PAYROLL
In
planning your work for October, it is important to remember that Columbus Day
is Monday, Oct. 10. Although not a state holiday, Columbus Day is a
federal/bank holiday. As a reminder, all payrolls and documents must be
received five business (5) days prior to the actual pay date to ensure adequate
time for audit and processing. Adherence to this policy will ensure payrolls
are processed to pay timely.
>> Back to Top
The
earnings codes listed below are setup in the HCM system to properly process
payments made to employees under a RIF or VOBO. Please contact Enterprise
Business Services (CORE) if your agency needs additional earnings codes.
VBO – VOBO/RIF
RBA Amounts - 18-month cost of health insurance (for employee only amount)
SEV –
Severance – lump sum payment up to $5,000
RLO -
Longevity (RIF, Retire) – prorated longevity amount for those individuals who
are retiring and are leaving under a RIF or VOBO. Because they are retiring,
the prorated amount is subject to retirement contributions.
LNS -
Longevity Severance – longevity amount for those individuals not retiring and
leaving under a RIF or VOBO. Additionally, used for the remaining amount a retiring
individual is receiving above the prorated amount subject to retirement.
NOTE: Only the
prorated longevity (RLO) amounts for those employees retiring are subject to
retirement wage reporting and contributions. Please be sure to use the correct
earnings codes for employees to receive their retirement credit. If an
incorrect earnings code is used and later discovered, the agency could be
responsible for paying both the employee and employer shares along with any
potentially lost earnings to the retirement system.
>> Back to Top
As a
reminder to agencies, certain types of earnings are eligible for deferral to
SoonerSave while others are not considered eligible compensation.
Annual
leave payout is generally eligible for SoonerSave deferral on termination of
employment. However, payments on severance from employment do not qualify
as compensation for SoonerSave deferrals. Therefore, payments under
voluntary buyouts (VOBO) and reductions in force (RIF) would be excluded from
deferral consideration.
Only compensation from an
agency that is attributable to services performed for the agency may be
considered as earnings from which SoonerSave deferrals can be
taken. This would include regular pay, overtime, shift differential and
other similar payments based on employment. If an amount would have been
paid had the employment continued, such as annual leave, then deferrals can be
taken.
Please
advise employees that changes in deferral amounts must be submitted to the
SoonerSave Administrator and approved before processing through payroll.
For additional information, agency personnel should contact their SoonerSave
Coordinator or the SoonerSave Administrative office at 1-800-733-9008 or
405-858-6781.
>> Back to Top
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 x 6.2%) + (100 x 1.45%)]. This amount that the employer is paying for the
employee is another benefit to the employee and must be taxed [(7.65 x 6.2%) +
(7.65 x 1.45%)] = $0.58. This additional $0.58 is again taxable to the employee
[(0.58 x 6.2%) + (0.58 x 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 x 6.2%) + (105.28 x 1.45%)] = $8.28 (taxes).
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.
>> Back to Top
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, 2016, 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 made after the end of that calendar year.
For
example, John Doe was overpaid in August by $1,000.00 regular wages. This was
discovered in September 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,
2016, the employee owes the agency the full $1,000.00 gross overpayment.
If the
employee pays the gross amount back after year end, 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, and should be advised to speak to their tax
accountant.
>> Back to Top
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 OMES Form 94P must be
submitted to correct the retirement amounts reported on the check that included the overpayment. Terminal leave is not included in retirement wage
calculations; therefore, a payroll earnings adjustment is required.
>> Back to Top
The OMES
Form 94P has been updated and is available on the OMES website. The updated form, revised
7/15/2016, contains new fields for reporting the Pathfinder retirement plan.
The instructions have been updated as well. Please be sure to use the new
form on all overpayment refund requests.
>> Back to Top
ACCOUNTING
There are reports in the State Accounting System that relate to federal program reporting. These reports can be found within
the navigation for General Ledger reports – General Ledger > General
Reports. These reports can be very useful when reporting federal
expenditures for the Single Audit Report. However, they are only useful
if agencies are properly including the CFDA number on their transactions.
SEFA Expenditures
SEFA Revenue Report
SEFA Transactions Report
The CFDA numbers established by the US Office of Management
and Budget are five-digit numbers in the format of two digits for the federal
granting agency followed by a period then three digits assigned to the program
(XX.XXX). For example, CFDA number 10.555 is assigned to a program administered
by the US Department of Agriculture. The specific program is the National
School Lunch Program.
In the State Accounting System, the CFDA number is a nine
digit field using primarily numeric data. The first five digits correlate
to the federal CFDA number without the period ‘.’, and the last four are for
state agency use (XXXXXXXXX). Some agencies use the last four digits to
designate whether the expenditure is part of the federal share or the state
matching share. If the last four digits are not specifically assigned,
they are filled in with zeros.
If you receive a grant for which the CFDA number does not
exist in the State Accounting System, you can submit a case through the OMES service desk to have it added to the system. If you want to use the last
four digits for further breakdown, be sure to include that in your
request. For example:
105550001 – Nat’l School Lunch - Program Costs
105550008 – Nat’l School Lunch – Admin Costs
The State Accounting System allows a voucher to process with
a valid CFDA number. Although the CFDA field is not a required field in the
State Accounting System, the federal CFDA number should be included for
tracking and reporting purposes. The CFDA number can be set up in the purchase
order or the voucher can be populated with the CFDA number if the purchase
order does not contain it. This procedure allows the processing of the voucher
without having to submit a change order to add or correct the CFDA number on
the purchase order when ready to pay the voucher.
In addition to using the CFDA number on the disbursements,
deposits of federal funds should also include the CFDA number.
So the simple answer to the initial question is that you
should use the CFDA number anytime you are receipting or expending funds
related to federal grants or programs.
>> Back to Top
Effective immediately, agencies should submit their Forms 11
and 11a electronically. The completed and signed forms, with the required
backup, should be sent to the Central Accounting and Reporting group using the
following email. Hard copy submissions are no longer required and forms
should not be submitted using a facsimile machine (FAX).
accounting@omes.ok.gov
A single PDF file should be submitted for each account and
the file should include the required supplementary reports or
information. Optional backup detail can be included as well.
Multiple files can be attached to a single email submission. The file
name should follow a specific naming convention to allow for electronic filing
and sorting. The appropriate naming convention contains the following
elements: five-digit agency number; class funding number; month and year
(spaces are allowed in the file name). Examples of naming conventions are
shown below.
09000 79901 Aug 2017
09000 8090B Sep 2017
If you have any questions, contact Vivian Day at Vivian.day@omes.ok.gov.
>> Back to Top
When submitting an OMES Form EWC - Electronic Warrant
(Payment) Cancellation, to cancel EFT payments, be sure to complete all
sections. This includes Section 3 - Reason
for the Requested Action, with the appropriate information.
Also, we have revised the EWC form to remove the Debit
Reversal option since it is not utilized for AP and Payroll EFTs. (Pages 1 and
2 of the EWC Form are revised)
Please refer to the following for selecting the
appropriate boxes for Section 3:
Select
the type of correction:
1) Stop
Payment/Deletion
2) Credit
Reversal
Select
the status of the Receiver (reason for cancellation)
a. Reversal
of a duplicate entry
b. Unintended
receiver of original entry
c. Incorrect
dollar amount of original entry
3) Reclaim
NOTE: Under the DCAR Forms, see the revised EWC form
and the EWC instructions for descriptions of the type of corrections, if
needed.
>> Back to Top
MISCELLANEOUS
Fraud attempts are increasingly targeting individuals within
businesses, government agencies and educational institutions to influence their
behavior. State agencies must be vigilant as they perform procedures to
verify requests for money movement (wire or ACH). Payment industry
experts say there has been a 91% year over year increase in the number of
targeted phishing attacks recorded globally. Many of these attacks are in the
form of email spoofing. Never initiate a payment or money transfer based solely
on email or telephone instructions, even from trusted sources. Validate by calling
the individual or entity requesting the payment at their known telephone
number. Never call a number provided via an email or popup message. Always
validate the sender’s email address and hover over the email address and/or hit
reply and carefully examine the characters in the email address to ensure they
match the exact spelling of the company domain and the correct spelling of the
individual’s name. Never give any banking or other confidential information to
an unexpected or unknown caller.
The Office of the State Treasurer (OST) has processes in
place to validate payment requests received from state agencies, but the
success of these processes depend on agency personnel properly validating
payments before they are submitted to OST for processing. If there are any
questions related to electronic payments, payment requests or OST processes
please contact Diedra O’Neil at diedra.oneil@treasurer.ok.gov.
>> Back to Top
On Sept. 23, 2016, an amendment to the NACHA Operating
Rules will become effective enabling same-day ACH payments. This amendment will
provide the option to financial institutions to originate certain same-day ACH
payments and mandate all receiving financial institutions to receive same-day
ACH payments. ACH credit transactions, except for international
transactions (IATs), payments to the federal government, and transactions above
$25,000, will be eligible for same-day processing.
Initially same-day ACH payments will be significantly more
expensive to process than future dated entries to allow financial institutions
to recover their costs for enabling and supporting this function. The Office
the State Treasurer (OST) will only originate same-day ACH credits on an
emergency basis. If your agency ever has such an emergency please contact the
Director of Banking and Treasury at OST, Diedra O’Neil (diedra.oneil@treasurer.ok.gov).
Agencies should NOT begin sending same-day effective dates in their payment
files, the entries will continue to be processed on the next valid, future
effective date.
>> Back to Top
|
