mid-Year

    -    Particularly problematic. Highly recommended that Government
         F/EAs switch subagents or reporting agents on January 1st.



                                                                           29
VIII. Other IRS Requirements For Government
And Vendor F/EAs Related To The Payroll
Process
     Government and Vendor F/EA Requirements

      Processing Federal Advanced Earned Income Credit EIC
      -    Receipt of an IRS Form W-5 and verification of eligibility
      -    Processing Federal Advanced EIC

      Preparing and Filing IRS Forms W-2 (See Handout)
      -    Preparation of Form in compliance with IRS instructions for
           employer agents
      -    Electronic filing requirement when filing 250 or more forms

      Preparing and Filing IRS Forms W-3
      -    Preparation of Form in compliance with IRS instructions for
           employer agents
      -    Not required if IRS Forms W-2 are filed electronically


                                                                         30
VIII. Other IRS Requirements For Government
And Vendor F/EAs Related To The Payroll
Process (continued)
  Processing Employer and Employee Refunds of Over Collected
  FICA

     -    Domestic service workers pay into FICA when they earn $1,500
          or more in gross wages from one employer in a calendar year.

     -    Government and Vendor F/EAs must withhold as if every worker
          will meet the FICA wage threshold. At the end of the year, some
          do not.

     -    Methods and due diligence process for refunding employer and
          employee portion of over collected FICA

          • Who receives the employer portion of over collected FICA?

     -    Maintaining documentation

                                                                            31
IX.    When Is The Individual Versus The
       Representative Considered The Common
       Law Employer By The IRS?
     If a person who is a representative for an individual program participant
      has an executed IRS Power of Attorney, (IRS Form 2848) with the
      individual, the IRS considers the individual the common law employer
      with a POA representing and signing for the individual. The IRS Forms
      2678 and 8821 would be executed between the individual and the F/EA
      with the Power of Attorney (POA) signing on the individual’s behalf.

     If the individual’s representative does not have an executed IRS Power
      of Attorney (IRS Form 2848) with the individual, the IRS recognizes the
      representative, and not the individual, as the common law employer.
      The IRS Forms 2678 and 8821 would be executed between the
      representative and the F/EA.




                                                                                32
X.       Other Important IRS Issues and Initiatives

    Revised IRS Form 2678 and Instructions – due out in Fall 2007

     -    Will eliminate the 60 day requirement language.
     -    Forms and authorization processed in two offices at the IRS
          Ogden, UT and Cincinnati, OH – a uniform authorization
          process needed and IRS staff designated and trained

    Final decision on how IRS will address the IRS FICA/FUTA matching
     issue 2008 and forward

     -    Individual or aggregate FUTA filing and payment
     -    Schedule R attached to IRS Form 941 or 940 (latter preferred)

    IRS Form 944, Employers Annual Federal Tax Return

     -    Effective 1/1/06 certain small business employers whose annual
          employment tax liability is $1,000 or less can file Federal income
          tax withholding and FICA annually using the IRS Form 941.

     -    Should not be used by Government and Vendor F/EAs                    33
X.           Other Important IRS Issues and Initiatives
(continued)

        Online Form SS-4 option, should not be used by F/EAs to obtain
         individuals’ and representatives’ FEIN.

        New Preparer Signature Requirements per the Small Business and
         Work Opportunity Tax Act of 2007 (contained in H.R. 2206)

         -     Passed by Congress in May 2007.

         -     Prior to passage of the law, it was optional for non income tax
               preparers (including F/EAs) to sign Federal tax forms (e.g., IRS
               Forms 940 and 941).

         -     As of January 1, 2008, all non income tax preparers will be
               required to sign Federal tax forms.

         -     In the short term, IRS will issue an addendum signature form to
               submitted with the Federal tax forms rather than amending all of
               the Forms by 1/1/2008.

         -     How Form 940 and 941 electronic filing will be handled is still
               pending.                                                           34
XI. State And Local Tax Requirements For
Government And Vendor F/EAs Related To
The Payroll Process
   Registering Individuals and Representatives as Employers For State
   Income Tax Withholding (SIT) and Unemployment (SUTA) and
   Disability Insurance Tax Reporting and Depositing Purposes

   -    State tax agency procedures differ; some have consolidate
        reporting forms and processes, others do not. Where should the
        F/EA contact information be reported to make sure it receives all
        forms and correspondence?

   -    Some states use the individual’s FEIN as the SIT and/or SUTA
        employer identification number but many do not.

   -    Timing of registering an individual as an employer for SUTA
        purposes and making the first SUTA filing and deposit

   -    Retiring individuals’ and representatives’ SIT and SUTA employer
        account numbers when no longer an employer, permanently

   -    Five states have mandatory disability insurance programs (HI,
        CA, NJ, NY, and RI). Employer and employee contributions, as
        required, need to be withheld and paid by the F/EA.                 35
XI. State And Local Tax Requirements For
Government And Vendor F/EAs Related To
The Payroll Process (continued)

 State Income Tax (SIT) Withholding Filing and Depositing

 -       Majority of states require F/EAs to file and deposit SIT for each
         individual/representative-employer using his/her SIT employer
         account number and contact information.

              • An increasing number of states now allow F/EAs to act as
                a common paymaster and file and deposit SIT in the
                aggregate for all individuals they represent as agent.

     - Filing and depositing last SIT when individual/representative-
       employer is no longer an employer, permanently.




                                                                             36
XI. State And Local Tax Requirements For
Government And Vendor F/EAs Related To
The Payroll Process (continued)
  State Unemployment Tax Filing and Deposit

  -   All but one state (Wyoming) require F/EAs to file and deposit
      SUTA for each individual/representative-employer using his/her
      SUTA employer account number and contact information.

  -   Filing and depositing last SUTA when individual/representative-
      employer is no longer an employer, permanently.


  Locality Taxes

  -   Some states have locality taxes that are employment related (e.g., PA
      and WV). F/EAs must identify these, determine the registration and
      filing and depositing processes and process as appropriate.



                                                                              37
XI. State And Local Tax Requirements For
Government And Vendor F/EAs Related To
The Payroll Process (continued)
  Submitting Unclaimed Funds for All Entities to the State Treasury
  Department in Accordance with a State’s Unclaimed Property Act

  -    Process is state-specific.




                                                                      38
XII. Developing and Maintaining F/EA
Policies and Procedures Manual
    A comprehensive F/EA Policies and Procedures Manual is essential for
     effectively operating a Government or Vendor Fiscal/Employer Agent.

    Should include policies, procedures and internal controls for:

     -    Addressing all requirements described in a state’s F/EA service
          standards, F/EA Medicaid provider agreement and/or contract;

     -    All F/EA tasks;

     -    Staying up-to-date with all federal and state requirements and for
          updating the manual at least annually, and as needed; and

     -    Reference the tasks a reporting agent or subagent will perform,
          communication, coordination and data transmission tasks that
          occur between the two entities and for monitoring reporting or
          subagent performance:

          • A reporting agent or subagent’s Policies and Procedure Manual
            for F/EA tasks should be an addendum to the F/EA’s Policies
            and Procedures Manual.                                        39
XIII.       Staying Up-to-Date With Federal and
            State Rules, Publications, Forms And
            Instructions
   Government and Vendor F/EAs should stay up-to-date with:

     -   IRS rules, publications, forms and instructions by reviewing
         www.irs.gov on a periodic basis and at least quarterly.

     •    Publication 926, 596, 15 and 15a and b, and 797
     •    Forms SS-4, 2678, 8821, 8655, 940, 941, 941(c), 843, W-2
          W-3, and 8822
     •    Remember, a form and its instructions can be updated separately

     - F/EAs also should review the quarterly IRS/SSA Reporter and the
       new projects reported under the small business section on the IRS
       website www.irs.gov.



                                                                            40
XIII. Staying Up-to-Date With Federal and
State Rules, Publications, Forms And
Instructions (continued)
-   Federal and state department of labor fair labor standards information-
    www.dol.gov

-   US Citizenship and Immigration Services Information including the IRS
    Form I-9 and instructions – www.uscis.gov

-   State department of revenue for SIT information at website

-   State department of labor’s unemployment insurance division for SUTA
    information at website

-   State department of labor new hire reporting division at website

-   State department of workers’ compensation insurance and related
    agencies at website

-   State treasurer’s office for unclaimed property act and procedures at
    web site
                                                                              41
XIV. Key Issues for States Using Government
and Vendor F/EAs
     State and local government program staff need to address several
      issues when implementing and monitoring the performance of
      Government and Vendor F/EAs.

      -    Obtain F/EA – Related Knowledge and Designate Staff to Work
           on F/EA Issues

      -    Verify and Document State Tax, Labor, Workers’ Compensation
           Insurance and Locality Requirements

      -    Assess State’s Data and Information Systems Capabilities to
           Implement F/EA Services

      -    Tasks Performed by F/EA Should Not Make It Look Like an
           Employer

      -    How Many F/EAs are Enough? Determine Whether F/EA
           Services will be an Administrative Function or Program Service
                                                                            42
XIV. Key Issues for States Using Government
and Vendor F/EAs (continued)
    -   Determine Appropriate Start-up Period for Implementing Self-
        Directed Services and F/EA Services

    -   Establishing Rates of Payment for F/EA Services

    -   Coordinating F/EA Services with Supportive Services and
        Ensuring Effective Communication Between the F/EA and
        Supportive Service Entity

    -   Assess Initial Readiness and Monitor Ongoing Performance of
        F/EAs and Their Reporting Agent or Subagent

    -   Recruit Voluntary Workers’ Compensation Insurance Agents and
        Brokers to Write WC Policies for Individuals Enrolled in Self-
        directed Service Programs




                                                                         43
XIV. Key Issues for Government and Vendor
F/EAs (continued)
   Government and vendor entities must address several key issues when
    operating as a F/EA.

     - Although IRS procedures and guidance are improving, IRS
       information on Government and Vendor F/EAs continues to be
       incomplete and IRS staff knowledge varies. IRS procedures and
       guidance related to F/EAs needs to be clarified and expanded
       upon.

     - Need to clarify state taxation requirements and procedures for
       F/EA related to PoA and filing and paying SIT and SUTA on behalf
       of individual household employers and their support service
       workers.

     - Need to develop and maintain effective data and information
       systems infrastructure and that links effectively with State.

                                                                          44
XIV. Key Issues for Government and Vendor
F/EAs (continued)

    - Need to develop and maintain effective F/EA policies and
      procedures manuals and stay up-to-date with federal, state and
      local requirements.

    - Need to develop effective incidence reporting and quality
      management systems.




                                                                       45
XV. Promising Practices Related to the
Provision of F/EA Services

    States and Government and Vendor F/EAs have developed several
     promising practices related to F/EA operations.

     -    Advances in F/EA Information Technology

     -    Timely Individual Budget Reports

     -    Timely Payment of Support Workers

     -    Maximizing the Availability of Cost Effective Workers’
          Compensation Insurance

     -    Customer Service Systems Including Individual Orientation and
          Training Curriculum




                                                                          46

								
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