Roadmap to your 260E project

Form 1

The Preliminary Agreement is a nonbinding document used to set the beginning date of the 260E Project. Assuming your project is approved, employees who are hired into new positions on or after the date of the Preliminary Agreement qualify as new employees for the project. If approved, training that occurs on or after the date of the Preliminary Agreement may be covered under the project.

Job Projections Template

The job projections template is a form that illustrates the jobs you hired or plan to hire after the date of the Preliminary Agreement. The template asks for types of jobs, estimated number to be hired, and wages. The template also asks for a brief job description detailing the duties of the job. This will be used to determine the training amount.

Exhibit A, Form 2

Your company must provide a legal property description of the project site(s). You may type the description on this form, or submit a copy of the legal document. It is as simple as it sounds. Indicate the property location and address.

Exhibit B, Form 3

Exhibit B will be provided with your contract. Dollar amounts will be determined via the job projections template.

Exhibit C, On-the-job Training

Your BSC will work with you to identify the jobs that will qualify for on-the-job training (OJT) reimbursement. They will need to be identified on Exhibit C. Ideally, these jobs will be hired within the first 2 years of the training grant.

Exhibit C, Part 2 

This Document provides a brief overview of your business, your goals of increasing employment with the average wage of all of the jobs covered under the preliminary agreement and how we will develop a customized training plan to meet your needs.

The training plan will show the overall budget for training, breaking down the allocation between on-the-job training (OJT) and customized training. The customized training section will include program descriptions, the training amount needed, estimated costs, and the expected quarters in which the training will take place.

The Final Agreement is a legally binding agreement that your company needs to review, sign, notarize, and return to your BSC. A signature by a company officer is required. It must be signed by an indivistual in your company who has the authority to enter into financial contracts of the size specified. The Traiing Plan becomes part of this Final Agreement. It is then sent to the EICC Board of Directors for final approval. Once signed, your project is officially approved and ready for the certificate sale. EICC will also need a copy of your by-laws that illustrate who signs documents for your business.

You need to fill out this form every time you want to get reimbursed for training expenses that were approved, but not provided by EICC. Based on your Training Plan, specify the category of the training (e.g., Job Skill, Management/Supervisory, Training Materials, etc.). Then, send the completed Reimbursement Request form back to EICC with the following:

• An invoice of the training activity, including the name, dates and description/outline/agenda of the training class.
• The employee ID numbers of the those who were trained (Iowa residents only).
• Evidence of payment (copy of the check, ledger posting, etc.).
• If the trainer was an employee of your business, include a payroll ledger and form for reimbursement

A year after the bond sale, the EICC Director and Senior Accountant will visit your site to monitor the project. This monitoring will continue during all the years you are withholding payroll taxes. If your hiring is delayed, resulting in less money being diverted, your requests for reimbursement or payment for training may be suspended. Additionally, a portion of your training funds will be frozen and unavailable for use. Your BSC will work with you to explore available options. If you’re approaching the agreed-upon number of new employees, your BSC will discuss another 260E project. As your company grows, you can continue writing agreements. Just let your BSC know when you are close to reaching your projected headcount.

The debt for your project is retired through the diversion of Iowa withholding taxes on wages earned by employees in new positions. The following are the step-by­step instructions for properly diverting these taxes: 

Calculation of Withholding Tax Diversion Amount 

1. Total the gross wages earned by each employee in the new positions for the period. The diversion period is to correspond with Iowa Department of Revenue reporting periods: monthly or quarterly.
2. Multiply the grand total of these gross wages by 1½% (.015).
   If you have no new positions that qualify for the supplemental withholding diversion, proceed to Paying your Tax Diversion below.
3. For those positions that meet the wage criteria, you will need to calculate the additional supplemental withholding as follows:
   
   • Identify and list employees qualifying for supplemental withholding.
   • Total wages for all employees identified as supplemental.
   • Multiply total supplemental wages by 1½% (.015).
4. Add the sums from step #2 and #3c.
5. Submit total withholding diversion calculated in step #4.

Make check payable to EICC 

Mail to: 
EICC 
Attn: Accounts Receivable 101 W 3rd Street 
Davenport IA 52801 

• Send your payment prior to the Department of Revenue tax due date.
• Submit the following supporting documentation with each check sent to EICC:
  
  • Dates of the payroll period.
  • List of Social Security numbers of new employees (ONE TIME ONLY).
  • Number of employees.
  • Total gross wages for the identified period and the percentages used to calculate the amount.
  • Amount of withholding tax being paid to EICC.

1. A credit is taken on your withholding tax return for the amount of withholding taxes diverted to EICC.
2. Balance of tax due is paid to the State.
3. The credit is taken on the adjustment line on the return.
4. Electronic filers will file a quarterly reconciliation form.
5. Call Russ Shumate, Department of Revenue & Finance, 515-242-0123, for assistance.
6. If you are using a payroll service company, you must notify them to begin and maintain the diversion process.

You should begin withholding quarter 3 of the year the agreement is signed; the diversion is calculated from the hire date. 

Note: The release of dollars from your training fund is directly related to your withholding diversion payments. If you are in arrears on diversion, EICC may hold any reimbursements until the shortfall is corrected. 

The company does assume the risk of bond repayment through a diversion of withholding taxes that you are required to pay to the State of Iowa. The program allows you to take a credit and send those dollars to the Community College to retire the bonds sold to fund the training program. If you hire the number of new employees and pay the wages you certified to the College, the program costs your company nothing. However, should you not hire the number you certify, or leave Iowa before the bonds are retired through normal withholding diversion, there would likely be a balloon payment required to meet the bond obligations.

The Preliminary Agreement is designed to lock in the date from which new employees can be counted for the project and training expenses may be reimbursed. It is preliminary in nature and either the college or the company can decide not to proceed.

Ideally, you want to hire two years from the date of the Preliminary Agreement to fill the number of new employees certified in the 260E Agreement.

To promote the creation of high-quality jobs within Iowa, a supplemental withholding credit may be available to your company, increasing the size of your training program. Supplemental withholding credits are available for new positions with wage levels meeting or exceeding established regional/county criteria. Check with your BSC on what those levels are for your area.

Submit those of your parent company.

Training dollars can be used for Job Skill Specific Training such as training on equipment and/or processes, new employee orientation, basic skills, English as a Second Language, Industrial Maintenance, Lean Operations Techniques, training program development; for Management/Supervisory Skills Training such as basics of supervision, good management practices, motivation, leadership skills, training the on-the­job trainer; and for Training Materials including the development, design and production of training support materials, process and procedure manuals, videos for orientation, process training and textbooks. Tools and equipment may be purchased with training dollars at a prorated rate and may be turned to production upon the completion of the 260E project.

Use the Preliminary Agreement date to calculate your base head count. Included in this count will be the number of permanent full-time employees paying Iowa withholding taxes.

Temporary employees should not be included in your base head count, which would inflate your count, and you cannot count them as new positions. Temporary employees are defined as individual positions not being paid directly by the company, seasonal employees, or those hired only to alleviate backlogs.

It is required by Iowa Code. There are references to this requirement in both the Preliminary and Final Agreements. We do not need names, which should help with privacy issues.

Your 260E funds follow the positions, not the individuals hired into those positions.

No. It is a one-time determination based on the starting salary at the time the project is finalized.

It is handled the same way. If you are using a payroll service company, you must notify them to begin and maintain the diversion process. It is your responsibility to assure that the withholding diversion to the College is occurring.

1. Total all gross wages for new positions not previously diverted.
    
2. Total includes all wages earned in new positions since the Preliminary Agreement date.
   
   • Wages are to be totaled by quarter.
3. Multiply quarter total by 1½% (.015) plus 1½% (.015) for applicable supplemental wages.
4. File Quarterly Amended Withholding Return utilizing the State’s online system.
   
   • Standard 1½% calculated amount goes on line 3(a) NJC-New Jobs Credit.
   • Supplemental 1½% calculated amount goes on line 3(b) SJCSupplementary Jobs Credit.
   • File amended return for each quarter affected by the backlog.
   • Send EICC a check for the amount of the expected refund.
   • This process generates a refund from the state.

Renee Richmond, Eastern Iowa Community Colleges, 563-336-3468.

The process should not take a great amount of extra time. Work with your BSC to help streamline your processes.