PAYROLL
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 lisa.raihl@omes.ok.gov.
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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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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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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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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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, lisa.raihl@omes.ok.gov or Jean Hayes at
405-522-6300, jean.hayes@omes.ok.gov.
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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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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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MISCELLANEOUS
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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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; kristin.elsenbeck@omes.ok.gov.
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ACCOUNTING
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:
- Stop Payment/Deletion
- 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
- 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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TRAVEL
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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P-card
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 pcard@omes.ok.gov.
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