PAYROLL
The U.S. Citizenship and Immigration Services has announced an update to Form I-9, Employment Eligibility Verification (10/21/2019), with minor changes to the form and instructions. Agencies should have started using this new form as of Jan. 31, 2020. The announcement also allows a grace period for employers to make any necessary updates or adjustments to business processes. The prior version of the form (July 17, 2017) may be used until April 30, 2020. However, agencies should begin using the new version of the form as soon as possible.
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Agencies are reminded to review and ensure employees have valid forms on file for 2020. The exemptions expire on Feb. 17, 2020, and employees must submit new forms to continue exemptions for 2020. If you receive an exempt W-4 after Feb. 17, 2020, 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 is currently claiming an exemption from income tax withholding. The IRS has posted the 2020 W-4 form on their website and the OK-W-4 form can be found on the OTC website.
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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 versus 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. Settlement agreements should specifically state what is being settled and break out any necessary amounts to identify the payments for correct processing.
If the payment settles a lawsuit, the auditor will focus on the basis of the lawsuit. The IRS has a recorded webinar that provides valuable information regarding the taxability of lawsuits and settlements. Agency payroll, finance, human resources and legal departments should obtain the knowledge needed to accurately process compensation to employees or former employees. Agencies are responsible for complying with IRS requirements for withholding and reporting.
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 (wages), then applicable federal, state and FICA taxes must be remitted to OMES on the same day the item is processed. 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 [email protected].
NOTE: The IRS 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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For settlement proceeds paid to an attorney, the agency must ensure the correct account code is used so the amount is reported on a 1099-MISC to the attorney at year-end. In addition, the taxable amount of the payment must be reported to the claimant. If the claimant is a current or former employee and the settlement or judgment payment is income that constitutes wages, the payment is reportable as compensation and included on the W-2 and all applicable taxes and deductions must be withheld. For any payment that is income but doesn’t constitute wages, the payment will be subject to reporting on Form 1099-MISC to the claimant. The agency must obtain the claimant’s reporting information (name, address, ITIN) and provide it to OMES so that a 1099-MISC may be created for the individual. If the payment is excludable from gross income (e.g., paid on account of personal physical injuries or physical sickness) there is no reporting to the claimant required. Agencies are responsible for complying with IRS requirements for withholding and reporting. If additional guidance is needed, please contact Lisa Raihl at 405-521-3258 or [email protected].
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Repayments from employees made in the current year (2020) that are for overpayments of wages in a prior year (2019 or earlier) must be repaid at the gross overpayment amount in accordance with Internal Revenue Service regulations. A W-2C must be completed and sent to OMES. Only Social Security and Medicare wages and taxes are corrected on the W-2C.
DO NOT correct federal or state taxable wages or income taxes. The employee received and had use of the funds during the year of overpayment and as such, the amounts are taxable for federal and state purposes. The employee may be able to take into account such repayments on their current year (2020) income tax return. Please advise the employee to speak to a tax accountant. Additional instructions for Form W-2C are available on the IRS website. For assistance, contact Jean Hayes at 405-522-6300, [email protected] or Lisa Raihl at 405-521-3258, [email protected].
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When an employee chooses to reimburse an overpayment of salary or wages 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 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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40 O.S. § 165.3a allows employers to provide employees the option of designating a beneficiary for wages and benefits payable upon an employee’s death. There is no requirement for an employer to allow employees to select beneficiaries, but agencies may want to consider adopting such a policy. Providing the option to employees relieves stress and anxiety on the family members and provides agencies with clear guidance on who is to receive final wage payments.
This statute does not include any longevity payment that may be due as of the date of death of an employee. 74 O.S. § 840-2.18, subsection H.2, authorizes any longevity payment to be paid to the decedent’s surviving spouse, or if there is no surviving spouse, to the decedent’s estate.
For more information or sample forms and instructions, please contact Alicia Reel at 405-522-9479, [email protected] or Jean Hayes at 405-522-6300, [email protected].
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When entering an employee’s address in the PS HCM system, please do not type the dash (-) that goes between the first five and last four digits. The system automatically populates the dash when printing the earning statement and W-2, along with any other items that include the employee’s address. By manually entering a dash, the system converts this to a space and then drops off the last digit of the final four, resulting in an incorrect Zip code when documents are printed.
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The OMES Form PWC should only be used when an employee is not entitled, in part or whole, to the funds. All PWC forms received by OMES will initiate the process to retrieve the funds, if direct deposit, and cancel the warrant in the payroll system. It is imperative that agencies identify payroll errors and process the Form PWC immediately upon discovery.
Paper warrant cancellations:
The original warrant must be marked Void, attached to the completed Form PWC and sent to OMES Transaction Processing. These requests cannot be processed by fax.
Direct deposit cancellations:
Fax OMES Form PWC (revised 4/2017) to 405-522-2186 and verify the fax was successful. Requests for cancellation of direct deposits must be made by completing the Form PWC and faxing it to OMES to initiate the cancellation procedures. As an alternative, the forms may be emailed to [email protected]. To ensure that direct deposit funds are returned, the Form PWC request must be received by noon three business days prior to the effective pay date.
Any faxed/emailed request for cancellation of direct deposits after that cutoff will be subject to recall or reversal procedures which are subject to denial by the employee’s bank. An employee must be notified in writing of a reversing entry and the reason for the reversing entry no later than the effective date of the reversing entry. Please notify the employee no later than the day the OMES Form PWC is submitted for processing.
The statement below can be modified by your agency and used to inform your employee(s) of the pending reversal:
“A payroll item will be posted in error to your bank account on MM/DD/YY. A reversal has been issued and will post to your account to pull these funds back to the state. Please keep the full amount of this deposit in your account. If the state cannot retrieve the full amount of the deposit, action will be taken in accordance with applicable procedures to retrieve the funds from you.”
Once the funds have been returned to the state, OMES will process a cancellation in the payroll system that returns the funds to the agency. If the funds cannot be recovered from the bank, the agency is responsible for recovering the funds from the employee. Please refer to 74 O.S. § 840-2.19 D for proper procedures for recovering overpayments if needed. The agency should submit the OMES Form 94P for processing if the employee reimburses the funds through a miscellaneous payroll deduction or cash.
NOTE: PWC forms received for direct deposit items that are more than five business days past the effective date will not be processed in accordance with NACHA rules. If agencies encounter erroneous entries more than five business days past the effective date, please contact Alicia Reel at 405-522-9479, [email protected] or Jean Hayes at 405-522-6300, [email protected], for consultation on options for recovering the funds.
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MISCELLANEOUS
By this time agencies should have printed the forms 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 2019 will have received the 1095-C form for the employee with information for the entire year related to the employee’s status.
Please see the FAQs for more information and detailed instructions on correcting or creating a 1095-C form. Corrections for Form 1095-C must be submitted to OMES HCM by Feb. 28, 2020. Please send the original form, a copy of the corrected form and a memo explaining why the correction is needed. If a form was not created for an employee and should have been, the agency must manually create one, provide the employee a copy and submit a copy for inclusion on the IRS file. Please send corrected and newly created forms to [email protected] or by interagency mail to Will Rogers Building – OMES HCM, Attention: Rena Bigby. Any corrections needed after the deadline should still be sent to OMES for us to notify the IRS.
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. 28, 2020, 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 Rena Bigby, director of Classification and Compensation, at 405-522-6109, [email protected].
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HIGHER EDUCATION ENTITIES
As a reminder, when an MWC or EWC is submitted to cancel a payroll warrant, a corresponding PFT Reversal file must be submitted to remove the funds from the 789 class-funding and place them back in the originating class-funding. The amount in the PFT reversal file should be the gross-to-net amount and employer share of taxes and benefits that processed on the original warrant.
The PFT Reversal process is also used to process amounts in or out of the 789 fund based on business needs. This includes:
- Processing taxes which were not processed through the normal 500Misc/PFT process but must be submitted through the ACES system.
- Corrections necessary for overpayment refunds.
- Correction of items improperly reported or omitted from the original PFT submitted.
Additional information on processing PFT Reversal files can be found on the OMES website.
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OpenBooks files are due after the end of the month, by the fifth business day of the following month. The following are specific field data reminders:
Job code – This must be a valid OMES job code. If you need to know a job code, contact OMES HCM Classification and Compensation at 405-521-2177 for assistance.
Hours – This must be an employee’s accurate hours. The hours reported here will also be used for FTE reporting, along with the pay frequency entered in the file.
Warrant number – The warrant number must contain the required leading 2. This is the actual warrant number processed through the state’s financial system and paid through the treasurer’s office.
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1099 INFORMATION
All 1099 corrections for 2019 or previous years must be submitted to OMES and we will report the corrections to the IRS. If you have any 1099s returned by the vendor requiring changes, please issue a Corrected 1099 to the vendor using the blank forms provided with the original 1099s or you may contact OMES to print them for you. Send copies of the incorrect 1099, the correct 1099 and any documentation to support the change to OMES. If you have questions, please contact Beth Brox at 405-522-1099 or [email protected] or Alicia Reel at 405-522-9479 or [email protected].
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ACCOUNTS PAYABLE
Always provide adequate information on vouchers processed for interagency payments. Without proper information, it is difficult and sometimes impossible for the receiving agencies to properly apply payments. When an agency provides an invoice number on the invoice, that number should be put on the voucher payment in the available field.
Information can also be placed in the Messages field (under Payment Options) on the voucher record to provide additional clarification of the payment. If you need assistance in how to properly use this field on the voucher, or for adding it to the voucher record for agencies submitting voucher files to OMES, please email [email protected].
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TRAVEL
Reminder: The statewide contract for travel agent services is transitioning to Journey House on March 1. Agencies booking travel that will not be completed before March 1 are encouraged to contact Journey House by phone at 405-463-5800 or 800-726-0051 for help with booking (cost $25). If the current online booking tool is used before March 1 for travel that will not be completed by that date, the traveler will have to work with the airlines directly in case of any flight changes. The new online booking tool should be up and running on March 1 at a cost of $9 per booking.
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