2001 BANCADO YEAR-END PROCESSING

Chapter 1

Introduction

Year-end BANCADO processing involves several steps to:

a) download the appropriate updated programs, libraries, and documentation from the Internet

b) install the updated 2011 files onto your computer system

c) establish separate 1099 data files for up to 99 separate reporting entities

d) automatically add records to the 1099 data file from your year-end accounting files

e) print reports of year-end data that will be required for reference at a later date

f) print statements and notices to inform customers of the year-end status of their accounts with the institution

g) manually enter additional 1099 information

h) download 1099 data to a PC for transmission to the government via the Internet

i) clear year-to-date figures from account files in preparation for processing the following year

These instructions explain in detail all of the procedures to be followed in completing these functions. You will note that some steps are optional depending on the application software in use at your institution. There are also many options concerning the sequence of processing and the format of printed output. It is recommended that computer operators review all options with bank management well before year-end processing begins so that the appropriate decisions may be made. You should amend the processing checklists to fit your particular needs well ahead of time.

As usual, the BANCADO support office will be open over the new-year holiday to answer your questions. Please call 515/225-2920 during this time period. We will be closely monitoring email sent to the email address bancado@bancado.com as well as our chat room at https://www.bancado.net/chat. You may also FAX pertinent information to 515/225-7661.

If an updated library is required during the weekend, it may be retrieved from our ftp site. Just go to http://www.bancado.net and click on the required file.

You should have available the latest version of IRS Publication 1179 for information concerning wording on substitute forms as well as IRS Publication 1220 (Rev. Proc. 2011-26) for detailed instructions on the information required for each type of 1098, 1099, and 5498. Publication 1220 may be downloaded from http://www.irs.gov/pub/irs-pdf/p1220.pdf . Telephone support is available from the IRS at 866/455-7438.

If you are in a state that participates in the combined Federal/State filing program and you have not previously been approved to participate in the program, we strongly recommend that you prepare and submit a combined test file as soon as possible so that you can be approved to take advantage of this program.

In 2005, we implemented major enhancements to the Government Reporting Library to make the reporting of IRA values, contributions, distributions completely automatic for those users who have installed the BANCADO IRA processing module. The old option of creating 1099-R and 5498 records from deposit and CD FILES is still available, but manual input to classify contributions and distributions is required.

Significant Changes

Since 5498 and 5498-SA market values are sent at yearend, we now have the option of printing only those forms with other information such as distributions, contributions and postponements after April 15th. If you plan to use this new method in April, you should amend the message sent in January to let customers know they will not be receiving a second 5498 or 5498-SA unless it is necessary and you should create the new special message for the notices sent after April 15th explaining why the second notice was necessary.

The substitute documents have been changed to include the state name and your state ID number for any accounts that include withholding. Please verify that this information is present in your Government Reporting Control File Record.

In past years, the government reporting software has inserted a zero amount in the Taxable Amount field of 1099-R records and set the corresponding indicator to “Taxable Amount Not Determined” during the 1099 creation process. Since in 2009, all distributions have been included in the Taxable Amount field by default and the indicator is set accordingly.

Please verify the withholding and other data on notices for any IRA's with withholding before they are provided to customers.

Form 1098 now includes a box for reporting Mortgage Insurance Paid. Because of the complexity of the qualifications for the deductibility of mortgage insurance premiums as established by section 2 of the Homeowners Protection Act of 1998, the program will not insert any amounts into this field. If you have collected or accrued qualifying insurance payments in excess of $600 for any individual loans, use the Add/Change Government Reporting File Records program to manually insert the appropriate amount.

We have added the ability to submit an electronic file of corrections to individual forms. See Chapter 6, Download to PC for instructions.

The PC file names have been changed this year from GOVTFED.DAT to 2011FED.DAT, from GOVTST.DAT to 2011ST.DAT and from GOVTIRA.DAT to 2011IRA.DAT so that multiple years of transmitted files are retained on the PC.

The payroll withholding tables shown in Section 11 are the latest available. We will notify you if there are any last-minute changes.

The due date for giving 1099, 1098, and W-2 forms to customers and employees is January 31^st, 2012. The due date for submitting paper forms to the IRS is February 29^th, 2012. The due date for submitting the forms electronically is April 2^nd, 2012.

Chapter 2

Software Download and Installation

Downloading Files from the Internet

There are 3 files to be downloaded from the Internet for this year's yearend processing.

yebook2011.pdf	This instruction manual
backup.arc	A backup file containing the government reporting library and the 1099 instruction files created by the standard BANCADO archiver program
2011 Government Reporting Setup.zip	A compressed folder containing the PC program to be used for verifying document totals and for printing substitute documents.

To download the 2011 files, log on to the Internet using FileZilla and go to our FTP site at ftp.bancado.org. Enter your user name and password supplied to you earlier and save all three files to your PC. You should then burn the files to a CD for archival purposes.

A few copies of the file yebook2011.pdf should be printed for reference.

Mainframe Software Installation

Using FileZilla to connect with your in-house BANCADO system, the file backup.arc should be moved to the BANCADO server as /versyss/data/backup.arc. Then perform the following steps to update the government reporting library and the instruction files on the server:

1. From the main menu, go to System Backup/Restore.

2. From the Backup/Restore menu, select 1 for Normal Archiver Utility.

3. Select 7 for Configure Archive Device.

4. Enter 5 for the Device Number.

5. Verify that the Device Type is 3 for File, the Extent in Tracks is 999999, and the device name is /versyss/data/backup.arc. Note that /versyss/data must all be in lower case. The file name, backup.arc may be upper or lower case, but it must match the name of the file as it was placed on the server.

6. Escape to return to the Archiver menu.

7. Select number 4 for System Update.

8. Select Device Number 5 to select the backup.arc file that you placed on the server.

9. Select 1 for Update All.

10. Press Enter to indicate the backup.arc file is available.

11. Enter a "Y" to indicate the options shown are correct.

12. Enter a "Y" to tell the system to overwrite the library GOVT on /SYSVOL.

13. Enter a "Y" to tell the system to overwrite the text area GOVTFORM on /SYSVOL.

14. Escape to return to the main BANCADO menu.

IMPORTANT: There are 8 steps listed on page 33 for copying 3 programs from the library GOVT to other libraries. Read the explanation there and perform the 8 steps before year end.

PC Software Installation

After the PC installation programs have been downloaded from the Internet, they must be run on the PC or PC’s where you wish to install them. CAUTION: The PC installation programs are only to be used on PC’s running Windows XP, Windows Vista, or Windows 7.

On your Windows task bar, right-click on Start and select Explore. Locate the compressed folder named "2011 Government Setup.zip". During the installation, you may be asked if you want to cancel the installation because there is another version on file, reply “No”. It may also then ask if you are sure you want to replace the existing program. Reply “Yes”. If you are warned that you are about to replace a newer version of a module with an older one, select the option that retains the newer version. The remainder of the PC installation procedure is automatic. Upon completion, you will have a selection for 2011 Government Reporting in the Programs section of your start menu.

Chapter 3

Processing Checklists

The following checklists are provided for your year-end processing. You may use them as presented or as a guide in developing your own lists. The lists start after all transactions for the final day of the year have been entered and balanced. Because of limited time available to prepare for the next year's processing, it is assumed that printing of interest notices and preparation of magnetic files for the IRS will be delayed until after year-end closing and that no deletion of closed accounts or transaction history will be performed until later in the year.

As in years past, we recommend that CD and IRA updates be run only to 12/31 rather than to the 1st of the next year due to the fact that interest payments to be made on the 1st are paid during the update to the 1st and would be included in your customers' 2011 1099's. This means that accruals for the 31st are also delayed until the following year.

 1. Perform BANCADO backup.

 2. Update Certificates of Deposit to 12/31/2011.

 3. Update Individual Retirement Accounts to 12/31/2011.

 4. Update Installment Loans to 1/1/2012.

 5. Update Commercial Loans to 1/1/2012.

 6. Update Mortgage Loans to 1/1/2012.

 7. Perform proof posting to post final accrual entries and C.D. interest payments.

 8. Update Deposit Accounts to 1/1/2012.

 9. Run service charges for cycles .

(enter appropriate cycles above)

 10. Perform proof posting to post deposit account accruals and service charges. NOTE: Please verify that this step has not been skipped and that the entries have been posted to period 12 of 2011 with a date of 12/31/2011.

 11. Balance General Ledger through 12/31/2011 and print final daily statement.

 12. Perform COMPLETE backup. Save as final 2011 year-end backup.

 13. Print statements for cycles

 14. Print Deposit Account Trial Balance.

 15. Print Certificate of Deposit Trial Balance.

 16. Print Individual Retirement Account Trial Balance.

 17. Print Installment Loan Trial Balance.

 18. Print Commercial Loan Trial Balance.

 19. Print Mortgage Loan Trial Balance.

 20. Print Daily Statements, Balance Sheets, Income Statements, etc.

 21. Print General Ledger activity for periods one through twelve.

 22. IMPORTANT! Print Customer Balance List. Select the options to print a detail report and to include year-to-date interest. You may want to print a few copies to have available for customers’ questions between year-end and tax day.

Government Reporting

 1. Follow instructions in Chapter 5 for Government Reporting. Perform at least steps 1 through 6 before returning to General Ledger Closing below. You may delay the other government reporting processes, including the printing of customer notices, until a later time.

 2. Perform a preliminary backup of the government reporting file as described on page 27.

General Ledger Closing

In the following steps, the phrase “Perform Year-end Maintenance Item” followed by a number refers to the selections available on the Year-end Maintenance Menu which is accessed through number 17 on the main General Ledger Menu.

 1. Clear Period 13 to hold closing entries using menu selection 16, Clear Transaction Journal.

 2. Perform Year-end Maintenance item 1, Clear and Close to period 13 for Clearing Step Number 1.

 3. List the closing entries in period 13, Year-end Maintenance item 2.

 4. Post the closing entries in period 13, Year-end Maintenance item 3.

 5. Print Closing Daily Statement, Year-end Maintenance item 4. Verify.

 6. Print Closing Income Statement, Year-end Maintenance item 5. Verify.

 7. Enter and post any additional adjusting entries. Repeat steps 5 - 6.

 8. If you maintain a separate filesystem for yearend data (highly recommended), use /VECOPY to copy all files from volume /BANCADO on device 0 to the appropriate volume and device. Then you must rebuild the system control file on the yearend filesystem using selection 3 on the BANCADO Multi-filesystem Control menu.

 9. Perform Year-end Maintenance Item 6, Save Historical Data. If your system is set up to save prior-year general ledger transactions, enter a “Y” to save balances and transactions. Enter 2011 for the year to be saved, “/BANCADO” for the current year volume and “OLDGL” for the volume to be used for saving 2011 data.

 10. Perform Year-end Maintenance Item 7, Year-end File Maintenance.

 11. Use menu selection 6 to Update Average Balances for 1 day for period 1.

 12. Change Date to 1/2/2012.

 13. Clear Periods 1 through 13 using menu selection 16, Clear Transaction Journal. NOTE: It has come to our attention that some users have traditionally skipped this step under the mistaken impression that leaving the prior year’s transactions in the journal files until the month they are to be used might be useful. All transactions for the prior year are stored for easy retrieval during step 8 above and skipping this step frequently leads to errors later on in the year when the month’s journal file is accidentally cleared at the wrong time.

Certificate of Deposit Closing

 1. Perform year-end file maintenance to clear year-to-date interest. Do not perform the print-and-purge or delete-cashed-certificate functions. Some transactions may be required to update 5498 records after April 15^th and there may be a need to research prior activity during subsequent year-end reporting tasks. The weekend after April 15th is normally reserved for performing these functions.

 2. Update C.D.'s to 1/2/2012.

 3. Print Checks, Check Register, and notices.

Individual Retirement Account Closing

 1. Perform year-end file maintenance to clear year-to-date interest. Do not perform the print-and-purge or delete-closed-account functions. IRA transactions are required to update 5498 records after April 15^th and there may be a need to research prior activity during subsequent year-end reporting tasks. The weekend after April 15th is normally reserved for performing these functions.

 2. Update IRA.'s to 1/2/2012.

 3. Print Checks, Check Register, and notices.

Installment Loan Closing

 2. Delete Old Earnings Records. Do not perform the print-and-purge or delete-paid-loan functions. There may be a need to research prior activity during subsequent year-end reporting tasks. And you have enough work to do at year-end anyway. The weekend after April 15th is normally reserved for performing these functions.

 3. Update Installment Loans to 1/2/2012.

Commercial Loan Closing

 1. Run the Annual Interest Notice Program to clear year-to-date interest – even if you do not wish to actually print the notices. Printing of the notices is optional. If you do print notices, bypass loans with codes and types for which 1098's are printed. Upon completion, run a Commercial Loan Summary report to verify that the total year-to-date interest has been zeroed. Do not perform the print-and-purge or delete-paid-note functions. There may be a need to research prior activity during subsequent year-end reporting tasks. The weekend after April 15th is normally reserved for performing these functions.

 2. Update Commercial Loans to 1/2/2012.

Mortgage Loan Closing

 1. Print Mortgage Statements.

 2. Delete Paid Mortgages.

 3. Clear Year-to-Date Interest, Late Fees Paid, and Extension Fees Paid.

 3. Update Mortgage Loans to 1/2/2012.

Deposit Account Closing

 1. Perform year-end file maintenance to clear year-to-date interest. Upon completion, run a Deposit Account Summary report to verify that the total year-to-date interest has been zeroed. Do not perform the delete-closed-account function. There may be a need to research prior activity during subsequent year-end reporting tasks. The weekend after April 15th is normally reserved for performing these functions.

 2. Post Proof Items created by the IRA, C.D. and loan updates.

 3. Update Deposit Accounts to 1/2/2012.

 4. Post Proof accrual entries created by the deposit account update. NOTE: Please verify that this step has not been skipped and that the entries have been posted to period 1 of 2012 with a date of 1/2/2012.

Chapter 4

Social Security and Federal ID Numbers

In normal operation, a CIF record is established for each customer in your BANCADO system. Each CIF record is assigned a Social Security or Federal ID Number. The CIF relationship feature is used to relate separate CIF's with different Social Security Numbers as in the case of a husband and wife, each with their own accounts.

For government reporting purposes, a single report of interest is made for each CIF under that CIF's Social Security Number. In order to provide for those few instances where it is desired to group related accounts with different Social Security Numbers under the same CIF, special coding has been incorporated to separate the accounts for government reporting. If you wish the interest for a particular deposit account, C.D., IRA, or loan reported under a Social Security or EIN different from the one in the CIF for the account or loan, you may enter that number in Legal Title Line 2 in the standard Social Security Number or EIN format. Accounts so coded are combined with other accounts with the same Social Security Number in the government-reporting file.

The name and address from the CIF of the first account encountered with a social security number will be used since a single social security number may have only one name and address.

Chapter 5

Government Reporting

This chapter describes the processing of 1099's, 1098's, and 5498's.

Select the Government Reporting Library and the menu will appear on the screen as shown below. Always note the Active Company Number shown in the upper right corner of the screen before making selections. Selection numbers 1 (Initialize 1099 File) and 3 (Edit 1099 File Control Records) must be performed first in sequence for each company to be processed. Selection 1 automatically initiates selection 3 after the file has been initialized. You may use selection 3 at any time to change any options you have selected. The others may be run and re-run as necessary. However, you may find it less confusing to run the programs you wish to use in the order listed on the menu. Key the number of the function you wish to perform and press Enter.

1. Initialize Government Reporting File - This program sets up the 1099/1098/5498 data file for subsequent processing. As an option, you may tell the program to reformat last year’s records and zero any amounts in them for editing with this year’s information. This option is useful if you manually enter data for Form 1099-DIV for dividends paid as a separate company. There is also a hidden feature that allows you to retain last year’s amounts. Enter “Z” to zero the amounts and then reply “Special” instead of “Y” or “N” at the “Are you sure?” prompt for this option. Records with all zero amounts may later be deleted using the “Scan for Errors” program. The initialization program is normally run only once per company prior to other government reporting processing. You should perform a complete backup prior to running any 1099 programs.

2. Government Reporting Analysis - This program shows the status of existing 1099 records. It also will read your account files and let you know how many individual 1099 records will be created automatically from those records. The program may be run as often as you wish.

3. Edit Control Records - This program provides the facility for entering and changing the various options and messages used during 1098/1099 processing.

3.1 Edit Government Reporting File Control Parameters - This program records information about your institution. The following screen is displayed.

You are asked to supply the following:

Year for reporting: []

Enter 2011 and press Enter. The system requests:

Payer's EIN: []

Enter your institution's Employer Identification Number (9 digits without dashes) and press Enter. The system requests:

Combine for Federal/State Reporting? (Y/N): []

Unless you have submitted a test file and the appropriate documentation to the IRS and have been approved for combined reporting, enter an "N" and press Enter. The system will display N/A for Two-digit State Number. The system requests:

Payer's Control Code: []

Enter the number assigned to your institution by the IRS on form 4419 and press Enter. (This number may contain some letters.)

Then you are asked to supply:

Payer's Surname Control: []

Enter the four-character Surname Control supplied by the IRS on the address label of your package for 2011 reporting. Then the system requests:

Foreign Corporation? (Y/N): []

Unless you are a foreign corporation, enter "N" and press Enter. Then the system requests name and address:

Payer's Name: []

Address:

City/State/Zip:

Telephone:

Enter your institution's name and address as it is entered on tax forms and press Enter. Your EIN, TCC, name and address, and telephone number, must be entered a second time as the transmitter. Then enter your contact name and email address.

3.2 Edit Deposit Account and CD Control Parameters - Options entered using this program control the reporting of interest from your deposit and CD account files. You are asked to supply the following information:

Include Deposit Accounts with Interest (Y/N): []

If you wish to include interest paid to deposit accounts, enter a "Y" and press Enter. Otherwise enter "N" and press Enter. The next question is:

Federal minimum total amount to be reported : []

The figure normally used is $10.00. Enter the applicable amount. The system next asks for:

State minimum total amount to be reported: []

Enter the amount appropriate for your state. The system then asks for particular deposit account codes to be used to create forms other than 1099-INT.

Use 5498 for IRA Account code(s): []

Use 5498 for SEP Account code(s):

Use 5498 for SIMPLE Account code(s):

Use 5498 for Roth IRA Account code(s):

Use 5498 for 2004 Roth Conversion Account code(s):

Use 5498-ESA for Education IRA Account code(s):

Use 5498-SA for Medical IRA Account code(s):

Use 1099-INT Bond Interest for Account code(s):

Use 1099-MISC Non-employee Compensation for Account code(s):

Key the appropriate two-digit codes (if any) separated by commas. Do not space after any commas and always enter two digits for each code. Enter "01,41,51" not "1, 41, 51". The computer will then proceed to request the reporting year.

Year for reporting: []

Enter 2011 and press Enter.

Next, the system asks a similar set of questions regarding C.D.’s. Respond to those questions as you did for deposit accounts.

3.3 Edit Form 1099 Substitute Document Control Record - This control record contains information regarding plain-paper notices to be printed for deposit account customers and other individuals receiving payments such as stockholders and those cashing Series E Bonds. The program requests the following information:

Print bank name and address? (Y/N): []

If you are using a blank form, enter "Y" and press Enter. Otherwise, enter "N".

Total lines per form: []

The notices are normally printed at 6 lines per inch on impact printers. Therefore, enter 66 if you are using 11-inch forms or 84 if you are using 14-inch paper. Laser printers cannot print in the top and bottom margins, so you may have to adjust these numbers downward to accommodate them.

Starting line for customer name and address: []

Starting print position for customer name and address: []

Specify the location of the customer's name and address on the form so that it appears properly in the window in your envelopes. The program adjusts the location of your message (above or below the name and address) to accommodate the location you choose. In selecting a starting line, remember that the phrase "IMPORTANT 2011 TAX INFORMATION ENCLOSED" appears immediately above the name and address and it should be viewable in the window.

Enter message to customer:

Line 1: []

Line 2:

Line 3:

Line 4:

Line 5:

Line 6:

Line 7:

Line 8:

Type a message to appear on the face of the notices. IMPORTANT: Refer to IRS Publication 1179 for information on substitute form requirements. Some very specific wording is required. The program automatically prints specific instructions for the necessary forms included for each customer so you do not have to include those in your limited message space. The following is a sample used by several BANCADO users:

THIS IMPORTANT TAX INFORMATION IS BEING FURNISHED TO THE IRS. IF YOU ARE REQUIRED TO FILE A RETURN, A NEGLIGENCE PENALTY OR OTHER SANCTION MAY BE IMPOSED ON YOU IF THIS INCOME IS TAXABLE AND THE IRS DETERMINES THAT IT HAS NOT BEEN REPORTED. PLEASE CONTACT US AT 555/555-1212 BY JANUARY 31^ST IF THERE ARE ANY ERRORS.

3.4 Edit Mortgage and student loan control parameters - Options entered using this program control the reporting of interest from your Mortgage Loan, Installment Loan, and Commercial Note files. You are asked to supply the following information:

Bypass if total Mortgage interest received is less than: []

The lower limit specified by the IRS is $600.00, but most institutions use $1.00 so that all mortgages will be reported.) Enter the amount and press Enter. The system then asks for particular mortgage codes to be excluded from reporting.

Do NOT report Mortgage code(s): []

Key the appropriate two-digit codes (if any) separated by commas. CAUTION: Do not space after any commas and always enter two digits for each code. For example, enter "01,41,51" not "1, 41, 51". The system will then proceed to request any Installment Loan and Commercial Note codes or types used to indicate home equity loans.

Report Loans based on Type or Code (T/C): []

Report Loan xxxx(s):

Report Notes based on Type or Code (T/C):

Report Note xxxx(s):

Enter a T or C to indicate if home equity loans are selected by type or code. Then, using the same format as for mortgages, key any appropriate two-digit types or codes for simple-interest installment loans followed by any two-digit codes for commercial notes. The system then requests the reporting year.

Year for reporting: []

Enter 2011 and press Enter. The system will then proceed to request any Installment Loan and Commercial Note codes or types used to indicate student loans.

Report Loans based on Type or Code (T/C): []

Report Loan xxxx(s):

Report Notes based on Type or Code (T/C):

Report Note xxxx(s):

3.5 Edit Form 1098 Substitute Document Control Record - This control record contains information regarding plain-paper notices to be printed for mortgage and student loan customers. The program requests the following information:

Print Bank name and address? (Y/N): []

If you are using a blank form, enter a "Y" and press Enter. Otherwise, enter an "N".

Total lines per form: []

Forms used for printing the notices may be from 21 through 84 lines. 8 ½ by 11-inch paper is 66 lines at 6 lines per inch. 8 ½ by 14-inch paper is 84 lines at 6 lines per inch However, if you are using a laser printer and the “Form Feed” option when printing, you may need to decrease this entry by a few lines.

Starting line for customer name and address: []

Starting print position for customer name and address: []

You must specify the location of the customer's name and address on the form to facilitate the use of window envelopes. If you are not sure, enter 16 for the line and 9 for the print position. Then move it up or down and left or right from there.

Enter message to customer:

Line 1: []

Line 2:

Line 3:

Line 4:

Line 5:

Line 6:

Line 7:

Line 8:

Type a message to appear on the notices. IMPORTANT: Refer to IRS Publication 1179 for information on substitute form requirements. Some specific messages are required. The program automatically prints specific instructions for the necessary forms included for each customer so you do not have to include those in your limited message space. The following is a sample used by several BANCADO users:

THIS IMPORTANT TAX INFORMATION IS BEING FURNISHED TO THE IRS. IF YOU ARE REQUIRED TO FILE A RETURN, A NEGLIGENCE PENALTY OR OTHER SANCTION MAY BE IMPOSED ON YOU IF THE IRS DETERMINES THAN AN UNDERPAYMENT OF TAX RESULTS BECAUSE YOU OVERSTATED A DEDUCTION. PLEASE CONTACT US AT 555/555-1212 BY JANUARY 31^ST IF THERE ARE ANY ERRORS.

3.6 Edit Government Form Layouts - This program is for users with pre-printed continuous forms for reporting interest data to customers. If you use plain-paper substitute documents, bypass this step. For each form you will be printing, you must specify the following:

Form: [] Lines per form:

Enter the form number such as 1099-INT or 1099-DIV and press Enter. For the lines per form entry, place your BANCADO ruler with the zero on the "lines of text 1/6" scale at the top of your form, read the number of the last line, enter that number, and press Enter. Then the system prompts:

Institution's Name: []

If your 1098's came pre-printed with your institution's name, leave this field blank. Otherwise enter the name of the institution as you wish it printed on the 1098's. The system then requests:

Line: []

Place your ruler with the zero on the "lines of text 1/6" scale at the top of your form and read the number of the line where the institution's name is to appear. Enter the line number and press Enter.

The computer will then request:

Position: []

Place your ruler with the zero on the "10 pitch" scale at the left side of the form and read the number of the position where the institution's name is to start. Enter the position number and press Enter. The computer will then request the same information for the rest of the institution's name, address and I.D. numbers as follows:

Address: [] Line: Position:

City/State/Zip: Line: Position:

Federal and State I.D.'s: Line: Position:

Complete the above as you did for the institution's name. After this step is completed, the system will request the location of the customer information to be printed on the form. The fields requested depend on the specific form.

Enter the information requested and press Enter.

4. Load account, CD, and IRA 1099 data to Government Reporting File - This procedure transfers information from your BANCADO Deposit Account and/or C.D. files to the file used in reporting. Since all parameters must be entered through menu selection 3, Edit Government Reporting File Control Records, there is only one operator response required by the program. But before the prompt is displayed, the system checks to see if the 1099 records have already been created. If they have, a warning message is displayed informing you that the records will be replaced. Then you must specify the sequence of the report. CAUTION: This program requires that the year-end deposit, CD, and IRA files be present on the system during its operation!

Enter sequence for creation report: []

Select 1 for customer name sequence, 2 for customer number sequence, 3 for account or certificate number sequence, or 4 for social security number sequence.

If you run this program a second time, it will automatically delete records previously created by the program, but it will not delete records created automatically for mortgages or any records created manually.

5. Load account, CD, and IRA 5498 data to Government Reporting File - This procedure creates 5498 records in the1099 file containing the year-end values for IRA's and creates 1099-R records for IRA accounts with withdrawal transactions on file. Except for those records created from the IRA files, users must manually edit the 1099-R records to ensure the proper classification of withdrawals.

A feature of the programs is the option to update 5498 records after April 15^th with the total deposit amounts posted for 2011. In order to use this feature, IRA transactions for the period must still be on file, so be sure to avoid running the “Print and Purge” program prior to April 15^th.

If you run this program a second time, it will automatically delete records previously created by this program, but it will not delete records created manually. CAUTION: This program requires that the year-end IRA files be present on the system during its operation for creating year-end values. The year-end files are not required when adding contributions to the records after April 15^th. The program requests that you specify a sequence for the creation report as shown in step 4 above.

6. Load loan 1098 data to Government Reporting File - This procedure is to be used if you use the BANCADO Mortgage Loan, Installment Loan, and/or Commercial Note Module for mortgage loans. It transfers data from your loan files to the government-reporting file. Since all parameters must be entered through menu item 3, Edit 1099 File Control Records, there is only one operator response required. CAUTION: This program requires that the year-end loan files be present on the system during its operation. It requires that you specify a sequence for the creation report as shown in step 4 above.

If this program is run a second time it automatically deletes records previously created by this program, but it does not delete records created automatically for deposit accounts and C.D.'s or manually entered records.

7. Add/Change Government Reporting File Records - This program is used for adding, deleting, and changing government reporting records.

You may enter a Social Security Number or an Employer Identification Number with or without the appropriate hyphens. If you enter the number without hyphens, the system asks you whether the number is an "SSN" or "EIN". Also, you may enter a customer’s CIF or Customer Number into the field. The system then automatically converts your entry to the Social Security or Employer Identification Number contained in the CIF record for the customer. All records on file for the number selected are displayed. To view the detailed amount fields or to edit a specific record, enter the line number shown at the left side of the screen and press enter.

To enter a new record, enter the line number with "OPEN - NEW" in the customer number field. A customer number is not required, but if one is entered, the system will pull the name and address from your customer information file. In the field headed “TP-Account”, you may enter one of the following codes followed by a hyphen and an account or reference number. If you are unsure or none of the other codes apply, use MI for Miscellaneous. You may no longer leave the account number portion blank. In the case of unnumbered items, such as cashed savings bonds, you should number multiple bonds for a single customer BD-01 through BD-99. After the type and account number have been entered, you may change the form number to the one desired.

DP - Deposit Account

CD - Certificate of Deposit

BD - Savings Bond

SV - Savings Account

IR - IRA

IL - Installment Loan

CL - Commercial Loan

MI – Miscellaneous

ML - Mortgage Loan

DV - Dividend

NE - Non-Employee Earnings

To delete a record, select the line as described above and then backspace over the social security number on the detail screen and type the word "DELETE" in all capital letters.

To change a social security number for a record, select the line as described above and then backspace over the old social security number on the detail screen and enter the new number.

The applicable fields for the selected form then appear on the screen. IRS Publication 1220 (Rev. Proc. 2011-30) is the best source for detailed instructions on the data fields required for each type of 1099 and 1098, and 5498. For definitions of terms used, refer to the actual instructions for each form. If you have questions about "document specific/distribution codes" for forms 1099-R and 1099-SA, refer to pages 83 through 84 of publication 1220. We have naturally become familiar with many of the filing procedures in writing the programs, but we are not tax experts. Specific questions on what should be entered into specific fields are better directed to the IRS or to your own accountant.

The Surname field (Name Control) is to contain the first four characters of the customer’s last name. In order to avoid unnecessary problems with unmatched names and Social Security Numbers, refer to publication 1220 for usage and examples.

Name 1 must contain data. Name 2 may be used only for overflow of the data field Name 1. Do not use Name 2 as an address line or for the name of a second individual. Refer to page 54 of Publication 1220.

There is a special field to identify foreign addresses. Foreign zip codes may contain both letters and numbers. US addresses must contain the postal service two-character abbreviation for the state and a five or nine-digit numeric zip code. See page 58 of Publication 1220.

8. Scan for Errors - This program produces a list of common errors present in the 1099 Tape File. Select from the available report sequences. There are options to “Flag missing surname errors”, “Flag records with all zero amounts”, and “Delete records with all zero amounts. Normally, you should accept the defaults of Yes, Yes, and No for the three options until your final run when you should delete any records with all zero amounts.

Use procedure 7 to correct any errors listed. NOTE: If a record is flagged as having the “foreign address indicator” set, you must change the indicator to “no” and enter a valid state. And to prevent the error from recurring next year, you should also correct the customer’s CIF record.

9. Print Government Forms from Government Reporting file - This program prints on official government forms. Item 10, Print Notices from Government Reporting File is generally used in lieu of this selection. If you have a printer with variable spacing, ensure it is set at 6 lines per inch and 10 characters per inch spacing. Since all parameters must be entered through menu selection 3, Edit Government Reporting File Control Records, operation is quite simple. Upon initiation, the program displays:

Enter Form Number or Press Enter for all: []

You may select a single form or print all forms in the same run. As the forms are required, the system instructs you to put the appropriate form into the printer.

Load form xxxx-xxx and press <Enter> when you are ready. []

After a sample form has been printed, the system asks:

IS FORM ALIGNED? (Y/N): []

Once the form is properly aligned and you have entered a "Y", the system will begin printing the forms.

10. Print Notices from 1099 File - If you are using plain-paper notices in lieu of mailing 1098 and 1099 copies to customers, you may use this procedure to print notices for manually entered items as well as for those created from your BANCADO files. The program does not require that year-end deposit and loan files be present on the system during its operation. The control information for this program is entered under menu item 3, Edit Government Reporting File Control Records. The control records are displayed on the screen for your review before notices are printed.

You may print the notices in Social Security Number, Customer Number, or alphabetical sequence. This year, there is a special option for preparing a spool file for doing the actual printing on a laser printer using the Government Reporting program on a PC. Follow the instructions on the screen and those in item 10-b below to use this option. You may then specify a restart in case of an earlier problem in printing. And you may specify which form types are to be included in the run. Normally, your run at year-end should include all form types and your run in May should include only form 5498. After form alignment, the system starts printing and returns to the menu.

10-b. Special Laser Printing Instructions. The instructions on the screen state quite simply that you should clear your spool area, spool the forms, and then copy the spool file to your PC. There are several ways to copy the file, but it must be done in binary mode so that the line feed characters transfer properly. FTP (File Transfer Protocol) is an efficient method, so it is detailed here. It doesn't really matter where you store the spool file on your PC, but for ease of use, we recommend that you just copy it to the root folder of your C drive.

Before you copy the file to your PC, you have to know where it is located on your BANCADO Unix server. From the BANCADO main menu, select the number for Optical Disk Utilities. From that menu, select number 96, Optical Disk System Configuration. At the top of the configuration, you will see the complete path for the spool area. It may read /versyss/data/0.device/reports/reports. Write down the complete path for use during the FTP transfer. Note that it may start with $VAE in lieu of /versyss, That is just shorthand for /versyss, so write /versyss, not $VAE. You will also need to the name or IP address of your server. Look in the title bar of your PCN-Term window. At the end of the title, you will see either a name like scosysv or pcn or an IP address like 192.168.0.10. Also make a note of that.

To use FTP to copy the file onto your Windows PC, click Start, All Programs, Accessories, and Command Prompt. On the screen that appears, type c: and Enter. Then type cd c:\ and press Enter so that the file will be saved in the root folder of the C drive. If there is already a file named 1099s.dat from last year in the directory, change its name by typing rename 1099s.dat 10992011.dat and pressing Enter. Then type ftp and press enter. That will give you an ftp> prompt. To connect to your server, type the word open followed by the name or IP address of your server.

Once you have connected, you must log on as root. At the User prompt, type root and press Enter. At the Password prompt, type root's password and press Enter. You will then see the message "User root logged in. If you were unsuccessful, type the word user, press Enter, and try again.

The next step is to change to the directory where the spool file is stored. The last word in the path that you have recorded is the name of the file, so when you type the change directory command, omit it. So if your path is /versyss/data/0.device/reports/reports, type cd /versyss/data/0.device/reports and press Enter. Next, switch to binary mode before downloading the file. Type bin and press Enter. The system will respond with "Type set to I." Now you are ready to get the spool file, the last part of your recorded path. If the file name is reports, type get reports 1099s.dat and press Enter. Reports is the name of the file on the server and 1099s.dat is the name it will have on your PC.

To exit the FTP program, type bye and press Enter. Then type exit and press Enter to close the command prompt window.

To laser print the documents, start the 2011 Government Reporting program on your PC. Click Summaries and Reports and then Print Substitute Documents. In the top box, enter C:\1099s.dat for the complete path of the spooled file. Follow the instructions on the screen to set up the line counts, the left side offset, and the top of form offset. Then print a test page to make sure that the forms fit properly into your window envelopes. Once you properly set the options, you may want to exit the program so that your selections are saved and restart it again. Finally, click Start to begin printing the documents.

You may cancel printing after it has started by clicking the Cancel button. If a restart becomes necessary, return to the BANCADO system, clear the spool area, and perform the restart procedure from the Print Substitute Documents program. Then download the new spool file and start the printing process again.

11. Print Report from Government Reporting File - This function should be run to get a complete list of your records before you forward the file to the IRS.. If you are sending the file to us for transmission to the IRS, please include a summary report so that we may verify totals. The following prompt is displayed:

Enter report sequence: []

Enter 1 for Customer Name, 2 for Customer Number, 3 for Account/Loan number, or 4 for Social Security Number sequence. (You may want to print the list in two or more sequences for future reference.)

The system then asks for a two-letter state code in case you require a report of records for state reporting. Key the state code for a state report or press <Enter> for a complete federal report. Then the system requests:

Select Detail or Summary (D/S): []

Enter an "S" the first time to print a summary report so that the totals can be verified. Then initiate the program again to generate a detail report for your records.

Then the program asks: Include non-reported 1099-INT records? (Y/N): [] The non-reported items are accounts that received less than the minimum amount of interest. You may wish to print the detail list twice, once with each option.

There is also an option to select which forms will be included on the report. It is intended primarily to enable you to print a report of only 5498's in May when they are submitted to Martinsburg.

12. Download Government Reporting File to PC - This program is used to download your reporting file to your PC after the file has been verified to be 100% correct and ready for submission to the IRS. This program must be run from a PC attached to your mainframe as a terminal. Complete operating instructions are included in Chapter 6, Download to PC.

96. Government Reporting Utilities - This selection initiates a menu of special utilities you may or may not require.

96.1 Delete all records for a specific form - This program is normally used only in the event of an error in the creation of government reporting records for a single form. It allows you to restart processing for some forms without starting completely over with file initialization.

Besides requesting form type, the program has options concerning manually entered, automatically created, and changed records. Follow the screen instructions.

96.2 Change corrected return indicator on all forms - This selection is to be used only in the event that an erroneous file was forwarded to the IRS or to your state agency. It sets a switch in each record on file so that you can transmit an update file.

96.3 Clear amounts from old records for 2011 reporting - this program clears the amounts from records created in 2010 so that you do not have to re-enter the name and address. If this function is used, bypass initializing the file, but be sure to manually edit all control records. Then edit each record to add the 2011 dollar amounts and delete unnecessary records.

96.4 List company files available - this selection displays a list of company files you have created.

96.5 Change active company files - this is the selection to use to access the records for another company that you have already created on your system.

96.6 Create new company - this program creates a new file named “TAPEnn” in the volume “TAPEVOL” on your system where “nn” is the new company number. The new file will be sized the same as your original “TAPE” file.

96.7 Start PC Government Reporting Program - if you are using a PC running PCN-Term as a terminal connected to your main BANCADO system, this selection will start the PC program required to complete the government reporting process after your files have been downloaded.

97. Backup/Restore 1099 Data File - To preserve the Government Reporting Information throughout the year, the file (named "TAPE") must not be backed up with either your "BANCADO" or "COMPLETE" backup archive set. A separate backup of the 1099 data file should be made in case you want to reload the information into your computer later without restoring all year-end information. You may use this menu selection to access the normal backup and restore program and use the archive set name "TAPE".

Chapter 6

Download To PC

Programs are supplied to download your government reporting file to a PC attached to your mainframe, print a report of the downloaded file to verify accuracy, transmit the file to the IRS, and copy the file to diskette for submission to your state revenue agency. Refer to page 6 for PC software installation instructions.

The download to PC process requires the use of a text area of sufficient size to temporarily hold the government reporting data on your mainframe computer. If you use word processing, the area set up for that application will probably suffice. You will need approximately 52 tracks (408 blocks) per 1000 records to be downloaded. If an existing text area is not large enough, use Text File Utilities to establish a new area.

Selection number 12 on the Government Reporting Menu initiates the download process. If state reporting is required, you will have to run this program twice, once for the IRS and once for your state. You will then run it again in May for 5498 reporting. Separate files for each of the three options are maintained on the PC, so you may perform multiple download functions in a single session. Upon initiation, the following prompt is displayed:

Two-letter State Code: []

Enter the two-letter code for your state. The system then asks:

Include this state only? (Y/N): []

If you are preparing the state file, type Y and press <Enter>. Otherwise, type N and press <Enter>. (If you have been approved for combined federal and state reporting and you responded with a “Y” to the combined reporting option on page 13 in Chapter 5, it is not necessary to download a state file.)

The system then prompts:

File Type: [O]

This option is indicates the type of file you will be submitting. Normally, enter an "O" for Original file and press <Enter>. If the processing center has informed you of problems with your first submission and you have made corrections and will resubmit the file, enter an “R” to indicate that it is a Replacement file. If you want to submit only those records that you have manually set as “Corrected”, enter a “C” for a Correction file. (Before you submit a Correction file, see the Corrected Return Instructions” on the next page.

Next, a list of all of the possible forms is shown so that you can indicate which are to be included in the download operation. For federal files, all forms are normally included except in May when 5498's are forwarded. For state files, the system automatically selects only the forms that are normally required by states. It is up to you to verify that the appropriate records are forwarded to your state.

Then the system requests:

Volume for Download: [] Text Area for Download: []

Enter the name of the volume (normally SORTVOL) where the text area you will use is located followed by the name of the text area (normally PCTEXT).. You will then see:

PC Drive for GOVT subdirectory: C[]

If your GOVT directory is on drive C of the PC, press <Enter>. Otherwise, enter the appropriate drive letter. The system then will show the name of the file it will create on the PC and proceed to download your government reporting data to the PC from which you initiated the program. IMPORTANT: Verify that the name of the file corresponds to your intentions according to the following.

2011FED.DAT 1098's and 1099's for the IRS

2011ST.DAT 1099's for your state only

2011IRA.DAT 5498's

The first file is created shortly after year end. If you take advantage of the combined filing program, you will not require the second file. If not, it also will be created shortly after year end. The third file is created after final IRA contributions have been made in April.

A countdown of the records being downloaded is displayed on the screen during the process.

NOTE: If you submit multiple companies, you may not download more than one at a time without renaming or transmitting the downloaded file between downloads. This is because the same PC file name is used for each download and only the last one downloaded remains on the computer. It is always a good idea to verify the date and time a file was downloaded prior to transmitting it to the IRS.

Corrected Return Instructions

A corrected return is defined as one which has been submitted to and has been accepted by the processing center in error. Since individual corrected returns should be submitted only once and you may have some to submit at different times, use the following procedure.

1. From the Government Reporting Utilities menu, select item 2 for Change Corrected Return Indicator on all forms. Enter an “N” to make sure that previously submitted corrections are reset.

2. From the Government Reporting Utilities menu, select item 3 for Change Corrected Return Indicator on individual forms. Access the individual customers that you have manually corrected to set the Corrected Return Indicator. For combined 1099-INT records, be sure to set the indicator for all combined accounts.

3. Download the file to your PC using file type “C” for Correction file.
Chapter 7

PC Reports

After you have performed the download of government reporting data as described in Chapter 6, you should print a report of the downloaded data to verify its accuracy. On your Windows XP system, click on Start, Programs, and Government Reporting. When the Government Reporting menu window appears, click on Summaries and Reports.

To quickly verify totals, click on View Summary Totals and select the appropriate file.

For hard copy, click on Print Reports and select the appropriate report name and type from the options shown. The system will verify your printer selection and print the selected report.

If you chose the option to print substitute documents for mailing to customers on a laser printer through the PC program, you must first copy the spooled print file from the BANCADO computer to a folder on your PC. Click the Print Substitute Documents icon in the Summaries and Reports section. Use the tools provided to set up proper print alignment on your printer following the instructions on the screen. Enter the full path of the downloaded spool file and then click Start to begin printing.

Chapter 8

Transmit 1099 File to IRS

The IRS now accepts 1099 files submitted via the Internet. Point your Internet browser to http://fire.irs.gov, log in, and follow the instructions on the screen. You will have to have your sign in name, password, EIN (Employer Identification Number, and TCC (Transmitter Control Code) available to submit files.

The file that you will be transmitting will be either C:\GOVT\2011FED.DAT or C:\GOVT\2011IRA.DAT depending on whether you are sending 1099 or 5498 data.

Two or three days after your transmission, you should log back on to the site to verify that your file has been properly processed.

Chapter 9

PC Diskette Creation

The IRS has phased out the use of diskettes. This program is now included solely for the purpose of creating diskettes to send to individual states.

To copy records from the downloaded file on your PC to a floppy diskette for forwarding to your state taxing authority, click on Start, Programs, Government Reporting, and Create Diskette. Upon selection of the Create Diskette function, you are asked to select a diskette drive and the file you require.

Insert a blank formatted diskette into the drive. Select the diskette drive to use and the file you wish to create. Then click on Start.

If additional diskettes are required, the system will request them.

Upon completion of each disk, the system instructs you to remove the diskette, label it, and if necessary, insert another blank disk.

When the Create 1099 Disk process has been completed, follow the instructions supplied by your state taxing authority for labeling, packaging, and shipping the floppy disks.

Chapter 10

Release 11.2

BANCADO Release 11.2

Because of the shortness of the time available for yearend processing this year caused by January 1st falling on a Sunday, we have decided to not attempt to install any significant BANCADO software changes prior to yearend processing. This will allow us to avoid any unexpected issues with program changes and to concentrate on getting through yearend as quickly as possible.

There are 3 important program changes that have been included in the government library update. The first is a change to the deposit account year-end maintenance program that removes the code that clears the year-to-date overdraft and return item fee fields. The second is a change to the statement rebuild routine so that those same two fields may be cleared at the proper time. The third is a change to the IRA RMD report to include bank totals. After you have installed the new government reporting library, perform these steps"

1. On the main BANCADO menu, type /PROGDEL and press Enter.

2. Delete from volume /SYSVOL, Device 0, Library name IRA, Program name IRA RMD LIST, Program number 235.

3. Escape and on the main BANCADO menu, type /PROGCPY and press Enter.

4. Select 1 for copy a single program.

5. Copy from volume /SYSVOL, Device 0, Library name GOVT, Program Name YEAR-END MAINT 2

6. Copy to volume /SYSVOL, Device 0, Library name DEP, Program Name YEAR-END MAINT 2

7. Copy from volume /SYSVOL, Device 0, Library name GOVT, Program Name STMT RESET QUESTION

8. Copy to volume /SYSVOL, Device 0, Library name DEP, Program Name STMT RESET QUESTION

9. Copy form volume /SYSVOL, Device 0, Library name GOVT, Program Name IRA RMD LIST

10. Copy to volume /SYSVOL, Device 0, Library name IRA, Program Name IRA RMD LIST, Program number 235.

When resetting files after statement runs at the end of December and during January, you will be asked about clearing year-to-date overdraft and return item fees. The reason is that the fields are to run for 12 consecutive months starting the day after the 1st statement in January through the first statement in January of the next year unless statements are printed after the close of business on the last day of the year.

We will be releasing a general BANCADO update early in 2012.

Chapter 11

2012 Federal Payroll Withholding Tables

These tables for the BANCADO Payroll System are to be used for payrolls processed in 2012. DO NOT change the tables before you have processed the final 2011 payroll. Due to late changes in laws, these tables may change. Please verify the ranges shown with the latest copy of Circular E.

Table ID: FEDS Title: FED SINGLE 12 Columns: 3

OVER -- BASE + % OVER

------------- ------------- ------------

6.20 110000.00 6820.00

1.45 999990.00 3800.00

2150.00 .00 10.00

10850.00 870.00 15.00

37500.00 4867.50 25.00

85800.00 17442.50 28.00

180800.00 43482.50 33.00

390500.00 112683.50 35.00

999999.99

Table ID: FEDM Title: FED MARRIED 12 Columns: 3

OVER -- BASE + % OVER

------------- ------------- ------------

6.20 110000.00 6820.00

1.45 999990.00 3800.00

8100.00 .00 10.00

25500.00 1740.00 15.00

78800.00 9735.00 25.00

150800.00 27735.00 28.00

225550.00 48665.00 33.00

396450.00 105062.00 35.00

999999.99

Notes

BANCADO

2011 YEAREND PROCESSING

Table of Contents ..................................................................................................................... i

Introduction ............................................................................................................................... 1

Social Security and Federal ID Numbers ......................................................................... 11

Download To PC ................................................................................................................... 28

1099 Diskette Creation........................................................................................................... 32

BANCADO Release 11.2 ...................................................................................................... 33

2012 Federal Payroll Withholding Tables ......................................................................... 34

Notes ........................................................................................................................................ 35

Government Reporting

General Ledger Closing

Certificate of Deposit Closing

Individual Retirement Account Closing

Installment Loan Closing

Commercial Loan Closing

Mortgage Loan Closing

Deposit Account Closing

Social Security and Federal ID Numbers