Filing Instructions

  1. Health Care Reform: Introduction to Employer Responsibilities for Filing the Fair Share Contribution (FSC) Report and the Health Insurance Responsibility Disclosure (HIRD) Report

  2. What is the Difference Between the Fair Share Contribution Report and the Unemployment Health Insurance Report Filed with DUA?

  3. The Who's and When's of the Annual Filing

  4. How to Use this On-Line System to File FSC and HIRD Reports

  5. Required Filing Data - Checklist

  6. Fair Share Contribution Payment Process

  7. Non-Compliance Provisions

  8. Other Information You Should Know

  9. Legal and Regulatory Citations

  10. How to Contact Us

  11. Acknowledgement Box

1.      Health Care Reform: Introduction to Employer Responsibilities for Filing the Fair Share Contribution (FSC) Report and the Health Insurance Responsibility Disclosure (HIRD) Report

State health insurance legislation (Chapter 58 of the Acts of 2006) enacted in April of 2006 contained new obligations for Massachusetts employers who employ 11 or more full-time equivalent employees. Employers meeting this minimum employment threshold must file a Fair Share Contribution report annually. If they do not contribute to health insurance for certain of their employees at levels specified by regulation, those employers must make a Fair Share Contribution to the Commonwealth Care Fund, payable to DUA. In addition, these employers are required to file an Employer Health Insurance Responsibility Disclosure (HIRD) Report. Among the HIRD questions to which these employers must respond is whether the employer offers a Section 125 Cafeteria Plan (ref. IRS code) to their employees, financed through pre-tax dollars.

General Description of the Employer Fair Share Contribution

Employers with 11 or more full-time equivalent (FTE) employees who do not make a "fair and reasonable contribution" to their employees’ health insurance, as defined in regulation, are required to pay a per-employee Fair Share Contribution of up to $295 annually.

In its regulations, DUA defines "full-time equivalent" as equaling 2,000 payroll hours (not including workers employed less than one (1) calendar month in the "applicable base period"). Therefore, the minimum employer threshold for potential liability for the Fair Share Contribution is 22,000 payroll hours - 11 X 2000 payroll hours. The "applicable base period" for this payroll hours calculation is the 12-month period from October 1 through September 30.

The methodology set forth in DUA regulation for determining whether the employer has 11 full-time equivalent employees is the same methodology as that adopted by the Division of Health Care Finance and Policy to establish which employers are required to file the HIRD report. Information about how to access the DUA regulations as well as the Division of Health Care Finance and Policy regulations appears in the section, Legal and Regulatory Citations.

When employers file the first annual report between October 1 and November 15, 2007, they will be using employment and health insurance data for the applicable base period, from October 1 of 2006 to September 30, 2007.

The determination of an employer’s liability for payment of the FSC is based on self-reported data filed by employers annually. All data filed by the employer is subject to audit and/or validation by DUA and/or other agencies of the Commonwealth.

Requiring an employer to file does not mean that the employer will owe FSC contributions. That determination is made when the employer files and provides the information required by law and regulations. In fact, many employers required to file the FSC report with DUA will not be liable to pay the Fair Share Contribution.

Those employers liable to pay the Fair Share Contribution will have the option to select a payment schedule: a single annual payment two semi-annual payments or four quarterly payments with due dates established by DUA regulation. Fair Share Contribution revenues are deposited into the Commonwealth Care Trust Fund to help finance health insurance for income-qualified Massachusetts residents. More information about the particulars of the filing and payment methods appears in the sections The Who's and When of the Annual Filing and Fair Share Contribution Payment Process.

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2.     What is the Difference Between the Fair Share Contribution Report and the Unemployment Health Insurance Report Filed with DUA?

A Note of Clarification: Do Not Confuse the Fair Share Contribution with the Unemployment Health Insurance Contribution in Effect Since 1990.

DUA has been administering the Unemployment Health Insurance ("UHI") Program since 1990, which requires a contribution from certain employers who have an average of at least six employees in a quarter. The UHI contribution is based on one of three tax rates, depending upon the length of time an employer has been in business. The assigned UHI tax rate is applied to the first $14,000 in wages paid to each employee during the calendar year. The UHI contribution funds the Medical Security Trust Fund, and enables DUA to provide health coverage to qualified and income-eligible Unemployment Insurance (UI) claimants while they are unemployed and collecting UI benefits. All employers in business for two years or more are required to file with DUA for the first quarter each year between April 1 and April 30; and to file quarterly for any quarter in which they average at least six employees.

Conversely, potential liability for the Fair Share Contribution applies to employers who have at least 22,000 payroll hours during the applicable base period. Liability for FSC payments is determined by whether the employer has made a "fair and reasonable contribution" to employees’ health insurance coverage Reference the link to 114.5 CMR 16.00 - 16.05 in the Legal and Regulatory Citations section). All such employers must file annually with DUA between October 1 and November 15 so that liability for the Fair Share Contribution can be determined.

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3.     The Who's and When's of the Annual Filing

Who must file the Fair Share Contribution Report and the HIRD On-line Report with DUA?

  1. Those employers who receive a notice to file for FSC from DUA will be required to file the on-line report with DUA. These are employers whose employment count information provided to DUA in their quarterly UI reports (i.e., monthly "snapshots" of employee counts) suggest that they could reach the 22,000 threshold. A notification to file for FSC will be mailed by DUA to the legal address of record provided by the employer to DUA. Not all employers will receive a notification to file.

    Employers who receive a notice to file for FSC from DUA must file, even if they do not have 11 FTE’s, in order to avoid non-filer notices and potential tax assessments. However, employers with fewer than 11 FTE’s will find the filing process relatively easy, since only one data element will be required - the number of payroll hours of employees who worked at least one (1) calendar month during the base year. A few other questions about employer health care coverage will be offered to these employers, but responses to those questions are optional.

  2. Any employer who has at least 11 full-time equivalent employees in the applicable base period is required to file the FSC/HIRD reports, even if they do not receive a notice to file from DUA. In other words, all employers who reach the threshold of at least 22,000 payroll hours for the period from Oct. 1 - Sept. 30 must file for FSC by Nov. 15 each year.

    Important: DUA does not know for sure which employers have reached the 22,000 payroll hour minimum threshold for filing, because no state agency systematically collects this information from employers. DUA will use its available data sources - the employee count in a designated week each month - to approximate which employers may reach the 22,000 payroll hour threshold, as defined. However, employee counts do not tell us how many full-time equivalent employees a company actually has (as uniquely defined in the health care reform law & regulations).

    Therefore, it remains the employer’s responsibility to complete the FSC filing if the company reaches the 22,000 payroll hour threshold, even if they have not been notified by DUA to do so.

    (Note: All employers required to file for FSC must certify that the information they provide is accurate to the best of their knowledge.)

    It should be noted that the Commonwealth Connector Authority mailed notices to every Massachusetts employer in the spring of 2007 notifying them of their future filing responsibilities under the Massachusetts health care reform law. Thus, employers with at least 11 FTEs have been alerted to this requirement, even if they do not receive a notice to file from DUA.

How often must employers complete the on-line FSC/HIRD filing?

The "timely" filing period is October 1 through November 15 for each year (although the on-line filing system is available all year).

The decision about whether the employer owes an FSC contribution is based on the time period from Oct. 1 thru Sept. 30, with the filing for that base period due by Nov. 15. Liability is based on employment levels, payroll hours, and health insurance coverage available to its employees.

Although the filing is completed only once annually, payment may be made in a single payment at the time of filing, or spread out to either two semi-annual payments, or four quarterly payments, at the employer’s option. More information about payment process can be found at Fair Share Contribution Payment Process.

Are there any prerequisites to using the on-line Fair Share Contribution filing system?

Employers must be registered as a UI-subject employer with DUA, and must have already received their 8-digit DUA number. The employer must use their unique DUA number each time they access this FSC filing system to initiate or continue their FSC filing process.

  1. If you are a new business and have not yet registered as a UI-subject employer with DUA, you should do so immediately through one of the following methods:
    1. On-line at https://web2.detma.org/revenue/ereg/employer/ereg_e01_welcome.aspx?bhcp=1. Note: Certain restrictions apply to on-line registration of a new business. These restrictions are explained at the start of the on-line registration process.
    2. By completing the "Employer Status Report", Form 1110. This form may be downloaded at www.Mass.gov/dua.

    To speak to a DUA representative about the new employer registration process, please call 617-626-5050.

    After you register your new business, you will be notified by DUA if you are required to file for FSC.

  2. If you are an employer who took over part or all of another business, changed your organization type or FED ID number, you must notify DUA and provide the necessary information to receive a determination and a new and/or modified DUA number, in conformance with MA Unemployment Insurance law.

    To start this process, please download the "Employer Status Report," Form 1110, at the location identified above, and/or contact 617-626-5050 for more information.

    After a UI determination is made related to the business transfer, you will be notified by DUA if you are required to file for FSC.

How Will the Annual FSC Filing Be Completed?

The annual employer filing must be completed online. DUA does not have a lockbox arrangement or any realistic provisions for manually processing the thousands of filings that will be received annually, as well as for the volume of FSC payments that will be received throughout the year.

While it is unlikely that the segment of employers required to file the FSC report would not have access to a personal computer, there are locations where an employer can obtain free access to a PC if needed. These include the 32 Career Centers across the Commonwealth as well as most public libraries. Employers needing help locating a Career Center near them may be provided with a list of locations that can be downloaded from the DWD website (www.mass.gov/dwd; click on Labor and Workforce Development; select Find a Career Center Near You).

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4.     How to Use this On-Line System to File FSC and HIRD Reports

What should I know about how to use the on-line FSC filing system?

You will be asked to enter your DUA number at the beginning of the filing process and you will be presented with the name and mailing addresses that have been submitted by your company to DUA. Confirm the accuracy of this information. If either address needs to be updated, check the box provided and enter your email address. In a separate email you will receive the form you need to update your mailing addresses with DUA. You may proceed with the filing process as long as you have a valid 8-digit DUA number.

You will be asked a series of questions that require you to provide data and/or responses. (A list of the data items you need to be prepared to supply can be found at Data Checklist.

After you have answered each question, you will be asked to confirm your entry by data entering it a second time. Once you have confirmed your entry, your response will be saved and you can continue to the next question. Changes to previously confirmed answers may require the assistance of a DUA staff person, so be sure that you understand the questions. See the explanation of the On-Line Help features below.

If you cannot complete the filing process in one session, you will be given the option to exit the system and return later to complete the filing. You can enter and exit the system as often as needed to complete all of the required questions. Each time you initiate a filing or re-enter a partially completed filing, you will be issued a Re-entry Number beginning with the letter "R." When you return to continue filing, you must enter your DUA Account number and the corresponding Re-entry Number. Each time you visit a partially completed filing, you will be issued a new Re-entry Number. So please be sure to retain the most recent Re-entry Number associated with your filing.

On-line Help

Extensive on-line help is provided throughout the filing process. Click on the definitions supplied with each question. Some questions contain detailed examples and/or an explanation of the overall sense of the question. At any time in the process you can select the Filing Summary Tab to review your responses to previous questions and then return to the filing by selecting the Employer Filing Tab. EMPLOYERS ARE ENCOURAGED TO USE ALL HELP FEATURES, SINCE EACH QUESTION HAS ITS OWN SET OF DEFINITIONS.

Be Sure you Receive a Confirmation Number after Completing the Certification Section!

After you have responded to the required questions in the FSC and HIRD portions of the filing, you will certify that the information you have provided is true and accurate to the best of your knowledge and belief. As part of this certification, you will enter your name and contact information. Once you have completed the certification, you will receive a Confirmation Number beginning with the letter "C."

After you certify the FSC and HIRD sections of your filing, select the Filing Summary Tab. The Filing Summary will contain your responses, determination of your FSC tax liability, payment schedule if applicable and your Confirmation number. It is suggested that you print out this certified version of the FSC and HIRD portion of the filing and retain it for your records.

Remember: You will not have completed the FSC and HIRD portion of the filing until you receive a Confirmation Number. If you fail to complete this step, you will receive a non-filer notice and, potentially, an FSC tax assessment in the future.

Be sure to retain your Confirmation Number. This will allow you to get back into the FSC filing system at a later date to view your responses, your liability amounts and payment schedule (if you are liable for payment), etc.

Note: Employers with greater than eleven (11) FTE’s who contribute to employee health insurance will be required to complete a final section after certification: Part 5, Your Firm’s Full-Time Criteria.

How to Ensure a Successful Filing Experience

Start the filing process early in the timely filing period! This is particularly important if this is your first time filing this report, since you may discover that you do not have all of the information needed to complete the filing process. With the save feature built into the on-line filing application, you may stop at any point in the process and take more time to gather the information you need to continue. All items you have completed and confirmed will be saved. Your re-entry number will allow you to return and open a new session later on.

Make sure that you have responded to all of the required questions in the FSC and HIRD portions of the filing process by obtaining your Confirmation Number, which will begin with the letter "C." Retain this number in case you need to review your filing record at a later date.

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5.     Required Filing Data - Checklist

All filers will be required to answer Question #1.

  1. FOR CALCULATION OF THE NUMBER OF FULL-TIME EQUIVALENT EMPLOYEES

Listed below are the data items that employers with at least 22,000 payroll hours will be required to provide.

Note: If your company uses a third party payroll / accounting service, you may need to obtain some information from them.

  1. FAIR & REASONABLE CONTRIBUTION: PRIMARY TEST

    Please note that the Primary Test has been changed from that which is specified in the Division of Health Care Finance and Policy regulation 114.5 CMR 16.03 (1) (a). You may go to the DHCFP website, www.mass.gov/dhcfp, for an administrative bulletin announcing this change in the Primary Test.

  2. Primary Test Worksheet

    Yearly Average of Full-Time Employees and Enrolled Full-Time Employees (2007 Primary Test)
     
        12/31/06 3/31/07 6/30/07 9/30/07   Yearly
    Average
      Yearly Average (Rounded). Enter into the on-line filing system
                       
    2A.     Enrolled Full-Time Employees What is the yearly average of the number of full-time employees1 who were enrolled in your employer-sponsored health insurance plan on the last day of each calendar quarter?         AV1.   2A.  
                       
    2B.       Full-Time Employees What is the yearly average of the total number of full-time employees1
    on your payroll on the last day of each calendar quarter?
            AV2.   2B.  
                       



    Definitions:
    1 "Full Time Employee" is an employee who worked "Full Time"2 a majority of his/her time during the calendar quarter ending on the date indicated.
    2"Full Time" for this purpose is the lower of:
    1. the number of weekly payroll hours to be eligible for "full-time health plan benefits"3; or,
    2. 35 payroll hours per week.
    3"Full-time health plan benefits" means the equivalent level of employer contribution to the employer's health plan that is offered to full-time employees.

    Instructions:

    Question 2A
        Enter the number of full-time employees1 enrolled in your employer-sponsored health plan on the quarter-ending dates indicated.
        Enter a zero for the quarter if no full-time employees are enrolled on the date indicated.

    Question 2B
        Enter the total number of full-time employees1 on your payroll on the quarter-ending dates indicated.
        Enter a zero for the quarter if no full-time employees are on the payroll on the date indicated.
        The value must be greater than or equal to the corresponding quarter-ending value in Question 2A.

    AV1. Yearly Average Enrolled Full-Time Employees
        Sum the four quarterly responses to Question 2A and divide by the number of non-zero quarters in Question 2B.

    AV2. Yearly Average Full-Time Employees
        Sum the four quarterly responses to Question 2B and divide by the number of non-zero quarters in Question 2B.

    2A. Yearly Average Enrolled Full-Time Employees (Rounded)
        Round up AV1 to the next highest whole number.

    2B. Yearly Average Full-Time Employees (Rounded)
        Round down AV2 to the next lowest whole number.

    2A cannot be greater than 2B. If the rounding rules above cause this to occur, round AV1 and AV2 both up or both down.

    Enter 2A and 2B into the corresponding boxes in Question 2A and 2B of the on-line filing.
    The on-line filing system will compute the average annual full-time employer participation rate by dividing 2A by 2B and display your percentage when you complete the FSC portion of the filing.

  3. FAIR AND REASONABLE CONTRIBUTION: SECONDARY TEST

  4. TOTAL NUMBER OF EMPLOYEES

  5. HEALTH INSURANCE RESPONSIBILITY DISCLOSURE (HIRD) DATA

  6. Your Firm’s Full-Time Criteria

    *For this purpose, "full-time health plan benefits" mean the equivalent level of employer contribution to the employer’s health plan that is offered to full-time employees. For example, some firms offer full-time level health insurance benefits to employees who work thirty (30) hours or more per week. In this circumstance the answer to the second question would be thirty (30) hours.

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6.     Fair Share Contribution Payment Process

When must payments be made by employers liable for the Fair Share Contribution?

Those employers liable to pay the Fair Share Contribution will have a choice of payment schedule. They may choose to pay the full amount by November 15, to pay semi-annually, or to pay quarterly. Payment due dates established in regulation are as follows:

Note: The filing period begins on October 1. In order to encourage you to file early, DUA will not debit the bank account of any liable employer for any payment, regardless of the payment schedule they have chosen, until the November 15 due date.

Single, annual payment: Due November 15
 
Semi-Annual Payment Schedule: 50% due on November 15
50% due on May 15
 
Quarterly Payment Schedule: 25% due on November 15
25% due on February 15
25% due on May 15
25% due on August 15

Fair Share Contribution revenues are deposited into the Commonwealth Care Trust Fund to help finance health insurance for income-qualified Massachusetts residents.

How will FSC Payments Be Made?

DUA regulations require electronic payment of the Fair Share Contribution. DUA will use an ACH Debit method to collect the FSC payments by automatically debiting the employer’s account on the due date. To ensure that employers are prepared for this debit activity, DUA will send the employer a reminder of the upcoming debit date and amount about two weeks before DUA debits the employer’s account on each pre-scheduled due date. This will give employers ample time to ensure that there are sufficient funds in their account to cover this payment.

During the filing process, employers liable for FSC contributions will be asked to provide their banking information for ACH debit purposes. This includes the bank routing number and their bank account number. In accordance with the contract between the Commonwealth of Massachusetts and EDS (Electronic Data Services), EDS will facilitate processing of the debit through the Federal Reserve Bank system. All data transmissions of banking information are encrypted and are maintained in a secure environment. DUA will not retain any employer banking information in its systems, so no DUA employee will have access to any employer’s banking data.

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7.     Non-Compliance Provisions

What happens when an employer fails to file timely, after being notified by DUA that they must file?

DUA may first send a reminder notice to the employer to file. If non-filing persists, DUA will estimate a Fair Share Contribution due amount and issue a bill to the employer. Since many employers who are required to complete an annual FSC filing may not owe the contribution, and/or may owe less than the assessed contribution amount estimated by DUA, it is in the employer’s best interest to file with DUA timely.

What happens if the employer is liable for FSC contributions, but there is insufficient funds in the employer’s account when DUA attempts to debit the employer’s account on the due date?

The law governing the Fair Share Contribution program (MGL Chapter 149, Section 188 (d), as amended) requires DUA to assess penalties to employers who fail to pay required contributions. By regulation, that penalty is set at 12% per annum on unpaid contribution amounts. DUA has no authority to waive those penalty payments for late payers.

Continued failure of the employer to file and/or pay the required contributions may result in legal enforcement actions by DUA, such as receipt of a court judgment against the employer. Typical legal collection methods include bank levies and property liens to employers who persist in non-payment, and/or fail to meet the requirements of a payment plan agreement with DUA.

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8.     Other Information You Should Know

Multiemployer Plans Including Those Related to Collective Bargaining Agreements

Questions have arisen about Multiemployer Health Benefit Plans, to which more than one employer is required to contribute and which are maintained pursuant to one or more collective bargaining agreements. To complete the primary test in the DUA application, the Division of Health Care Finance and Policy has ruled that an Employer that makes a contribution to a Multiemployer Health Benefit Plan on behalf of a full-time employee may include that full-time employee in the number of employees enrolled in the health plan. Also, for purposes of completing the primary test, an Employer under contract with the federal government that makes a contribution to a full-time employee’s benefits in accordance with federal requirements may include that employee in the number of employees enrolled in the health plan.

Business Transfers and Organizational Changes That Occur During the Base Period

Companies that take over part or all of another UI subject employer during the base year, October 1 through September 30 are responsible for including the predecessor’s payroll, employment, and health insurance data when they file for FSC.

First, by law, the predecessor and successor must have reported this information to the DUA for UI purposes - to receive a proper UI determination and the possible issuance of a new DUA number(s). Then, the FSC filing can be completed under the appropriate DUA number, and with the correct FSC filing data included. Failure to take the first step in notifying DUA of a business transfer may not only result in retroactive changes to their UI accounts and UI rates, but could also result in improper FSC filing.

Among the types of business transfers and organizational changes that must be reported to DUA are if:

Please refer to the section entitled Are there any prerequisites to using the on-line Fair Share Contribution filing system? for information on how to notify DUA of such a business transfer or organizational change.

Leasing Companies

By DUA regulation, the client company is the "employer," not a leasing company who supplies workers to the client and/or handles payroll, tax, and/or other administrative functions for the client company.

This means that the FSC filing must be completed under the client company’s DUA number, and must reflect the payroll, health insurance, and employment data related specifically to the client company.

DUA is not set up to accept "multiple business filings" in bulk by third party agents (e.g., by disk, cartridge tape, FTP file, etc.)

While the employer may choose to secure the services of a third party to complete the on-line FSC filing on their behalf, the FSC filing must be done individually, in this on-line filing mode, on an employer-by-employer basis. Each filing must reflect the payroll, health insurance, and employment data related specifically to that employer.

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9.     Legal and Regulatory Citations

The text of the law that created the Fair Share Contribution program (M.G.L. Chapter 149, Sec.188 (d), as amended) may be accessed from the DUA website. The URL is:

http://www.mass.gov/fairshare

Alternatively, this website area can be accessed as follows:

WWW.MASS.GOV/DUA
Select LABOR AND WORKFORCE DEVELOPMENT
Click Tab FOR EMPLOYERS
Select UNDERSTANDING FAIR SHARE CONTRIBUTION (FSC)

DUA’s regulations, 430 CMR 15.01 - 15.11, define certain elements of the FSC liability decision as well as filing and payment provisions. These regulations may also be accessed from the DUA website at the URL cited above.

The MA Division of Health Care Finance & Policy, an agency within the Executive Office of Health and Human Services, promulgated regulations related to determination of an employer’s liability for the fair share contribution. Among other provisions, these regulations define the "Primary Test" and the "Secondary Test" for a fair and reasonable contribution to an employee’s health insurance coverage. These regulations (ref. 114.5 CMR 16.00 - 16.05) may be viewed at the following website address: http://www.mass.gov/Eeohhs2/docs/dhcfp/g/regs/114_5_16.doc.

Please note that the Primary Test has been changed from that which is specified in the Division of Health Care Finance and Policy regulation 114.5 CMR 16.03 (1) (a). You may go to the DHCFP website, www.mass.gov/dhcfp, for an administrative bulletin announcing this change in the Primary Test.

In addition, the MA Division of Health Care Finance & Policy (DHCFP) has promulgated regulations (114.5 CMR 18.00) establishing which employers must file the HIRD report annually (adopting the same definition of 11 full-time equivalents as DUA does in its regulations), and stipulating the information to be contained in the HIRD report. As noted previously, by completing the DUA FSC filing process, all employers with 11 or more FTE’s will also satisfy their requirement to file the HIRD report with DHCFP. The HIRD regulations may be accessed at the following website address: http://dhcfp/g/regs/114_5_18_emerg.doc

The Commonwealth Health Insurance Connector Authority has promulgated regulations (956 CMR 4.00) pertaining to the responsibility of certain employers to establish and maintain a Section 125 (IRS Code) Cafeteria Plan. These regulations may be accessed via the Connector’s website: www.mass.gov/connector.

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10.     How to Contact Us

You may contact DUA’s Fair Share Contribution Unit as follows:
BY TELEPHONE: 617-626-6080
BY EMAIL: FSC@detma.org

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11.     Acknowledgement Box

Please read the following statement and check the acknowledgement box in order to proceed with your filing:

I acknowledge that I have read the introductory information and instructions presented prior to beginning the FSC filing process.

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