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October 2018 CAR Newsletter
The Statewide Accounting Manual has been revised and is now posted to the OMES website. For the remainder of October, the manual is still undergoing minor changes based on questions we’ve received since posting the manual. If you print the manual, we recommend waiting until after Nov. 1 to ensure the last-minute changes are included.
Most of the updates are for clarification purposes. The updates that affect policy and procedures are listed below:
In planning your work for November, it is important to remember that Veterans Day is Monday, Nov. 12. Thanksgiving is recognized on Thursday, Nov. 22, and Friday, Nov. 23, is also a state holiday. November biweekly payroll for state agencies (“B” or “C” biweekly schedules) will be paid on Friday, Nov. 9, and Wednesday, Nov. 21. November monthly payrolls will be paid on the last working day of the month, Friday, Nov. 30.
With these dates in mind, agency staff should plan their work accordingly for the deadlines:
SUPPLEMENTAL: PeopleSoft supplemental payrolls are set to pay on Friday Nov. 9. Agencies should have these payrolls processed and paperwork forwarded to OMES by Friday, Nov. 2.
BIWEEKLY: “B” and “C” biweekly payrolls are set to pay on Friday Nov. 9. Agencies should have these payrolls processed and paperwork forwarded to OMES by Friday, Nov. 2.
The next biweekly pay date for “B” and “C” biweekly schedule agencies will be Wednesday Nov. 21. Agencies should have these payrolls processed and paperwork forwarded to OMES by Wednesday, Nov. 14.
MONTHLY: Monthly payrolls will be set to pay on Friday, Nov. 30. Agencies should have these payrolls processed and paperwork forwarded to OMES by Wednesday, Nov. 21.
Agencies should not be charging federal programs for amounts remitted to the OPERS Defined Benefit plan for employees who are on the Pathfinder plan. The expenditure code for the non-allowable portion is 513300, which is used for deduction codes SRDM9 and SRDM10. OMES is reviewing options for a solution in the HCM system.
A new public query has been created in the HCM system for agencies: GO_PY_PAY_DEDUCT_SRDM_DIST. The query prompts you to enter the Company and PayRunID. The results identify agency employees with amounts posted to account 513300 and the funding stream used. From this information, agencies can make funding corrections in the PS Financial system as needed.
The Internal Revenue Service has issued Notice 2018-75 that gives guidance on reimbursements an employer pays to an employee in 2018 for qualified moving expenses incurred prior to 2018. Amounts reimbursed in 2018 for qualified moving expenses incurred prior to 2018 are not subject to federal income or employment taxes. This also includes amounts paid to moving companies in 2018 for qualified moving services provided prior to 2018.
If an agency has reimbursed an employee in 2018 for qualified moving expenses incurred prior to this year and has processed the amount as taxable through the PeopleSoft HCM system, the amounts will need to be corrected so that it is not reported as taxable wages for 2018. Please contact Lisa Raihl at 405-521-3258 or Jean Hayes at 405-522-6300 for additional information.
Amounts paid or reimbursed to employees for 2018 moving expenses incurred in 2018 are taxable as wages to the employee and must be processed through the PeopleSoft HCM system to be reported on the W-2. Please see the article below.
The 2017 Tax Cuts and Jobs Act suspends the tax-free exclusion of qualified moving expenses paid to or on behalf of an employee by an employer. The suspension period is for tax years beginning Jan. 1, 2018 through Dec. 31, 2025.
Authorized moving expenses paid, directly or indirectly, to or for an employee will be taxable as wages and must be processed through the payroll system. This includes payments made with the P-card and those processed through accounts payable.
If paying the employee directly (through accounts payable) or a third party for moving expenses, the agency must notify its payroll department of the amount paid. The amount must process through the payroll system as non-paying, taxable earnings so that the amount will be taxed and properly reported on the employee’s W-2. We recommend the amount be processed through payroll on the employee’s next paycheck. Delaying until the end of the year could cause a hardship for the employee by taking the taxes out during the holidays. Delaying could also cause issues with collecting the employee taxes if the employee has terminated employment.
For any amounts paid directly to the employee, through the HCM system, taxes will be withheld from the gross amount and the employee will receive the net payment.
Pursuant to SB 527, of the 2nd session of the 56th Legislature, 2018, statewide elected officials or legislators who are first elected or appointed on or after Nov. 1, 2018, and who have prior participating service in the defined benefit plan prior to Nov. 1, 2015, will remain in the defined benefit plan.
Those first elected with no prior participating service in the defined benefit plan will continue to be enrolled in the Pathfinder defined contribution plan.
Prior to this change, officials first elected or appointed on or after Nov. 1, 2015, became a participant in the Pathfinder defined contribution plan even if they had previous OPERS service.
For additional information, agency personnel should contact OPERS at 800-733-9008 (toll free) or 405-858-6737 (OKC area) or their designated OPERS representative.
When a payroll warrant is reversed, payable time entered in Time and Labor is set back to ‘Estimated’ status in the HCM System. For a replacement check to be issued before the reversal is complete, it requires entering time upon which to be paid. Completion of the reversal after the replacement check results in duplication of the time worked in the system and potentially a duplicate payment to the employee if not reviewed and corrected. Employee wage and tax balances may not be correct if not taken into consideration when the replacement check was processed. Therefore, agencies should not issue a replacement until the reversal is complete.
If an agency absolutely cannot wait for the reversal to complete before issuing a replacement, the agency is responsible for removing the payable time created by the reversal. The agency must also review employee wage balances when processing a replacement check to ensure that all wage and tax balances will be correct after the reversal is completed.
Title 47 O.S. § 156.1, as amended, while forbidding the personal use of state-owned motor vehicles, permits the use of the vehicles for the commuting of designated employees.
The personal use of an employer-provided vehicle to commute constitutes a noncash taxable benefit to the employee even when the use of the vehicle is for the benefit of the employer. Excepted are qualified nonpersonal-use vehicles (any vehicle not likely to be used more than minimally for personal use because of its design). Please refer to IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for a list of vehicles generally included as qualified nonpersonal-use vehicles.
The employee can choose to have the value included as taxable income or pay the employer for personal use rather than having it treated as wages. When treating the value as wages, the imputed income is subject to FICA and income tax withholding. The valuation method is dependent on the employee status. Control employees (elected officials or employees whose compensation is at least as great as a federal government employee at Executive Level V - for 2017; $151,700) cannot use the commuting valuation rule ($1.50 rule). All other employees can have the value computed using the Automobile Lease Valuation Rule, the Vehicle Cents-Per-Mile Rule, or the Commuting Rule ($1.50 rule) subject to the requirements of each rule.
All valuation methods are included in IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits. The most common method is the Commuting Rule ($1.50 rule) for valuing employee use of an employer-provided vehicle. The employer must require the employee to use the vehicle for a business purpose; it cannot be voluntary on the employee's part. Personal use for commuting can be valued at $1.50 each way between home and work. If more than one employee commutes in the vehicle, each rider has imputed taxable income. The taxable amount, if not paid by the employee, must be processed through payroll so that taxes are calculated and withheld and the amounts are reported on the W-2.
Process the taxable amount through the HCM system using the TRC Code of “CAR,” which will show as earnings code “CAR.” The amount will be included as taxable income and will be taxed on the paycheck.
We highly recommend the vehicle usage be included in the employee’s payroll each pay period (for the previous pay period, as needed). This will preclude a large sum being included in the employee’s last pay of the calendar year which would result in a higher than normal amount of taxes withheld. Additionally, up-to-date reporting of vehicle usage will benefit the agency should the employee terminate during the year.
If for any reason an agency receives a payroll warrant issued in error, the warrant should be returned as soon as possible to OMES for cancellation. Payroll warrants must be accompanied by an OMES Form PWC.
Warrants issued by the state treasurer which, for any cause, remain outstanding or unpaid for a period of ninety (90) days shall be revoked and canceled under the provisions of 62 O.S. § 34.80. For warrants canceled by statute, the cash is transferred to the canceled warrant fund. Agencies will not be refunded the value of the canceled warrants.
Agencies should be reviewing the PS Financials Payroll 36 Month Statutory Cancellation Report on a regular basis.
If there is a payroll warrant listed and the employee is entitled to the funds, please complete OMES Form 20R and send to Transaction Processing. This will allow a replacement warrant to be issued to provide the employees their due pay.
If there is a payroll warrant listed and the employee is not entitled to the funds, the issuing agency must notify OMES. (62 O.S. § 34.80) Notification should include the warrant number, warrant date, and must be signed by an agency approving authority. Please send notification to Transaction Processing stating that the warrant should not be reissued. In addition, the amounts must be removed from the employee’s earning record. Please contact Lisa Raihl at 405-521-3258, [email protected] or Jean Hayes at 405-522-6300, [email protected].
As a reminder, in the HCM system, the W-2 process loads the employee’s mailing address for IRS Form W-2 reporting. If there is no value in the mailing address field, then the employee’s home address will be used on the W-2. If there is a value in the mailing address field that is not to be used on the Form W-2, it must be updated or inactivated.
The 1095-C form process in the HCM system has been set to load the employee’s mailing address just as the W-2 process does. If there is no value in the mailing address field, then the employee’s home address will be used on the W-2. If there is a value in the mailing address field that is not to be used on the Form W-2, it must be updated or inactivated.
Please verify the correct agency address is being used on the HCM system. The agency address can be found on the Employee’s Earnings Statement. If the address is not correct for the agency, this must be updated before year end processing of tax forms. Please contact the OMES Service Desk at 405-521-2444 to have the agency’s address updated in the HCM system.
The HCM system employee W-2s and 1095-C forms are processed and printed in mail drop order. Please ensure this field is properly used for employees. The forms will print in the same order as checks and advices sort, which is based on each agency’s needs.
Each agency should review their 1099 reportable transactions for the first three quarters of the calendar year 2018. Agencies should run and print the 1099 Transaction Report in the PeopleSoft system. The report path is:
Accounts Payable --> Reports --> Payments --> Misc. Tax Information Report
As you review this report please note that the IRS Name, TIN, 1099 address and 1099 Flag are our primary concerns. All vendors that should receive a 1099 should have a ‘Y’ in the 1099 Flag column. If it shows an ‘N’ and the vendor should receive a 1099 please indicate the change with your corrections. If a 1099 Flag is 'N' there is no need to submit a change of address since the vendor will not receive a 1099. Otherwise, please verify the address where the 1099 should be sent. The amounts are listed on the report, so as you reconcile make sure that all payments are accounted for.
Return the report and all available W-9s to document your changes (even if it is only an address change) to the Office of Management and Enterprise Services on or before Friday, Oct. 26, 2018.
The preferred way of submitting any corrections to OMES is to print the report and write the corrections on the report using a color of ink other than black, then send comments and corrections by mail or interagency mail. If there are just a few corrections they may be sent via e-mail to [email protected] or by fax to 405-522-2186. Any other questions or comments regarding this matter should be directed to Beth Brox at 405-522-1099.
Again, tax reporting for 2018 will be at an accelerated pace due to recent IRS regulations. After 1099s are distributed in January 2019 corrections must be returned within a week so they can be entered in the file which is due to the IRS by Jan. 31, 2019. Any corrections needed after this date should still be sent to OMES for reporting to the IRS. This will ensure our information is as accurate and complete as possible.
HIGHER EDUCATION ENTITIES
As a reminder each Higher Ed Institution is responsible for reporting their own 1099 information to the IRS and many have registered with the IRS for TIN Matching. Any others may contact Beth Brox, 405-522-1099, or [email protected], with any needs you may have in regard to TIN matching your vendors.
In planning your work for November, it is important to remember that Veterans Day is Monday, Nov. 12. Thanksgiving is recognized on Thursday, Nov. 22, and Friday, Nov. 23, is also a state holiday. With these dates in mind, please adjust your payroll processing schedules as needed. All payroll documents must be received five (5) business days prior to the actual pay date to ensure adequate time for audit and processing.
Agencies are required to complete all transactions related to fiscal appropriations for FY17 funding lines by the expiration/lapse date, generally Nov. 27, 2018. Although the funds are still valid and available through Nov. 27, due to the holidays, we are recommending that agencies complete all transactions related to the lapsing funds, including budget revisions, no later than Nov. 9.
The following steps should be started immediately to ensure completion before the lapse date:
The LAPSED FUNDS REPORT APPROPRIATED FUNDS report shows all appropriated funding lines which will lapse within the next 60 days. The report must be run prior to the lapsing date. Any negative encumbrances or pre-encumbrances on this report must be resolved. If you are unable to resolve the differences, submit a case to the OMES Helpdesk. Be sure to specify the particular funding lines with negative balances. Please run this report and begin working on it immediately as it could take several days to resolve any cases.
All pension trusts, colleges and universities and other component units (with a fiscal year of June 30) should be working with their auditors to complete financial statements. The deadline for submitting these, and any necessary financial reporting packages, to the OMES Financial Reporting Unit is Oct. 31. Failure to complete these statements in a timely manner jeopardizes the state’s ability to complete the audit of the CAFR in time to meet disclosure requirements set forth by bond issuers and the GFOA. A potential risk of missing the deadline includes a downgraded bond rating for the state. All component units are expected to ensure their auditors are aware of the deadline and complete their final reports in time for you to provide it to OMES no later than Oct. 31.
The 2019 GSA lodging and per diem rates took effect 10/1/2018. Please review the following website for the new rates. www.gsa.gov
The State of Oklahoma has received an extension for the Real ID Act through Oct. 10, 2019, for air travel.
It is important that each agency understand and comply with the IRS rules for classifying a worker as either an employee or an independent contractor. The relationship must be examined and a determination made that correctly reflects the worker’s status. Agencies will be responsible for any payroll taxes and penalties associated with classifying a worker incorrectly.
The general rule is that an individual is an independent contractor if the person for whom the services are performed has the right to control or direct only the result of the work and not the means and methods of accomplishing the result. In general, if someone performs services for you and you can control what will be done and how it will be done, they will be considered an employee.
Individuals who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, all information that provides evidence of the degree of control and independence must be considered on a case by case basis.
Section 6.7.6 of the revised State Accounting Manual contains additional details regarding criteria for these determinations.
Volume 29, Number 04
Presented by OMES
Students will learn how to build queries with the Query Manager Tool using financial tables. They will also learn how to edit and use existing public queries. Content includes all standard query functionality and features plus instruction specifically for financial reporting used by the State of Oklahoma, including both General Ledger and Commitment Control reporting areas.
The last day to enroll and drop is Nov. 5. This is a pass/fail class.
The cost of this class is $70.00 per person. It is payable by PO and is non-refundable.
Enrollment is through the LEARN Center: State of Oklahoma Learn Center Login
OKC American Payroll Association
For more information please visit their website
Presented by American Payroll Association
Friday, Oct. 26, 2018 - Tulsa
For more information, please visit the APA website
Sponsored by the AGA-OKC Chapter
Nov. 5-9, 2018
OMES EGID Building
Fee:$1,200 Early Bird Discount if payment is received by Oct. 5, 2018; $1,500 if payment is received after Oct. 5, 2018. All payments must be received by Nov. 4, 2018.
This five-day course is being offered Monday through Friday, Nov. 5-9. The fee includes study materials but does not cover meal costs. Candidates are required to make their own travel and lodging arrangements. Seating is limited. Recommended CPE credit: 40 hours.
Presented by the Oklahoma Society of Certified Public Accountants (OSCPA)
Friday, Dec. 7, 2018 – Tulsa, OK
Presented by Fred Pryor Seminars
Dec. 18, 2018 – Tulsa
For more information, please visit their website.