PEOPLESOFT NEWS
PeopleSoft includes an AP Workflow module that has not been previously implemented. In today’s virtual world this module will be very helpful to agencies, especially when employees telework. OMES has piloted the AP Workflow module and is now ready to start implementing the module for agencies statewide. The first step is to meet with you to determine your invoice approval requirements. To get on the schedule for this rollout, please email [email protected].
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The PeopleSoft upgrade is on schedule for Nov. 7, 2020.
PAYROLL
Pursuant to the president’s executive order related to deferring employee payroll taxes, the U.S. Department of the Treasury released guidance setting new payment deadlines for payroll taxes attributable to earnings from Sept. 1 through Dec. 30. Because this is a very short-term deferral of taxes for which the employee must repay beginning in January, the state will not defer the taxes and will withhold and remit payment of Social Security tax under the normal schedule.
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Agencies are reminded that employee bank deposit slips should NOT be used to get the bank routing/transit number for setting up direct deposit information. A voided check from the employee is the most reliable method. If the employee does not have a voided check or wants to deposit into another type of account, have the employee call the bank directly to get the routing/transit number. A bank routing/transit number should never start with the digit “5.” This indicates a branch of the bank and will cause the direct deposit to fail. A direct deposit that fails will not leave Office of the State Treasurer to be paid and additional processing by the agency will be required to pay the employee.
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Employee deferrals and employer contributions must be remitted to Oklahoma Public Employees Retirement System in a timely manner to ensure participant amounts are posted and transferred to the selected investment options within 10 business days of payday, end of payroll period or process date, whichever is later.
OMES processes payments for SoonerSave amounts on confirmed payrolls on a weekly basis. This payment schedule far exceeds the requirements set forth in the plan and IRS rules. On many occasions contributions are posted to employee accounts on or before the actual pay date. Occasionally, and due to the payroll processing schedule of agencies, payments may post after the actual pay date.
Please remind employees that payments not showing on a quarterly statement may be due to the later processing of payroll and will show in the next quarterly statement. Employees are also encouraged to use the SoonerSave website to review and receive up-to-date information on their account.
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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. Therefore, payments under voluntary buyouts and reductions in force 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 may 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 800-733-9008 or 405-858-6781.
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As we approach the end of the calendar year, remember the payroll system has been structured to accommodate the reporting of noncash, 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 noncash benefits.
Reporting these benefits is required by state and federal law and 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 may deduct the taxes associated with the wage item on a following paycheck in the next year as a miscellaneous deduction. Any taxes associated with items not run through the payroll system must be sent to OMES in a timely manner so the tax deposits can be made by established deadlines and the items posted to the employee’s earnings record.
Under IRS rules, an employer may choose to pay the employee’s share of taxes on group term life, auto fringe, and other noncash 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 noncash benefit valued at $100. The agency decides to pay the employee’s taxes on all noncash benefits. The employee’s taxes would be $7.65 [(100 x 6.2%) + (100 x 1.45%)]. The amount 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. Divide the benefit amount by 92.35% (100% – 6.2% – 1.45%) to get the gross wages to report. From this amount, the Social Security and Medicare taxes are calculated. $100/92.35% = $108.28 (the taxable wage amount). [($108.28 x 6.2%) + ($105.28 x 1.45%)] = $8.28 (taxes).
Refer to the W-2 instructions and Publication 15A, Employer’s Supplemental Tax Guide, for additional information, if needed. Also, refer to OMES Human Capital Management rules to determine whether these payments are a valid pay plan for a particular agency.
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Employee overpayments 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, notify the employee that if the amount is not paid in full by Dec. 31, 2020, the amount due 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 nearing, the collection of any outstanding overpayment is especially important and must be conveyed to employees who owe any monies back to the agency. When an overpayment is reimbursed in a subsequent year, IRS rules state the employee must reimburse at the gross amount because the funds were available for use 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 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 making the reimbursement by personal check or miscellaneous deduction in the current year. If the employee does not reimburse the net amount by Dec. 31, 2020, the employee owes the agency the full $1,000 gross overpayment.
If the employee reimburses the entire gross amount 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.
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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.
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 that included the overpayment. Terminal leave is not included in retirement wage calculations; therefore, a payroll earnings adjustment is required.
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Agencies must complete Form DER when an employee dies and payments are made after the date of death. The form is on the OMES website under CAR Forms. Complete all forms and send to [email protected] as soon as possible after all payments have been processed.
Procedures for processing payroll after the death of an employee are available in the OMES HCM how-to document titled Payroll Processing For Death of an Employee.
NOTE: Remember to update the date of death on the HR Personal Data Record, update Job Data for a termination with the reason code SO4 (deceased) and terminate the employee’s direct deposit. Banks will return direct deposits for deceased customers. A return of an item will cause a delay to the individual receiving the payment.
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Statute 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 family members after the death of the employee. It also provides 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 email: [email protected].
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Agencies must notify OMES CAR by 5 p.m. Friday of any items that will affect the Oklahoma centralized child support payment to be made the following Monday. Items that could affect the amount to be paid include refunds to employees for amounts withheld in error and reversals of payroll warrants. If OMES is not notified and the centralized child support payment is processed, the agency will be responsible for contacting the Department of Human Services Child Support Division to attempt to get a refund. If the funds have already been disbursed to the recipient, the money might not be refunded back to the agency. Timely communication from agencies is critical in these situations.
Each Monday, OMES CAR runs the OMES HCM process to report and make payment to the Oklahoma Child Support Services/Oklahoma Centralized Support Registry, PS Vendor ID 0000190715. The process is run for payments with dates from the second previous Saturday through the previous Friday. For example, paychecks with an issue date between 7/25/2020 and 7/31/2020 were processed to pay the child support withholdings on 8/03/2020. All payments going to the OCSS must be set up to use Vendor ID 0000190715. Payments to Vendor ID 0000000830 or Vendor ID 0000197419 for the OCSS are no longer allowed and will not be processed for centralized payment if used in error.
In PeopleSoft Financials, a journal entry is created to remove the funds from the agency’s 994 fund. The agency will see a debit to the 633190 account and a credit to 101000.
For questions, please contact Alicia Reel at 405-522-9479, [email protected] or Jean Hayes at 405-522-6300, [email protected].
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1099 INFORMATION
For the past few years the IRS has required an accelerated filing date of Jan. 31 for 1099-MISC reporting of Box 7, nonemployee compensation. The state has complied with this deadline and, in addition, also reported income for all other boxes on 1099M at the same time. Beginning with tax year 2020, the IRS has reintroduced Form 1099-NEC to report nonemployee compensation (formerly Box 7 on 1099M). This form will only contain nonemployee compensation and reporting to the IRS will be due by Jan. 31 each year.
The IRS has revised Form 1099-MISC and rearranged box numbers for reporting certain income. The filing date for this form to the IRS will be March 31.
OMES is working to conform to these filing requirements and we want to make sure agencies are aware of these changes, as well. We will provide more information on this in future CAR newsletters.
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ACCOUNTING
Agencies that have been using the temporary emergency procedures for voucher submissions and have not scanned their documents should resume voucher scanning and catch up on vouchers not scanned over the past few months as soon as the agency has employees returning to the office. While agencies may continue to use the emergency procedures, agencies must catch up on any delayed documentation scanning.
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All OMES form requests, such as the following, should be scanned and submitted by email to [email protected].
- Form 20R, Warrant Replacement.
- Form 77, Expenditure Correction/Transfer Requests.
- Form MWC, Misc. Warrant Cancellations.
- Form EWC, Electronic Warrant Cancellations.
- Form 13, Signature Card.
Since OMES is the holder of record for these documents, we have obtained annual continuing destruction approval from the Department of Libraries. Once we have the legible scanned documents, OMES is extending that authority to the agency for destruction of the paper records. If you have any questions concerning this destruction, submit your question to the above email.
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The Government Services Administration has posted revisions to its schedule, which we use for travel, effective Oct. 1, 2020 (federal fiscal year of October-September). The federal Standard CONUS Per Diem Rates for lodging and meals/incidentals rates (our per diem) did not change. Some of the Non-Standard Areas with higher rates may have changed from covered to non-covered and vice versa. Furthermore, the Oklahoma City/Oklahoma County lodging rate decreased.
View the chart.
The rate change is effective for travel occurring Oct. 1, 2020, and after, which is the start of the 2021 federal fiscal year. These new rates can be viewed or downloaded at the GSA website including travel locations.
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AGENCY NEWS
After 45 years of service to OMES and previously the Office of State Finance, Steve Wilson is retiring. Many accounting and finance employees statewide have worked with Steve over the years. If you would like to say goodbye to Steve, there will be a retirement event on Sept. 23 from 2-4 p.m., at the Will Rogers Building in rooms 214 and 216, with virtual options. For more information, email Stephanie Brown at [email protected].
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