PAYROLL
State agencies, with international students on OPT or CPT, need to evaluate the individuals when they are hired to determine if they meet the qualifications of being FICA (Social Security and Medicare) exempt, or if they are subject to FICA taxes.
IRC 3121(b)(19) allows an international person on a student visa to be exempt from FICA taxes for the first 5 years of physical presence in the US. This exemption also applies to any period in which the foreign student is in "practical training" allowed by USCIS.
Agencies will need to request information from international student employees about their visits to the US along with a copy of their Visa or Employment Authorization Card that shows authorized practical training. Once all the information has been received, a determination can be made whether the employee should be subject to FICA or should be exempt.
Additionally, if the individual is in a nonresident status, special instructions from IRS Notice 1392 must be followed when completing the IRS Form W-4. The state does not accept IRS Form 8233 for processing of tax treaty benefits; all employees must complete Form W-4.
We have recently been contacted by several agencies regarding employees that should have been evaluated at hire to determine their correct FICA status. Failure to perform this evaluation upon hiring results in taxes incorrectly withheld and creates the need to refund amounts and correct prior reporting.
Please contact Lisa Raihl at 405-521-3258 or[email protected] for additional information.
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In August and November 2018, OMES distributed a AAA memo to state finance officers regarding occurrences of payroll fraud. State agencies are still being targeted because the steps below have not been taken.
Within the past couple of weeks, a state entity was the victim of a phishing scam aimed at fraudulently changing employee direct deposit information.
Immediate steps to take include:
- All agencies must immediately pull all Payroll Change/Direct Deposit forms from their public websites and move the forms to an intranet or distribute by employee request only.
- Additionally, until otherwise notified, personnel who handle employee payroll direct deposit procedures should verify ALL requests for changes to direct deposit by directly contacting the employee by phone and verifying information such as employee ID number, employment start date, etc. Use the phone number on file for the employee; not a number shown on the communication you are verifying.
- Agencies may want to set a time delay when changing direct deposit information to decrease the chance of the theft of wages.
Tips on how to protect yourself from this scam:
- Roll your cursor over the links received via email and look for inconsistencies. If it is not the website the email claims to be directing you to, then the link is to a fraudulent site.
- Never provide credentials of any sort via email. This includes after clicking on links sent via e-mail.
- Be suspicious of any payroll change requests that come from a personal or outside email address. It is important to note that email addresses will often look like they come from an internal source. Instead of replying to the email, start a new email thread to the employee's internal organizational email account.
- Call the OMES Service Desk at 405-521-2444 or contact the appropriate IT or security support for your organization if you receive a suspicious phone call or email.
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Agencies are reminded that employees must submit a signed and dated Automatic Deposit Transmittal (HCM-73) form along with a voided check or official document from the financial institution showing the financial institution’s routing number and the employee’s account number. If both documents are not provided by the employee, the change should not be completed in the HCM system.
If it’s discovered that an employee’s banking information was submitted fraudulently, the employee should contact the HR/Payroll Department immediately along with the authorities. Agency IT personnel should be notified if any correspondence was by email.
If the individual is also established in the Vendor File, please contact Victoria Baker at[email protected] or 405-522-3093.
For helpful information and tips, please visit theOklahoma Cyber Command website.
The National Automated Clearing House Association website also has general information on electronic payment security along with adocument for protecting against fraud.
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If an incorrect Social Security Number has been entered into the HCM system, please contact the OMES Service Desk to have the number corrected. DO NOT create another employee in the system; this will only compound the issue. Employees with multiple EmplIDs must have data combined onto the one correct record, which requires many corrections and changes in the HCM system.
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When entering a new employee’s name and Social Security Number or updating a current employee’s name, please verify the name and SSN 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 required health offer/coverage information. If the name and SSN does not match the Social Security Administration 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 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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When entering a new employee or dependent's name and Social Security Number or updating an individual's name, please verify the name and SSN being entered is exactly as it appears on the employee's Social Security card. Benefit coordinators should ensure employees are aware of this when providing dependent information. The health insurance plans offered by the OMES Employees Group Insurance Division must also submit reports to the IRS for the Affordable Care Act. Incorrect information will cause the insurance plans to receive errors when submitting health coverage information and could result in an IRS letter to the employee for possible lack of health coverage on an individual.
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Public query ‘GO_PY_DED_RUNID_BY_CONFIRM_DT’ is available to assist with the reconciliation of agency 633xxx accounts. The query contains useful information such as deduction codes and descriptions for payee identification, the number of employees with a specific deduction, the total amount deducted for those employees and the general ledger 633xxx accounts to which the deductions were posted. The query is driven by payroll confirm dates, and system prompts allow the user to select a time frame for payrolls processed. Access to the query is included in the payroll processor role. Agency finance personnel will need to coordinate with payroll personnel to have this query run for them. For questions or more information, please contact Courtney Cowart at 405-522-4179 or [email protected]or Lisa Raihl at 405-521-3258 or [email protected].
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The recommended best practice is that a replacement payroll warrant should not be processed until the incorrect warrant has been reversed. Processing another payroll before the desired reversal is complete may cause balance issues for Social Security, Medicare and unemployment wages and taxes.
Additionally, completing the reversal first allows reversed time to either be processed through payroll again, or if needed, time can be corrected and then processed again. If time entered was invalid or incorrect and should not be pulled into payroll again, it should be corrected on the time sheet and processed through Time Administration.
If an agency chooses to run a payroll before the reversal is complete, the agency is responsible for verifying the Social Security, Medicare and unemployment wages and taxes are correct on the replacement payroll warrant. The amounts should be manually calculated as if the reversal had been completed and verified to the system-calculated amounts. If different, please contact the OMES Service Desk and an EBS team member will assist you.
The agency is also responsible for correcting the time sheet by removing the time that processed back through payroll when a replacement check was processed before a reversal was completed. When a payroll check that had time pulled in from Time and Labor is reversed, the reversal creates offset payable time with status “Reversed” and an additional row in payable time with “Estimated” status when the check reversal is confirmed. The “Estimated” payable time will be pulled into payroll again when payroll is processed if not removed, which may cause an overpayment.
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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 and not leave the state. A direct deposit that fails will not leave OST to be paid and additional processing by the agency will be required to pay the employee.
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ACCOUNTS PAYABLE
Payments to a vendor that have been reassigned to the Oklahoma Tax Commission due to a tax hold or tax snag may not be properly reflected on a 1099 even if they are paid using a tax reportable account code. This is because vouchers are not always processed correctly for assignments.
The proper method of making a payment if a vendor file has an OTC tax hold is to create the voucher using the vendor information from its invoice and putting this in the Invoice Information tab of the voucher record.
Then under the Payments tab of the voucher the Payment Information Remit to vendor should be changed to the Oklahoma Tax Commission, vendor ID 0000000695, and using the Location 0021. This will provide payment information on the vendor, but all or part of the payment can be assigned to the Tax Commission. The voucher process is the same for all assignment payments.
For reassigned payments to anyone other than the Tax Commission, the agency must obtain permission from the original invoiced vendor to reassign the payment. The request/permission should be included with the supported documents or the 15A voucher form should be signed by the original invoiced vendor.
For more in-depth instructions on assignments please refer to the Statewide Accounting Manual, or contact Courtney Cowart or Joana Stenulson at[email protected].
These procedures ensure proper 1099 reporting to the vendor. If in error, this procedure is not used, please contact Beth Brox at[email protected].
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FINANCIAL REPORTING
For the fiscal year ending June 30, 2019, the state will be required to implement GASB Statement 83Certain Asset Retirement Obligations.
This statement addresses accounting and financial reporting for certain asset retirement obligations. An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirements activities related to its tangible capital assets should recognize a liability based on the guidance of this statement.
AROs can be incurred based on the occurrence of external laws, regulations, contracts or court judgements, together with the occurrence of an internal event that obligates a government to perform asset retirement activities.
The OMES Financial Reporting Unit requests that all agencies evaluate whether they possess any capital assets that have any characteristics that could invoke an ARO for the state. This will be something that will be asked when your agency is preparing GAAP Package X during the upcoming GAAP conversion process.
If you believe that your agency possesses AROs, have any questions, or need assistance, please contact your financial reporting analyst.
(It should be noted that AROs do NOT include environmental remediation obligations that are already being captured based on the requirements of GASB 49.)
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TRAVEL
Some hotels make a distinction between GSA rate and “State” rate. Employees traveling on state business are limited to the GSA rate published atwww.gsa.gov. This applies to lodging paid with p-card or by other means.
Travelers are responsible for the difference between the actual charge and the GSA rate unless one of the established exemptions, such as designated lodging, applies.
FedRooms at www.fedrooms.com is a good resource for searching for lodging in all states at GSA rates. See Chapter 10 of the Statewide Accounting Manual for more information.
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FROM TREASURER'S OFFICE NEWS
This notification is to educate and remind state agencies of the importance of handling Notifications of Change in a timely manner.
A Notification of Change is a non-dollar entry that the receiving deposit financial institution transmits to the ACH Operator, for distribution back to the originator through the originating deposit financial institution. The RDFI creates the NOC when it receives a pre-notification or a live dollar entry that contains incorrect information. A Notification of Change:
- identifies the entry that has been received at the RDFI;
- pinpoints the specific information on that entry that is incorrect; and,
- provides the correct information in a precise format so the Originator can make the change.
Responsibilities of Agencies
Agencies are required to handle the NOC’s in a timely manner. The information reported in a NOC should be corrected within six banking days of receipt of the NOC information or prior to initiating another entry to the Receiver’s account, whichever is later. However, agencies should not wait if the change can be made earlier.
Agencies should implement any necessary system/process edits ASAP, to ensure that any subsequent transactions, to the recipients in question, cannot be initiated until the information reported in the NOC has been updated.
Fines and/or Penalties for Rules Violations
If the agency does not correct the incorrect data upon receipt of the NOC, prior to initiating another entry, they may be subject to fines/penalties imposed by NACHA for the violation. The fine(s)for an infraction(s) of these rules will be determined on an evaluation by NACHA and can range from $5,000 to $500,000 per month. Any fines/penalties assessed by NACHA and JPM for rules violations will be chargeable to the violating agency. Repeat offenders may be subject to further consequences as repeated offences could jeopardize the state’s ability to participate in the NACHA network.
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Volume 29, Number 9
Fiscal Year-2019
March 18, 2019
In This Issue ...
TRAINING
OMES is again offering the Statewide Financial Policy Training session for state agency finance, budget and procurement personnel as well as agency directors. The training provides a broad overview of the state’s accounting, budgeting and procurement policies, and is recommended for everyone in a management position within an agency as well as for all financial and budget staff whether they are new or a veteran state employee.
The class will provide six hours of continuing professional education credits for CPAs, CPOs or CGFM. Space is limited.
If you have not already registered you may RSVP for enrollment by sending an email to [email protected].
Date: Wednesday March 20, 2019
9 a.m. to 4:30 p.m.
Concourse Theater
State Capitol Complex
2400 N. Lincoln Blvd.
Oklahoma City, OK 73105
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Topic: Next Generation Payments & Disbursements
Burke Rice with rapid! Disbursements
Friday, March 15, 2019 11:30 a.m.
For more information please visit their website.
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Presented by Fred Pryor Seminars
April 4, 2019 - Oklahoma City
Aug. 13, 2019 - Ardmore
Aug. 14, 2019 – Oklahoma City
Aug. 15, 2019 - Tulsa
For more information, please visit their website.
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Mark your calendars for a special Oklahoma Financial Managers Association quarterly meeting on Thursday, April 11, 2019. This meeting will include OMES Director John Budd, who is also the cabinet secretary of agency accountability and the state’s chief operating officer, both new positions created by Gov. Kevin Stitt. In addition to Secretary Budd, we will also have Crawford and Associates coming to provide updates regarding the new GASB Statement 87 regarding leases as well as the Oklahoma ethics director of compliance. There will be a lot of very important information for all agencies.
Seminars are provided free of charge. Register today at: www.okfma.com.
Date: April 11, 2019
Time: 1:30 - 4 p.m.
Place: Business Conference Center Auditorium, MetroTech Springlake Campus,
1900 Springlake Drive, Oklahoma City.
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State Comptroller:
Lynne Bajema, CPA
405-522-5577
[email protected]
OMES Services CAR Accounting:
Jennie Pratt, CPA, CGFM
[email protected]
Agency Business Services/Deputy State Comptroller:
Steve Funck, CPA, CGFM
[email protected]
Financial Reporting Unit:
Matt Clarkson, CPA
[email protected]
Transaction Processing Manager:
Steve Wilson
405-521-4679
[email protected]
Statewide Accounts Payable:
Courtney Cowart
[email protected]
Replacement Warrants:
[email protected]
Voucher Processing:
[email protected]
Payroll Transaction Processing:
Elsa Kunnel
[email protected]
Payroll Reporting:
Lisa Raihl, CPA
405-521-3258
[email protected]
Purchase Cards and Travel (Online Booking) Assistance:
Linda Powell
[email protected]
Vendor Registration:
Victoria Baker
405-522-3093
[email protected]
Vendor File Maintenance:
[email protected]
Vendor Remittance Updates:
Updates to remittance contact for vendor payment notification.
[email protected]
OMES Service Desk:
405-521-2444 or toll-free 866-521-2444
[email protected]
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