References: UIPL 44-90 (September 21, 1990) Background: Charging a UI benefit to the appropriate employers' accounts involves two determinations: determining whether an employer should be charged for benefits paid under the claim in question; and allocating the benefit amount between the accounts of chargeable employers and the general pool account. Core RQC reviews the accuracy of both determinations as part of its program review of a SESA's tax accounting function. A Department of Labor Office of Inspector General study of experience rating raised the concern that employers might be systematically evading benefit charges by alleging that the claimant had quit or otherwise left for nonchargeable reasons. As a result, UI tax rates might be insufficiently experience-rated. In response RQC pilot tested a more thorough examination of Benefit Charging accuracy, including a verification of the accuracy of employer responses to notices of potential benefit charge. The results of that pilot test, conducted in six States for 9 months during 1991, are summarized in the attached paper. The paper also identifies options for assessing the accuracy of benefit charges in the future. The Department seeks comments on these options before deciding whether to go beyond, at some future date, the present Core RQC review. The final evaluation report on the Benefit Charging pilot was received from Abt Associates, Inc., in January 1993. Copies of this report, "Unemployment Insurance Revenue Quality Control: Benefit Charging Pilot Project" are available on request. Action Requested: State Administrators are requested to (a) provide comments to the appropriate Regional Office on the attached options paper 45 days from date of release of this UIPL, and (b) forward to the National Office (Attn: TEUQR) any benefit charge studies done within the past 5 years that might be helpful in considering these options. Inquiries: Questions should be directed to the appropriate Regional Office. Copies of the Abt Evaluation Report: Copies are available upon request from Burman Skrable, ETA/UIS/OQCI, 200 Constitution Avenue, N.W., Room S-4015, Washington, DC 20210, (202) 219-5220.

References: UIPL 33-89 (May 18, 1989), and UIPL 28-92 (June 4, 1992). Background: During each of the past three fiscal years the National Office (NO) has provided an increasing number of SESAs with the resources necessary to implement QC Program Improvement (PI) recommendations. The States have used these resources to successfully implement a wide range of PI recommendations. Policy: The NO will continue in FY 93 to provide limited funding for SESAs to implement QC/PI recommendations within their UI program. States are invited to submit proposals for additional funds for FY 93. The proposal eligibility is open to all States that have documented problems identified through QC findings that need to be corrected to improve operations, but do not have sufficient funding to implement these improvements. SESAs submitting requests for additional funding should describe: problems identified from QC findings; the changes, actions, etc., to be accomplished in the proposed project; the type of personnel that will be involved; and the additional resources in staff and material (e.g., programming and equipment) that will be required, including one-time start-up costs. The proposal must also contain the timeframes for the process including development, training and implementation. In addition, where outside contractor assistance is necessary, the proposal must include an estimate of the level of contractor effort. States should have developed and started the initial implementation phase of the project by October 1, 1993. After one year of operation, SESAs must submit a report describing the implementation effort and the resulting outcomes. This report should be received in the NO by December 18, 1994. The SESA must also agree to periodic Regional Office/NO monitoring of progress. Funds granted for PI implementation are for the express purpose presented in the agency's proposal as approved, including any clarifications or stipulations made by the Department. By accepting funding for this initiative, States are agreeing to the conditions and timeframes set forth in the proposal. Failure to implement funded proposals, or redirection of any portion of the funds allocated for this purpose, may subject the funding to recapture or audit exception. SESAs which are unable to initiate PI projects and/or obligate the funds should return those funds to the NO as soon as they become aware of their inability to implement the project, so that other approved projects may be funded. In the event unforeseen circumstances prevent the State from obligating these funds by December 31, 1993, a formal extension request must be submitted to the NO, Office of Quality Control. The extension request should provide a detailed explanation of the circumstances, and should be for a limited time period only. PI Implementation Funding: The total dollar amount to be set aside for this project is not yet decided. However, the NO will provide funding to those SESAs selected until the amount dedicated to the initiative is exhausted. The NO must obligate the funding by September 30, 1993. Procedures for Submitting and Reviewing Proposals: a. State Agency Procedures. SESAs wishing to undertake QC/PI implementation projects should submit a comprehensive proposal based on the criteria above. Attachment A provides an outline for proposals. The proposal must be received in the appropriate Regional Office (RO) no later than ninety (90) days from the date of this UIPL. The RO should submit these proposals to the NO, Attn: TEUQI as soon as possible. b. NO Proposal Review Procedures. Proposals received timely by the NO will be evaluated according to the procedure contained in Attachment B. The panel will review each proposal to determine whether the proposal is consistent with the format contained in Attachment A. All applicants will be notified concerning the outcome of this review. Action Required: Proposals are to be sent to the appropriate RO. Upon completion of the PI Implementation Grant, the State should send the final report to the NO. A copy of this report should be sent to the RO. SESA administrators are requested to provide this information to appropriate staff.

References: The Federal Unemployment Tax Act (FUTA), 26 U.S.C. 3301 et seq., and the National and Community Service Act of 1990 (NCSA), as amended, codified at 42 U.S.C. 12501 et seq. Background: The Department has received several inquiries concerning whether Federal unemployment compensation (UC) law requires State UC coverage of services performed by AmeriCorps participants for State or local governments and certain nonprofit organizations in National and Community Service Programs under the NCSA. This UIPL provides guidance on this issue. Discussion: a. AmeriCorps. Under the NCSA, the Corporation for National Service makes grants to States, which in turn grant the funds to local non-profit organizations and educational institutions which operate the National and Community Service Programs. The Corporation also grants funds directly to national non-profit organizations, State and local governmental entities and Native American Indian tribes for these public service programs. The Corporation is charged with the operation of three programs: AmeriCorps, Learn and Serve America and the National Senior Service Corps. Participants in AmeriCorps grantee programs perform full-time or part-time public services in exchange for post-service educational benefits. Full-time participants receive a stipend for living expenses while enrolled. Participants generally perform public service in one of four areas: education, environment, public safety or human service. For example, participants may provide services at a soup kitchen or may transform a vacant lot into an urban garden. b. Federal UC Law Requirements. Section 3304(a)(6)(A), FUTA, requires that UC must be payable based on services performed in the employ of State and local governments and certain nonprofit organizations. Specifically, UC must be payable based on the services described in Section 3309(a)(1), FUTA. Section 3309(a)(1), FUTA, applies to those services excluded from the definition of employment solely by reason of being performed for the State and local governments described in Section 3306(c)(7), FUTA, or the religious, charitable, educational and other nonprofit organizations described in Section 3306(c)(8), FUTA. Exclusions to this required coverage are found in the other paragraphs of Section 3306(c), FUTA, and Section 3309(b), FUTA. Whether an individual performs services in the employ of a governmental or nonprofit entity is determined under the common-law test required by Section 3306(i), FUTA. In sum, Federal UC law requires that UC must be paid based on services performed by an employee for governmental and nonprofit entities unless an exclusion exists in Federal law. The question concerning AmeriCorps is whether an employment relationship exists between the AmeriCorps participants and the grantee/ subgrantee programs. c. Application of Federal UC Law to AmeriCorps Services. The General Counsel for the Corporation for National Service has provided an opinion (attached) which interprets the NCSA as precluding, as a matter of law, the finding of an employer- employee relationship between the grantee/subgrantee program and the participant. Since the Corporation for National Sevice is the organization with the responsibility for administering and interpreting the NCSA, the Department has chosen to defer to its interpretation. Therefore, since there is no employer-employee relationship under this interpretation, the required coverage provision of Section 3304(a)(6)(A), FUTA, does not apply. At the same time, nothing in the NCSA or the FUTA requires States to exclude services performed by Americorps participants. Whether such services are covered is a matter to be determined under each State's law. Action Required: State agency administrators are requested to provide the above information to appropriate staff.

References: UIPL No. 16-94 (3/15/94), UIPL No. 31-94 (6/24/94), UIPL No.42-94 (8/16/94), UIPL No. 7/95 (12/20/94) and ET Handbook No. 401., 2nd Edition, Change 5 (10/11/94). Background: The RQC staff compiles questions and issues that arise during Regional and National Office (NO) monitoring trips, and from other sources to those questions believed to be of universal interest to the State staff implementing RQC. This set of questions is the fourth segment in the Q&A series. The revised 581 form has become effective January 1995 with the first report for the quarter ending March 31, 1995, due in the NO on May 20, 1995. In this set of Q&As, great emphasis has been placed on the revised 581 and RQC Computed Measures. Tax staff and RQC staff have worked closely in crafting the responses to questions and answering the additional concerns State Employment Security Agency (SESA) staff have raised on these topics. Questions and Answers: The Q&As are arranged by categories: (1) the 581 report and (2) each major RQC tax function. Numbering of the questions in each section is continuous. This format provides the necessary flexibility to allow periodic Q&A updates to be inserted in the appropriate section. There is overlap between 581 and RQC questions. Those that pertain to both the 581 and the RQC review are answered in the first section of the Q&A attachment. Those that pertain only to RQC appear in the second section of the attachment. Action Required: The SESA Administrators are requested to distribute the attached Q&As to the RQC Reviewers, SESA Tax staff, and appropriate Data Processing (DP) staff as well as the organizational unit staff responsible for the preparation and accuracy of the 581 report. Five copies are attached for your convenience.

Background: The criteria for establishing the rate of interest to be charged on Title XII advances during any calendar year are in Section 1202(b)(4) of the Social Security Act. Calendar Year 1995 Interest Rate: The U.S. Treasury Department has announced that the rate of interest to be charged for calendar year 1995 is 6.83 percent. Action Required: None.

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References: UIPL 3-95, 5 U.S.C. 8521(a)(1) and 20 CFR Part 614. Background: On December 6, 1994, UIPL 3-95 was issued to all State Employment Security Agencies (SESAs) formally transmitting a new consolidated list of acceptable narrative reasons for separation, except those for "inaptitude," and instructions for their use in determining individual eligibility for UCX benefits. The military services began to use exclusively the consolidated list of "acceptable" narrative reasons for separation shortly after October 1, 1993. Since the issuance of UIPL 3-95, the Department of Labor (DOL) has received several inquiries from SESAs regarding the effective date of the new instructions for using the consolidated list of acceptable narrative reasons for separation that was contained in UIPL 3-95. UIPL 3-95 states that the new consolidated list of acceptable narrative reasons for separation is effective for all separations from military service on or after December 6, 1994, the date of the directive. Since the DOL did not provide for a retroactive application of the consolidated list in UIPL 3-95, some SESAs are assuming that UIPL 25-83 and Changes 1-12 are controlling for the period October 1, 1993, to December 5, 1994. The DOL has reconsidered its position concerning the effective date of UIPL 3-95 in light of several factors. First, there is some confusion among the SESAs regarding which list of "acceptable" narrative reasons for separation is to be used for the October 1, 1993, through December 5, 1994 period. Second, the military services began to use exclusively the consolidated list of "acceptable" narrative reasons for separation shortly after October 1, 1993 (some military separation centers continued to use the old lists applicable to each branch of the military for a brief period after October 1, 1993). Third, when the DOL amends the consolidated list of "acceptable" narrative reasons for separation to include those dealing with "inaptitude," the effective date of the amended list may predate the issuance date of UIPL 3-95. The contents of this directive will also be issued as a Change 1 to ET Handbook No. 384, Second Edition. Revised Effective Date: SESAs shall use the Attachment to this Change 1 to UIPL 3-95 containing the revised consolidated list of "acceptable" narrative reasons for separation for determining UCX eligibility for all separations from the military services on and after October 1, 1993. SESAs should note that due to the retroactive effective date of the Attachment to this Change 1 to UIPL 3-95, the DOL has determined that the narrative reason for separation, "Intradepartmental Transfer," is "acceptable" for UCX qualifying purposes for separations from the military services on and after September 1, 1994. Implementation.: SESAs shall follow the operating instructions in section 4. of this directive. In addition, SESAs shall also follow the instructions contained in UIPL 25-83 and Changes 1-12 to UIPL 25-83 for the period from October 1, 1993, to December 4, 1994. For separations from the military services occurring between - October 1, 1993 through December 4, 1994, the lists of "acceptable" narrative reasons for separation in both UIPL 3-95 and UIPL 25-83 and Changes 1-12 to UIPL 25-83 will be utilized by the SESAs in determining UCX eligibility for ex-servicemembers who do not complete their first full term of service. For separations from the military services occurring after December 4, 1994, the SESAs shall only use the list of "acceptable" narrative reasons for separation in UIPL 3-95 (and any future changes thereto) in determining UCX eligibility. It is possible that an ex-servicemember was denied UCX eligibility during the October 1, 1993 through December 4, 1994 period because the SESA utilized only one of the lists of "acceptable" narrative reasons for separation during this period. If the SESA had followed the operating instructions contained in this directive, the SESA would not have denied the ex-service member's UCX claim. SESAs shall redetermine these UCX denials. In such case, the DOL has determined that it would be inconsistent with Federal law to apply the State law redetermination time limitations to UCX claims that were denied due to SESA actions inconsistent with the operating instructions contained in this directive. The authority for the retroactive application of this change to UIPL 3-95 is contained at 20 CFR 614.9(a). In order to implement the redetermination requirement noted in this section 5., the SESAs shall take the actions contained in section 6.c. of this directive. Specifically, the announcement shall indicate that the time period permitted for these redeterminations shall be the time period for redetermination permitted in the applicable State's UI law, and this time period for redetermination begins with the date the announcement first appears in a newspaper of general circulation and in appropriate media. Action Required: SESAs are required to: a. Distribute the contents of this directive and the attachment to all appropriate staff members. b. Destroy the Attachment to UIPL 3-95 and utilize the Attachment to this Change 1 to UIPL 3-95. c. Announce in a newspaper of general circulation, and in appropriate media, the application of the operating instructions contained in this directive and their effect on UCX eligibility. The announcements shall include mention of the authority under 20 CFR 614.9(a) to issue redeterminations of previously denied UCX claims. This announcement should indicate that ex-servicemembers separated on and after October 1, 1993 and before December 5, 1994, whose UCX claims were denied because their narrative reason for separation was not on a list of the "acceptable" narrative reasons for separation previously used by the SESAs may file for a redetermination of the denial. d. Take appropriate actions to redetermine all UCX claims with respect to which the decisions on ex-servicemember's eligibility are inconsistent with the operating instructions in this directive.

References: 20 CFR 602; Federal Register Notice, March 26, 1990, 54 FR 11112; UIPL 13-93, January 12, 1993; and Benefits Quality Control State Operations Handbook, ET Handbook No. 395. Background: The final rule to establish the Unemployment Insurance Quality Control program is found at 20 CFR Part 602. Effective October 5, 1987, QC programs in the 50 States, the District of Columbia, and Puerto Rico have selected weekly random samples of UI benefit payments for investigation under the mandatory program. 20 CFR 602.21(g) provides that each State shall: Release the results of the QC program at the same time each year, providing calendar year results using a standardized format to present the data as prescribed by the Department; States will have the opportunity to release this information prior to any release by the Department. The notice of procedures for the release of BQC data for the UI program was published in the Federal Register on March 26, 1990, at 54 FR 11112. Date of Record: The Department has established close of business (c.o.b.) April 30, 1995, as the date of record for State databases for computation of the error rates for the CY 1994 Annual Report of BQC data. All information in the Annual Report will be based on CY 1994 BQC cases that have been signed off by the QC supervisor by c.o.b. April 30, 1995. States must not reopen any CY 1994 BQC cases after this date until they have reviewed the computations of the error rates and have reconciled any differences between the State and National databases. Any data analysis supporting the Annual Report must be run on the database as it exists at c.o.b. on April 30. If States make any further changes, their data and results will differ from the data and results of the National Office. These differences will then have to be reconciled. Annual Report Software: As described in UIPL 13-93, the software which produces the Annual Report excludes Emergency Unemployment Compensation (EUC) program eligibility option cases from the rates calculations. It also excludes cases which do not meet the definition of the BQC population, for example, interstate or supplemental payments. These cases are coded "9" in data element c1. The software adjusts the population dollars paid to exclude any EUC and code "9" cases. The CY 1994 footnote look-up table can be found in Attachment 1, pages 2 and 3. For cases with a reopen code of "3" (the State has changed the data in a previously closed case), the reopen date is used in determining the appropriateness of footnotes concerning time lapse requirements. The States may run the Annual Report software as soon as all cases are completed. The National Office will produce an Annual Report for each State, based on the CY 1994 BQC cases as of c.o.b. April 30, 1995. Annual Report Format: The Annual Report format is shown in Attachment 1. It is divided into three main sections. Quality Control Data o Total Dollars Paid in Population Total UI benefits paid to the population of UI claimants who comprise the sampling frames for all weeks in CY 1994 for which the State pulled a BQC sample, adjusted to exclude EUC program eligibility option cases and other UI payments that do not meet the definition of the BQC population. o Sample Size Total UI payments selected during CY 1994 (BQC batches 9401 through 9453) and completed (QC supervisor sign-off) by c.o.b. April 30, 1995, excluding EUC program eligibility and other cases that do not meet the BQC population definition. This is the number of BQC sample cases from which the rates and sampling errors (confidence intervals) are estimated. o Proper Payments The weighted ratio estimate of total dollars properly paid to total dollars paid expressed as a percentage. o Overpayments The weighted ratio estimate of total dollars overpaid to total dollars paid expressed as a percentage. o Underpayments The weighted ratio estimate of total dollars underpaid to total dollars paid expressed as a percentage. o 95% Confidence Interval A confidence interval, expressed as +/- a percentage, will be constructed for each of the three estimated rates. The actual rate is expected to lie within 95 percent of the intervals constructed from repeated samples of the same size and selected in the same manner as the BQC sample. Footnotes The footnotes that will appear on State BQC Annual Reports to describe certain conditions that affect the data are described in Attachment 1, pages 2 and 3. Narrative States are invited to supply a narrative analysis that will accompany their Annual Report. The Department will include this narrative in the digest of State Annual Reports that it will prepare (see section 10, below). The narrative may include, but is not limited to, a discussion of State laws and how they affect error rates, an explanation of circumstances that led to some degree of inaccuracy in the reported error rates, and proposed or actual corrective action strategies. State narratives must be received in the National Office no later than June 9, 1995. States not planning to submit a narrative should notify the National Office by June 9, 1995, that no narrative will be submitted. The procedures for preparing and transmitting the Annual Report narrative to the National Office are described in Attachment 2. Supplemental Data: In order for the SESAs to interpret the data in the Annual Report and provide narrative explanations of the data, the Department recognizes the need for additional information on cause and responsibility. The software that produces the BQC Annual Report will also generate a separate report consisting of up to 16 responsibility categories and up to 6 cause categories. Responsibility and cause data will be reported as percentages of UI dollars overpaid. The format for this report is shown in Attachment 3. In order to provide States with the greatest flexibility in interpreting the data, all possible responsibility codes and broad cause categories can be generated. States can combine categories which contain few sample cases, where appropriate. No sampling errors will be computed because the publication of these percentage rates is not mandatory by the State. States should be aware that some of these percentages are based on small numbers of BQC sample cases and may have relatively large sampling errors. The Department may publish such data in the technical appendix, along with additional analysis where appropriate. Comment Period: BQC Annual Reports produced by the Department of Labor will be transmitted to each State on May 12, 1995. Each State should review its Annual Report and if there are any comments submit them to the National Office (Attn: TEUQS, Andy Spisak) by May 31, 1995. SESA comments will be discussed and reconciled by June 9, 1995. Public Release by SESA: As summarized from the Federal Register notice of March 26, 1990: Each State will release the required data annually through established channels for disseminating State performance data. In accordance with established State procedures, the data must be provided to those who normally receive performance/evaluation data and to anyone else who requests it. It is no longer necessary to publish a notice of availability. States must release their Annual Reports by June 30, 1995. If a State fails to release data in accordance with these procedures, the Department, in its annual review of State QC operations as specified in 20 CFR, Part 602, Section 602.31, will take appropriate action. Federal Release of Data: The Department will announce the availability of QC program data for CY 1994 through a notice published in the Federal Register on or about July 31, 1995. The Department's publication will be a digest prefaced by background information on the Quality Control program, and a brief discussion of how the error rate estimates are computed. Readers will be discouraged from comparing results among States. Each State's section, including its Annual Report and narrative, will be displayed separately. State sections will be ordered alphabetically to discourage ranking and comparisons. The name of the State official designated by the State as its Annual Report contact will also be published. For CY 1994, the Department will continue the practice begun with CY 1989 data of publishing certain analytical information on aspects of the BQC findings. If the Department determines that a State has failed to follow the prescribed QC methodology -- regarding sample selection, data collection methodology, or case completion timeliness -- to such an extent that the data are not reliable, the Department will publish an explanation of the major deficiency in lieu of an Annual Report for that State. Also in accordance with instructions in the Program and Budget Plan, ET Handbook No. 336 (11th edition, change 2), States will be required to address these areas by submitting corrective action plans for the upcoming fiscal year. Key Dates: The following is a summary of key dates for the public release of CY 1994 BQC data. 4/30 States check BQC databases and resolve any database problems. 4/21 States submit any request for waiver of time lapse requirements, along with supporting analysis, to appropriate Department of Labor ETA Regional Administrator. 4/30 Date of record for State BQC databases for Annual Report purposes. Cases closed by supervisors after this date will NOT be included in the Annual Report. States should not reopen any CY 1994 cases to change the database after this date until their Annual Report is finalized and any analysis for the release of the data or the narrative is completed. 4/30 Department of Labor electronically transmits the modified Annual Report software and footnote look-up table to each State's Sun computer. 5/12 Department of Labor sends Annual Reports to the State Administrators over signature of Mary Ann Wyrsch, Director, UIS. 5/15-5/31 States review Annual Reports, including footnotes, and provide comments to Department of Labor. 6/1-6/9 Department of Labor and States discuss and reconcile comments in collaboration with Department of Labor Regional Offices. 6/9 States provide name of contact persons to appropriate Department of Labor ETA Regional Administrator. States provide narratives or notice of waiver of narrative comments to Department of Labor National Office. 6/30 States release CY 1994 BQC Annual Report and send copy of the release to the appropriate Department of Labor ETA Regional Administrator. 7/14 States send copies of any press releases and/or newspaper articles relating to the Annual Report released by the SESA for CY 1994 to the appropriate Regional Administrator. 7/31 Department of Labor publishes notice in the Federal Register announcing the availability of BQC data. Action Required: State Administrators are requested to: a. provide copies of these guidelines to the appropriate staff; b. ensure that annual report narrative comments or notice of waiver of such comments is transmitted to the Department of Labor National Office by c.o.b. June 9, 1995; and c. ensure that the following items are supplied to ETA Regional Administrators: (1) any request for a waiver of time lapse requirements by c.o.b. April 21, 1995; (2) the name, location, and telephone number of a contact person to whom interested parties can write or call with questions or inquiries about the State's annual release of BQC data by c.o.b. June 9, 1995; (3) a copy of the State annual BQC data release by June 30, 1995; and (3) copies of State releases of BQC data, any press releases and/or newspaper articles relating to the Annual Report released by the SESA for CY 1994 by July 14, 1995.

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Reference: Employment Security Manual (ESM), Part V, Section 3670-3693, Field Audit Function (ETA Audit Policy); Core Revenue Quality Control, Operations Handbook. Background: The role of the field auditor in administering a compliance program under State UC laws requires a high degree of technical knowledge covering State and Federal employment taxes and acquired investigative skill. Depending on individual State approaches to auditor training, acquired knowledge and skills are often reflected in varying degrees of auditor productivity and inconsistent audit quality. The need for a broader approach to field auditor development, beyond their own State UC law and rules, has frequently been expressed by State UC tax managers at National and multi-Regional Tax Conferences and has also been recommended by Federal and State auditors. The variables in payroll control, employer-employee relationships and remuneration for individual services cannot be monitored efficiently unless the auditors' education includes background familiarity with the larger arena of Federal employment tax laws and the inter-relationship of similar but unique State UC tax programs. State UC Tax Field Auditor Training Program: A field auditor training program which focuses on issues beyond a single State's UC law and rules, is nearing completion. The program, developed under a cooperative agreement with the Indiana Department of Employment and Training Services (IDETS), will provide States a special supplement of broad based instruction that will complement existing State UC tax compliance training for UC field tax personnel. The training program will: (A) Provide State UC compliance staff with a working knowledge of the Federal Unemployment Tax Act and other related Federal employment tax applications; (B) explain ETA audit policy provisions and the Federal interest in UC audit performance; (C) encourage interstate cooperation in compliance efforts; (D) improve professionalism in audit performance and report integrity, and discuss Generally Accepted Auditing Standards (GAAS) and their application in payroll and tax compliance audit applications; and (E) raise the level of auditor awareness of outside influences on employment tax administration, through tax avoidance, employment practices and legislation. Development: Many State UC tax experts have participated in the program design and development. All States were surveyed for input as to their existing policy on field audit operations, auditor training programs and desired subject matter for supplemental training. A workshop comprised of experienced UC tax compliance experts from twenty-five States representing each of the ten ETA regions, reviewed options resulting from the survey and provided guidance on desired or needed training and audit program development. Design: The training program under development is structured to be folded into existing State training with an introduction to Federal employment tax law, ETA policy on UC auditing, meeting State quality control requirements and the inter-dependence of the States' UC tax programs. Subject matter will be broad based and include, but not be limited to: (A) The Federal Unemployment Tax Act (FUTA) and related employment tax provisions of the Internal Revenue Code and Social Security Act referred to in FUTA; (B) the inter-relationship of Federal and State roles in unemployment tax programs and the value of inter-State cooperation; (C) an explanation of Generally Accepted Auditing Standards to the extent they apply to payroll and the limited financial auditing practiced in UC tax compliance audits; (D) all elements of current ETA audit policy (ESM, Part V, Sections 3670-3693 (as revised) and the proposed Revenue Quality Control audit quality requirements; (E) working relationships often designed to circumvent standard employment classification tests; (F) examples and explanations of special provisions in Federal and State laws that either extend or restrict worker coverage and employer tax liability; (G) trainee introduction to the central office processes for which he/she provides support, such as, status, cashiering, employer accounting, delinquency/collections, computer services available to the auditor; and (H) instructions for setting up and closing out of an audit assignment. This includes making the appointment, the entrance interview, closeout interview, auditor's report and the central office review. The training program for State UC tax auditors will be in stand- alone modules that may be used, in the whole as a phase of, or to complement training for State tax staff, or in parts to supplement existing State training formats. As a complement to State training programs, the modules will focus primarily on expanding the trainees' knowledge of outside factors and audit approaches that contribute to the overall effectiveness of their State tax compliance programs. Each stand alone training module will have a trainee and a corresponding trainer section. The training modules package will consist of: (A) A supervisory executive summary to provide SESA management with a training program overview; (B) an instructor's manual that follows each module and training unit, with desired results to exercises and options available to auditors in coverage issues; (C) a student manual with text and exercises designed to carry a trainee step-by-step through each module; (D) video instruction to enhance trainee understanding of the subject matter; and (E) all texts and printed material on floppy disks in a flat ASCII format. Trainer and student manuals for each unit will include test exercises to familiarize trainees with application of the procedures and principles covered in that unit. These test exercises will help instructors measure trainee comprehension of the training material. All modules will contain transparency and flip chart masters for use in group training sessions. The complete training program package will be made available to each State in reproducible units. Program Delivery: Three Train-the-Trainer sessions have been scheduled for State staff who are responsible for auditor training and/or performance in their respective States. Such individuals should attend one of the three sessions that have been scheduled as follows: May 18-21, Atlanta, Georgia June 15-18, Denver, Colorado June 22-25, Indianapolis, Indiana The Indiana Agency and its contractor, The White River Training Company, will provide you directly with specifics on the training sessions. Hotel accommodations will be provided by the contractor. Trainers will be responsible for transportation, meals and other travel expenses. Attending a Train-the-Trainers session is essential to the success of the program because it will provide State trainers with specific knowledge and skills to deliver the program and guidance to develop related State-specific material for their auditor training programs. The Train-the-Trainers sessions will also enhance State trainers' knowledge of Federal and multi-State employment tax interface that they may not have exposure to in their own programs. Action Required: State Agency Administrators are requested to: (A) Provide the information in this Directive to their UC Directors and/or appropriate tax managers and training officers; (B) select individuals to be responsible for implementation and integration of the program into their auditor training program; and (C) assure that individuals who will be conducting the training attend one of the three train-the-trainer sessions.