CAR Newsletter ~ February 2017

Newsletter Archive | Statewide Accounting Manual | Forms | State Comptroller


Compensation to Employees and Former Employees, Including Settlements

All compensation to employees and former employees, no matter what form, constitutes wages unless specifically excluded by the Internal Revenue Code. This includes stipends, allowances, employee lawsuits and settlements, gifts, prizes, awards and fringe benefits to name just a few. Before compensation is given to employees or former employees, agencies must determine the correct method of payment (payroll vs accounts payable) and reporting required (W-2, 1099, or none). In an audit, the Internal Revenue Service will focus on the reason for the payment. If the payment settles a lawsuit, the auditor will focus on the basis of the lawsuit.  Agency payroll, finance, human resources and legal departments should obtain the knowledge needed to accurately process compensation to employees or former employees.

If an agency has a settlement agreement that requires the payment be processed through accounts payable instead of the payroll system to expedite processing, and the payment is reportable as compensation, then applicable federal, state and FICA taxes must be remitted to OMES on the same day the item is processed/provided to the individual. If taxes are not withheld on the payment, the agency must gross up the amount and pay both the employee and employer share of taxes. The employee’s record will be updated for year-end reporting. If additional guidance is needed, please contact Lisa Raihl at 405-521-3258 or

NOTE: The Internal Revenue Service has determined that Oklahoma public school teachers receiving payments from a state agency are to be treated as employees of the state. As such, any payments to teachers need to be evaluated to see if the payments should be considered wages. If so, the amounts must be paid through the payroll system, not accounts payable, to be reported on Form W-2 by the paying agency.

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Expenditure Codes for Settlements

The proper expenditure codes to use for different types of settlements can be confusing.  To provide better guidance for which code to use under different circumstances, there has been a recent revision to expenditure codes 553150 through 553220.  Two new codes have been added:  553155 – Current/Former Employee Indemnities, Restitution, Settlements (Non-Reportable) and 553165 – Current/Former Employee Court-ordered or Legal Settlements Reportable to the IRS on Form 1099 Misc Box 3.  The descriptions and proper use of the already existing codes has also been modified.  The Expenditure Code listing on the OMES website has been updated.  A list of the revised codes with descriptions is immediately available on the State Comptroller's webpage.

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Email Scam for W-2 Information

The Internal Revenue Service (IRS) and state tax agencies have renewed their warning about an email scam that uses a corporate officer’s name to request employee Forms W-2 from company payroll or human resources departments.

Agencies are urged to double check any executive-level or unusual requests for lists of Forms W-2 or Social Security numbers. Cybercriminals are tricking payroll and human resource officials into disclosing employee names, SSNs and income information. The thieves then attempt to file fraudulent tax returns for tax refunds.

View the entire IRS news alert.

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Employee IRS Form W-4

Agencies are reminded to review and ensure employees have valid forms on file for 2017. The exempt Form W-4, Employee’s Withholding Allowance Certificate, expires on Feb. 15, 2017, and employees must submit a new form to continue the exemption for 2017. If you receive an exempt W-4 after Feb. 15, 2017, do not process a tax refund to the employee or submit one to OMES for processing. The W-4 will take effect on the next pay cycle; it is not retroactive to the beginning of the year.  The PeopleSoft HCM query: GO_PY_TAX_EXEMPT_STATUS - Fed or State Tax Exemption can be run by agencies to see who currently is claiming an exemption from income tax withholding. The IRS has posted the 2017 W-4 form on the IRS website.

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Reporting Requirements for Repayments of Prior Year Wage Amounts

Repayments from employees made in the current year (2017) that are for overpayments of wages in a prior year (2016 or before) must be repaid at the gross overpayment amount in accordance with Internal Revenue Service regulations. A W-2C is required to be completed and sent to OMES. Only Social Security and Medicare wages and taxes are corrected on the W-2C. The employee must sign an IRS Form 843 in order for us to request a refund of employee FICA taxes.  If the employee will be seeking the refund themselves, the Form 843 is not required. DO NOT adjust Federal or State taxable wages or income taxes. The employee received and had use of the funds during the year of overpayment and, the amounts are taxable for federal and state purposes. The employee may be entitled to either a deduction or credit on their current year (2017) Form 1040. Please advise the employee to speak to a tax accountant. Additional instructions for Form W2-C are available on the IRS website. For assistance, contact Lisa Raihl at 405-521-3258, or Jean Hayes at 405-522-6300,

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Reduction of Annual Leave Hours for Overpayments

When an employee chooses to reimburse an overpayment using annual leave, the amount of annual leave reduced should equal the gross amount of the 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 reimburses an overpayment using terminal leave, an OMES 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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Employee Name and Social Security Number Entries in HCM

When entering a new employee’s name and social security number (SSN) or updating a current employee’s name, please verify the name and social security number being entered is exactly as it appears on the employee’s social security card. This is critical in reporting not only the W-2 wages at year end but the Affordable Care Act (ACA) required health offer/coverage information. If the name and SSN does not match the Social Security Administration (SSA) records, the employee’s wages may not be credited to their social security account. Additionally, if the name and SSN do not match, the employee may not be reported correctly for ACA purposes which could result in an IRS letter to the employee for possible lack of health coverage or an IRS letter to the agency for possibly not offering coverage.

Beginning Sept. 8, 2007, the Social Security Administration updated the social security card.  The number holder’s name will always be printed on two lines, with the last name printed directly below the first and middle names. If you receive a prior version from an employee and are unsure, please ask the employee to verify the first, middle, and last names.

Additionally, compound names do not need to be hyphenated. If an employee provides a name with an apparent compound or multiple last names, ask the employee which name is the beginning of the last name and which (if any) is the middle name.

Please update the employee’s name in the HCM system as instructed in the COR301 Part II manual beginning on page 42 (Navigation:  Workforce Administration > Personal Information > Modify a Person).  You can enter the name that the employee currently uses as their paycheck name if desired, so that their paycheck will continue to reflect the same name as in the past but the employee record and W-2 information should match the social security card.

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Early Payment Discount Update

OMES continues to work on configuring PeopleSoft for the early payment discount program.  We plan to release updated FAQ information soon.  To subscribe to information on this program click here and follow the prompts.  The early pay discounts selection is located under Enterprise Business Services (formerly CORE).

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Affordable Care Act (ACA) 1095-C Form Reminders

Agencies should have printed the forms by now from the CD received from OMES. Employers are required to provide Form 1095-C to ACA full-time employees. Employees that had an ACA eligibility status other than ‘Eligible’ are not required to be reported and will not have a form. The last agency on record at the end of 2016 will have the 1095-C form for the employee with information for the entire year related to the employee’s status.

Corrections for Form 1095-C must be submitted to OMES/HCM Division by Feb. 24, 2017.  Please send the original form, a copy of the corrected form, and a memo explaining why the correction is needed. Please send corrections to the attention of: Kristin Elsenbeck, Human Resources Coordinator, 405-521-6030. Any corrections needed after this date should still be sent to OMES for us to notify the IRS.  This will ensure reporting is as accurate and complete as possible.

If an employee did not have a form created and should have, you must manually create one, provide the employee a copy, and submit a copy to OMES/HCM for inclusion on the IRS file.

For correcting a 1095-C after providing the original to the employee and before the file is submitted to the IRS, correct the form as needed and write, type, or print CORRECTED somewhere on the new 1095-C furnished to the employee.

ONLY enter an “X” in the CORRECTED box after the file has been submitted to the IRS (this won’t be done until after the Feb. 24, 2017 correction deadline).

In addition to the form corrections, please ensure the data entered on the ACA Employee Eligibility (0674) page in the HCM system is correct.  The data entered on this page is critical to correct reporting of an employee’s offer and periods of coverage.

For additional information or questions related to ACA reporting, please contact Kristin Elsenbeck, Human Resources Coordinator: 405-521-6030;

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Procedure Reminders - MWC and EWC Forms

Submission of the OMES Form MWC

In the CAR Newsletter, Volume 27, Number 4, dated Oct. 13, 2016; we announced the reactivation of the OMES Form MWC used to cancel miscellaneous warrants. However, we are still receiving cancellation requests on the OST Stop Payment and Hard Cancel Form.

We will soon begin rejecting any miscellaneous warrant cancellation requests that are not submitted using the OMES Form MWC (Revised 9/16).

Properly Completing the OMES Form EWC

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.  

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: On the Comptroller webpage, under the DCAR Forms, see the revised EWC form and the EWC instructions for descriptions of the type of corrections, if needed.

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Mileage Calculation Reminder

This article is intended to expand on the mileage rounding procedures set forth in the December 2016 CAR Newsletter. When rounding the total mileage, amounts should be rounded to the nearest whole number. The dividing line for rounding is typically at ‘5’. If the number you are rounding is followed by 5, 6, 7, 8, or 9, round the number up. If the number you are rounding is followed by 0, 1, 2, 3, or 4, round the number down. For example:

38.5 would round to 39

38.4 would round to 38

27.49 would round to 27

27.51 would round to 28

Please remember that the actual mileage for the claim should be totaled and then rounded instead of rounding each day’s travel.

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Policy & Procedure Updates

The revised State of Oklahoma Purchase Card Policy & Procedures is scheduled to be posted by Feb. 15, 2017.  Please ensure that all p-card program participants read these as there are several changes, including complete reorganization of the document.  Questions regarding these procedures should be directed to  

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Volume 27, Number 8
Fiscal Year-2017
February 7, 2017

In This Issue ...


Payroll Law 2017

April 24, 2017 - Tulsa
April 25, 2017 – Oklahoma City
Presented by Fred Pryor Seminars

1-Day Seminar cost - $149
For groups of 5 or more - $139 each

For more information, please visit their website

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State Comptroller:
Lynne Bajema, CPA

Deputy State Comptroller:
Steve Funck, CPA, CGFM

Jennie Pratt, CPA, CGFM

Lisa Raihl, CPA

Transaction Processing:
Steve Wilson

Payroll Processing:
Elsa Kunnel

ISD Finance:
Cathy Menefee, CPA, CGFM

Vendor Maintenance:
Victoria Baker

OMES Service Desk:
(PeopleSoft questions)

Financial Reporting Unit:
Matt Clarkson, CPA

Agency Business Services:
Steven Hawkins, CGFM

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