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In planning your work
for November, it is important to remember that Veterans Day is Wednesday, Nov.
11. Thanksgiving is recognized on Thursday, Nov. 26, and Friday, Nov. 27
is also a state holiday. November biweekly payroll for state agencies
(“B” or “C” biweekly schedules) will be paid on Friday Nov. 13 and Wednesday
Nov. 25. November monthly payrolls will be paid on the last working day of the
month, Monday, Nov. 30.
With these dates in
mind, agency staff should plan their work accordingly for the deadlines:
SUPPLEMENTAL:
PeopleSoft supplemental payrolls will be set to pay on Thursday Nov. 12.
Agencies should have these payrolls processed and paperwork forwarded to OMES
by Wed., Nov. 4.
BIWEEKLY: “B” and
“C” biweekly payrolls are scheduled to pay on Fri., Nov. 13. Agencies
should have these payrolls processed and paperwork forwarded to OMES by Thurs.,
Nov. 5. The next biweekly for “B” and “C” biweekly schedule agencies will
be Wed. Nov. 25. Agencies should have these payrolls processed and
paperwork forwarded to OMES by Wed., Nov. 18.
MONTHLY: Monthly
payrolls will be set to pay on Mon. Nov. 30. Agencies should have these
payrolls processed and paperwork forwarded to OMES by Thurs., Nov. 19.
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PAYROLL
Each agency should review their 1099
reportable transactions for the first three quarters of the calendar year 2015.
Agencies should run and print the 1099 Transaction Report in the PeopleSoft
system. The report path is:
Accounts Payable --> Reports
--> Payments --> Misc. Tax Information Report
Specify your agency number and
select the date range as 01/01/2015 through 09/30/2016.
As you review this report, pay particular attention to the IRS Name, TIN, 1099 Address, and the
1099 Flag. All vendors that need to
receive a 1099 should have a ‘Y’ in the 1099 Flag column. If that field shows an ‘N’
and the vendor needs a 1099 please indicate the change with your corrections.
If a 1099 Flag is 'N,' there is no need to submit a change of address since the
vendor will not receive a 1099. If 'Y' please verify the 1099 address. Return the report and all available W-9s to
document your changes (even if it is only an address change) to the
Office of Management and Enterprise Services on or before Friday, Oct. 30, 2015. Your
timely review and response to this report will allow us to update the vendor
file in order to have the best information possible for the final report which
will need to be reviewed the first week of January 2016.
The preferred way of submitting
any corrections to our office is to print the report and write the corrections
on the report using a color of ink other than black. Please send comments and corrections by mail
or interagency mail, or if there are just a few corrections, they may be sent via
e-mail to beth.brox@omes.ok.gov or by fax to 405-522-2186. Any other questions or comments regarding this
matter should be directed to Beth Brox at 405-522-1099.
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House Bill 1107, of the
1st Session of the 54th Legislature, 2013, mandated the payment of the flexible
benefit allowance for employees on biweekly payroll to be credited annually
over 24 pay periods and the benefit deductions to occur over the same 24 pay
periods.
Beginning with the
first paycheck of 2015, employees on biweekly payroll with a benefit allowance
and benefit deductions were transitioned to a 24 period benefits plan.
This only affected state agencies; institutions of Higher Education were not
affected. This only affected state agency employees paid on a biweekly
basis (26 pay periods).
As a reminder, two
months during the year there will be a third paycheck with no benefit allowance
and no benefit deductions. The third paycheck in these ‘three-payday months’
may be larger or smaller than the previous two checks that month. Employees may
also see a difference in the amount of taxes withheld for Social Security,
Medicare, or federal and state withholding thereby increasing or decreasing the amount of net
pay.
October is the second
‘three-payday month’ for 2015. The third check to pay on October 30, 2015,
will not have the benefit allowance and will not have any benefit deductions.
Benefit deductions only include deductions for health, vision, dental, life
options, disability, health savings accounts and flexible spending accounts
(health care and dependent care). Other deductions such as retirement,
garnishments, child support, taxes or voluntary payroll deductions (i.e.:
banks, employee associations, college savings plan) will be withheld as
required on the third check.
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HB 2630 of the 2nd Session of the 54th
Legislature 2014 directed OPERS to establish a tax-qualified defined
contribution retirement system for those members who join the system on or
after November 1, 2015, including statewide elected officials and legislators. House
Bill 1376 of the 1st Session of the 55th Legislature 2015 further clarifies and
defines aspects of the new Defined Contribution (DC) plan set forth in HB 2630.
To meet this requirement, new plans have
been set up in the HCM system for employee enrollment. The OPERS Retirement
Coordinator training will have pertinent information on the implementation of
this new defined contribution plan, please see the training section of this
newsletter for date and times. For additional information on the new defined
contribution plan, please go to: http://www.opers.ok.gov/legislation
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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
Allowances
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
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, 2015, 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; 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, 2015,
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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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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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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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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When submitting employee payroll corrections (94P, Form
3, adjustment memo, etc.), please use the employee’s State EmplID along with
the employee’s name. To protect the privacy of employees, use of social
security numbers is no longer required unless specifically asked for on a form.
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HIGHER EDUCATION PAYROLL PROCESSING AND REPORTING
Information continues to
be added to the higher education separation project website. All webinars
through September 16th and the notes have been added along with
documents discussed during the sessions. All information that has been
published can be found in one area on the OMES CIO website.
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OMES created subscription topic designated specifically for the
higher education separation project. To receive updates, click Subscription Update to subscribe to the topic Higher Education
Payroll Processing & Reporting. Once on the subscription
page, select Subscription Type "Email", enter your email address
and click the "Submit" button. At the top of the subscription
page, select the "Higher Education Payroll Processing and Reporting"
topic. Other topics are available and can be subscribed to as desired. When
finished, select “Submit” at the bottom of the page and your preferences will
be saved.
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OMES programming is coming along and soon institutions will be
able to start testing. User testing is projected to being on Monday October 26th
and run through Wednesday November 25th.
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ACCOUNTING
To facilitate reporting of the OPERS new defined
contribution plan, new account codes have been created and added to the object
of expenditure codes list as follows:
513290 STATE
MATCH AND ADMINISTRATION FEE – DEFINED CONTRIBUTION PLAN
Payments for the state’s match under the Defined
Contribution Plan. This will also
include the administration fee to the Oklahoma Public Employee’s Retirement
System for administering the program.
519140 RET
SAVINGS – DEF CONTRIBUTION PLAN
Payments for deposit to the Oklahoma Public
Employee’s Retirement System for employer retirement savings made pursuant to
the Retirement Freedom Act (74 O.S. § 935.10).
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FINANCIAL REPORTING
Now that business has closed for Fiscal Year 2015, all
pension trusts and component units (with a fiscal year of June 30) should be
working with their auditors to complete financial statements. The deadline for
submitting these, and any necessary Financial Reporting packages, to the OMES
Financial Reporting Unit is Oct. 31. Failure to complete these statements in
a timely manner jeopardizes the state’s ability to complete the audit of the
CAFR in time to meet disclosure requirements set forth by bond issuers and the
GFOA. A potential risk of missing the deadline includes a downgraded bond
rating for the state. All component
units are expected to ensure their auditors are aware of the deadline and
complete their final reports in time for you to provide it to OMES no later
than Oct. 31.
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MISCELLANEOUS
The ACA has been in full
swing, effective Jan. 1, 2015. OMES HCM is working hard to keep you
informed on updates as they are developing new processes to accommodate the
provisions of ACA. A refresher on the ACA was provided during the Benefit
Coordinator Training. If you have any questions about the ACA or the ACA
Eligibility page in PeopleSoft, please submit to humanresources@omes.ok.gov and an
HR representative will contact you.
Each
October, agencies must run the Annual ACA Eligibility report which contains a
listing of the current employees measured during the 12-month look back
period. The report is available within PeopleSoft HCM at OK Custom
Reports/OK Reports/HR/ACA Eligibility Hrs Rpt (0666) and should be run after
all October 2015 payrolls are confirmed.
Here are a few reminders to
help ensure that your agency is in compliance with the ACA:
- All
current employees should have an initial 1/1/2015 effective dated row, or a row
effective their hire date if hired after 1/1/2015. You can run the
GO_HR_ACA_HIRE_NO_ACA_STATUS query to ensure your compliance.
- You should be running the ACA Monthly Hours Report 0668 each month to determine
eligibility for variable hour employees. Variable hour employees will
then need an updated ACA Eligibility row.
- Employees who have terminated since 1/1/2015 should have a Termination row on
the ACA Eligibility page. The effective date should be the same effective
date reflected on Job Data. You can run the GO_HR_ACA_TERMS_NO_ACA_STATUS
query to ensure your compliance.
- Any employee that terminated or who has not received pay prior to 1/1/2015
should be terminated in Job Data with the appropriate retroactive effective
date. You can run the GO_PY_NOT_PAID_SINCE_PROMT query using the 1/1/2015
prompt date to ensure your compliance. (NOTE: There may be extenuating
circumstances for an unpaid employee to remain on payroll, such as an employee
who is on workers compensation TTD. If your agency has an employee who
will remain active in an unpaid status, you must enter a row to reflect their
current ACA Status on the ACA Eligibility page. It would be advisable to
utilize the “Remarks” field.)
- To determine that you have accurate data for your employees,
run the GO_HR_ACA_EMPL_LIST to view the current ACA status for all
employees.
Please review the attached
information regarding the Affordable Care Act that was presented at the 2015
Benefit Coordinator training. Contact information is available within the
document if HCM can be of additional assistance.
HCM has created an ACA
page that can be found here contains helpful information and resources.
ACAUpdate.pptx
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