DCAR Newsletter - October 2014

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Tight Timeframe for Payroll Processing in November


The go-live date for the PeopleSoft financials upgrade is tentatively planned for mid- to late-November.  Because of the integration between financials and HCM, the timing of payroll processing will be critical.  With the upgrade and holidays occurring in November, it is imperative that payrolls processed for all paydates in November be processed timely and submitted in accordance with the existing policies.  Agencies cannot rely on any extension of that due date.  The five business days prior to the payday deadline should be considered the"drop dead" date.  The deadline for submission for the Friday, Nov. 14, payday is 3 p.m. on Thursday, Nov. 6.  The deadline for submission for the Friday, Dec. 5,  payday is 3 p.m. Wednesday, Nov. 26.  Other November paydates will follow the normal schedule.  Please plan now and make sure that employees know how critical it is to get their time entered early and payrolls processed timely.


Updated OMES Form PWC, Request for Payroll Warrant/Direct Deposit Cancellation

The OMES Form PWC has been updated with a new fax number, (405) 522-2186. Please note this change and begin sending PWC requests to the new number.  The updated form and instructions can be found on the OMES website.

Faxes sent to the old number may not be processed in a timely manner which could cause amounts not to be returned to the state. Agencies are responsible for collecting any amounts that cannot be retrieved through the PWC process in accordance with 74 O.S. § 840 - 2.19, Subsection D.

If you should have questions concerning this change, please contact Lisa Raihl at (405) 521-3258 or lisa.raihl@omes.ok.gov, Jean Hayes at (405) 522-6300 or jean.hayes@omes.ok.gov, or Beth Brox at (405) 522-1099 or beth.brox@omes.ok.gov.

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Taxable Fringe Benefits

As we approach the end of the calendar year, be reminded that the payroll system has been structured to accommodate the reporting of non-cash, taxable fringe benefits. Of specific concern to state employees, the following benefits should be reviewed to determine if W-2 wage adjustments are necessary:

    Group Term Life Insurance

    Employee Use of State Vehicles

    Maintenance, Car and Housing

    Additional non-cash benefits

Reporting of these benefits is required by state and federal law, and it is the responsibility of the individual agency to ensure compliance. If the item is not run through the payroll system in the current year, the employer can deduct the taxes associated with the wage item on a following paycheck in the next year, as a miscellaneous deduction.  The state is responsible for timely depositing the taxes. Any taxes associated with items not run through the payroll system will need to be sent to OMES in a timely manner so the tax deposits can be made and the items posted to the employee’s earnings record.

Under IRS rules, an employer can choose to pay the employee’s share of taxes on group term life, auto fringe, and other non-cash benefits. If the employer pays these taxes without deducting them from the individual, those taxes must be included as wages for federal, state, social security and Medicare wages (boxes 1, 3, 5, and 16). This increase in the employee’s wages is also subject to employee social security and Medicare taxes. This again increases the amount of additional taxes the employer must pay.

Example: Tom received a non-cash benefit valued at $100.00. The agency decides to pay the employee’s taxes on all non-cash benefits. The employee’s taxes would be $7.65 [(100 * 6.2%) + (100 * 1.45%)]. This amount that the employer is paying for the employee is another benefit to the employee and must be taxed [(7.65 * 6.2%) + (7.65 * 1.45%)] = $0.58. This additional $0.58 is again taxable to the employee [(0.58 * 6.2%) + (0.58 * 1.45%)] = $0.05. Total taxes to the employee are $8.28, for total wages of $108.28. An easier way to calculate, is to “gross up” the benefit. The benefit amount is divided by 92.35% (100% - 6.2% - 1.45%) and the outcome is the gross wages to report. From this amount, the social security and Medicare taxes are calculated. 100.00/92.35% = $108.28 (the taxable wage amount). [(108.28 * 6.2%) + (105.28 * 1.45%)] = $8.28 (taxes).

Under IRS rules, an employer can also choose to pay the retiree’s share of taxes on group term life insurance or collect them from the retiree. If the agency pays these taxes without deducting them from the individual, those taxes must be included as wages for federal, state, social security, and Medicare wages (boxes 1, 3, 5, and 16). The calculation is the same as the above example. If federal and state withholdings are required, this must also be taken into consideration for the calculations. Please refer to the W-2 instructions and Publication 15A, Employer’s Supplemental Tax Guide for additional information if needed. Also, please refer to OMES Human Capital Management Division rules to determine whether these payments are a valid pay plan for a particular agency.

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Employee Overpayments Collected After Year End

Employee overpayments that are collected in the next calendar year are to be repaid at the gross overpayment amount in accordance with Internal Revenue Service regulations. If an employee owes the agency, please be certain to let the employee know if the amount is not paid in full by Dec. 31, 2014, the amount they owe will increase to the gross amount.

In accordance with 74 O.S. § 840-2.19, the agency must send a notice to the employee within 10 days of identifying an overpayment.  The employee then has 30 days to respond to this notification.  Employees have several options for repaying overpaid payroll amounts:

  • reduction of annual leave (for the gross overpaid),
  • reduction of current gross salary (for the gross overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred,
  • lump-sum cash repayment,
  • miscellaneous payroll deduction (for the net overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred,
  • any combination of the above options.

With the calendar year end so close, the collection of any outstanding overpayments is especially important and must be conveyed to employees who owe any monies back to the agency. When an overpayment is paid back in a subsequent year, IRS rules state that the employee must pay back at the gross amount because they had use of the funds in the prior year and as such, they are taxable to that year. Additionally, federal and state wages and taxes cannot be reduced for prior years when repayments are done after the end of that calendar year.

For example, John Doe was overpaid in September by $1,000.00 regular wages. This was discovered in October and the agency calculated what the correct payroll should have been. The net check difference is $743.50, this is the amount the employee owes the agency if paying back by personal check or miscellaneous deduction in the current year. If the employee does not pay this net amount back by Dec. 31, 2014, the employee owes the agency the full $1,000.00 gross overpayment.

The applicable W-2, Corrected W-2, or W-2C will only reflect a change in the Social Security and Medicare wages and taxes. Since the employee received and had use of the funds during the year of overpayment, the amount is still taxable for federal and state purposes. The W-2 form will not correct Federal or State taxable wages or income taxes. The employee may be entitled to either a deduction or credit on their current year Form 1040, please advise the employee to speak to their tax accountant.

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Reduction of Annual Leave Hours for Overpayments

When an employee chooses to pay back an overpayment using annual leave, the amount of annual leave reduced should equal the gross amount of overpayment. In the past there have been instances where agencies have incorrectly reduced the annual leave by the net amount of the overpayment.

If an employee pays back an overpayment using terminal leave, an OSF Form 94P must be submitted to correct the retirement amounts reported on the check which included the overpayment. Terminal leave is not included in retirement wage calculations; therefore, a payroll earnings adjustment is required.

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State HCM System Use of Addresses on W-2s

As a reminder, in the PeopleSoft HCM system, the W-2 process loads the employee’s mailing address for IRS Form W-2 reporting.  If there is no value in the mailing address field, then the employee’s home address will be used on the W-2.  If there is a value in the mailing address field that is not to be used on the Form W-2, it will need to be updated or inactivated.

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Agency Address Verification

Please verify the correct agency address is being used on the payroll system. The agency address can be found on the Employee’s Earnings Statement. If the address is not correct for the agency, this will need to be corrected before year end processing of tax forms. Please contact the OMES Service Desk at (405) 521-2444 to have the agency’s address updated in the payroll system.

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GSA Federal Per Diem (Lodging Only Rate) Changes

The Government Services Administration (GSA) has posted revisions to the per diem rates we use for travel which are effective October 1, 2014. For Oklahoma, the meals and incidental rates (our per diem) did not change, however, the lodging rates increased for the Non Standard Areas (higher rate locations).

Please click here to view the lodging changes that have been made.                      

The rate change is effective for travel occurring on October 1, 2014, and thereafter, which is the start of the federal fiscal year (FY) 2015. These changes may also be viewed or downloaded at the GSA website: www.gsa.gov/perdiem.

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Legislative Changes to Travel - Effective Nov. 1, 2014

Enrolled HB 2397 (2014 Legislative Regular Session) made several changes to the State Travel Reimbursement Act. This is primarily cleanup language to the law based on practices we have already been following due to other limitations or procedures necessary for more effective application of the travel act. To read the actual changes in the law you can go to the Oklahoma State Legislature website and view the bill to see the amended language.

Section 1. of the bill amends 74 O.S. 2011 § 500.2 to remove outdated language regarding agency direct payment of airfare by removing the use of the employees social security number from the required support documentation and to remove the requirement for a separate affidavit stating the employee used an airline ticket purchased for state travel, as long as the travel claim references the airfare and that it was paid directly by the agency.

Section 2. of the bill amends 74 O.S. 2011 § 500.3 to correct the statutory citation used for travel claim approval as referenced in the travel act law.

Section 3. of the bill amends 74 O.S. 2011 § 500.9 to remove outdated language for a “per diem in lieu of subsistence” and clarify the allowance of an additional $10 to the per diem rate for cases where lodging is provided at no cost to the state (such as when staying with friends or relatives). Per the OMES Statewide Accounting Manual, Chapter 50.30.05 C., “Per Diem in Lieu of Subsistence” (pg. 209), the proper application of this per diem allowance is defined as follows:

For example, an employee may Voucher the authorized "per diem in lieu of subsistence" allowance where overnight travel was involved, but expenses for public lodging were not incurred due to the employee's election to stay with relatives or friends during the travel period. The allowance, however, would not be authorized for trips in which lodging was arranged and paid by another source apart from the employee. In other words, an employee would not be authorized the allowance where lodging was provided through the cost of registration or "package plan" paid by the state or provided complimentary by a grantor or sponsoring foundation. That is, if the employee used furnished lodging during travel, the per diem allowance in lieu of subsistence shall not be allowed.  

Section 500.9, Subsection E.- Amends outdated language to extend the twenty-four hour limit for travel to include in-state travel when the agency determines that travel is of duration where overnight travel prior to or after the trip objective would be necessary

Section 4. of the bill amends 74 O.S. 2011 § 500.15 to allow language where travel claims to be “approved” instead of being signed. This is to make way for OMES to look at new electronic ways of making claim approvals by the claimant.  However, OMES will continue to consider signatures to be the approval process until other methods are determined to be appropriate for claim approvals.  This also corrects the statutory citation used for travel claim approval as referenced in the travel act law.

These changes become effective Nov. 1, 2014.

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REMINDER – Breakout of Expenses by Expenditure Account Codes

Please remember that when creating purchase orders and processing invoices you should be watching to see that when there are multiple expenses they should be recorded under the proper object of expenditure account code for each expense.  For example, when establishing POs and processing vouchers for Fleet Vehicle type of expenses the coding could include any of the following codes, and possibly some vehicle supply type codes:

522110 – Tolls

532140 – Rent of Equipment

533120 – Maintenance & Repair of Equipment – Outside Vendor

534290 – Motor Fuels

This is whether the payment is made by specific PO/voucher or if paid by P-card.

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New Feature Empowers AP Users

If you are an AP user, there is a new feature that will provide you with important information about supplier (vendor) payment holds. Take a look at the Information Icon video to see it in action!

This new feature will alert you to Remit To: Supplier payment holds on the payment page of the voucher component. As you well know, there is no such alert in 8.9. You typically don't find out about a payment hold until after the voucher returns because it failed to pay. This new icon provides a heads-up a lot sooner in the process.

Don't forget to take a look at all of the 9.2 Financials Upgrade Delta Training Videos including: Budget Detail Search and 9.2 Navigation.

The EBS Upgrade Team encourages all users to review the videos -- regardless of the content -- in order to get a look at the new 9.2 environment.

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New Training Resources Available

Several new resources are posted and available to give you an advance look at 9.2. Accounts Receivable, Asset Management, and Grants and Contracts all have new items available. In addition, some of the existing Quick Tips have also been updated and posted.

EBS financials manuals and other resources are, and always have been, available on the EBS Financials Page for end-users to download and use at their convenience.

Just look for manuals and resources with a 2014 date.

How to Use EBS Manuals

EBS manuals do not train individual agency business processes. They are PeopleSoft manuals to teach end-users how to use the software. How your agency uses it and what your agency requires as data and input for the software is a business process and can vary greatly from agency to agency.

Best Practice

  • All manuals are Microsoft Word documents.
  • Download the manual you want.
  • Add your agency business processes in the appropriate spots within the manual.

And there you have it -- one resource that includes important technical information about the software AND your own agency rules!

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Volume 25, Number 4
Fiscal Year-2015
October 10, 2014

In This Issue ...


AGA CPE Luncheons

The AGA CPE luncheons have resumed.  Luncheons are planned to qualify for 1 hour CPE.  Luncheons are held at the National Cowboy and Western Heritage Museum at 11:30.  The next fall luncheon will be on Oct. 21 and the speaker will be Randy Ross, mayor of Choctaw and executive director of the Accountancy Board.

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AGA Fall Seminar

Nov. 5 at the MetroTech Business Conference Center Auditorium from 8 a.m. to 4:30 p.m.  8 hours CPE including 2 hours Ethics. 

$100 if registered and paid by Oct. 17.

$125 after Oct. 17.

For more information please contact Stephanie Langs at Stephanie.Langs@omes.ok.gov.

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Certified Government Financial Manager Course

Due to popular demand, the Oklahoma City Chapter is once again offering the Certified Government Financial Manager courses here in Oklahoma City.  The courses will be offered March 4-11, 2015.  The training offers 48 hours of CPE and the cost will be $1,150 to $1,500 which makes it very affordable CPE.  For more information contact Riley Shaull at riley.shaull@trs.ok.gov

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Jennie Pratt, CPA, CGFM
(405) 521-6160 jennie.pratt@omes.ok.gov

General Ledger:
Dan Thomason, CPA
(405) 522-4992 dan.thomason@omes.ok.gov 

Lisa Raihl, CPA
(405) 521-3258 lisa.raihl@omes.ok.gov 

Transaction Processing:
Steve Wilson
(405) 521-4679

Payroll Processing:
Elsa Kunnel
(405) 521-6178

AP Manager:
Patricia Garcia, CPA, CGFM
(405) 522-6855

Vendor Maintenance:
Victoria Baker
(405) 522-3093

OMES Service Desk
(PeopleSoft questions)
(405) 521-2444

Financial Reporting Unit:
Matt Clarkson, CPA
(405) 521-2759

Steve Funck, CPA, CGFM
(405) 521-3231

Steve Funck, CPA, CGFM
(405) 521-3231