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September 2018 CAR Newsletter
In planning your work for October, it is important to remember that Columbus Day is Monday, Oct. 8. Although not a state holiday, Columbus Day is a federal/bank holiday. As a reminder, all payrolls and documents must be received five (5) business days prior to the actual pay date to ensure adequate time for audit and processing. Adherence to this policy will ensure payrolls are processed to pay timely.
Within the past few weeks, multiple state entities have been the targets of phishing scams aimed at fraudulently changing employee direct deposit information.
Immediate Steps to Take:
Tips on how to protect yourself from this scam:
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 also 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 the Oklahoma Cyber Command website.
The National Automated Clearing House Association website also has general information on electronic payment security along with a document for protecting against fraud.
As of Aug. 31, 2018, only the revised version of the standard child support withholding order, Income Withholding for Support (IWO), should be used. The expiration date of the form is Aug. 31, 2020. The form is required to be used in all child support cases. It must be used by state child support agencies, courts, tribes, private attorneys and other entities when ordering or sending notices to withhold. When the revised form was released in 2017, some entities needed additional time to implement the use of the revised IWO and a grace period was allowed until Aug. 31, 2018.
For additional information, the revised form and instructions please see the Office of Child Support Enforcement website.
The HCM system correctly calculates taxes based on the current tax rates and an employee’s withholding certificates. Agencies should not override the taxes calculated. If the taxes appear to be incorrect, the employee should be reviewed before continuing the payroll process. If the taxes prevent after-tax deductions to not be withheld, the employee should be notified. Payment of items not withheld through payroll due to lack of net pay must be settled between the employee and the vendor.
New or rehired employees eligible for the Pathfinder retirement plan should have a Coverage Begin Date starting the first day of the month following the month of employment. For example, the coverage Begin Date should be Sept. 1 for an employee that was hired/rehired on Aug. 21. For additional information, please refer to the Oklahoma Administrative Code for additional information.
Authorized Human Resources or Payroll staff may use the Statewide Employee View functionality to find their employees or prospective employees in PeopleSoft HCM. When trying to determine if an individual already exists in the system, please search by “National ID” (social security number). Searching with criteria other than National ID can cause an agency to identify a person that isn’t truly the one they want. Please review the search results carefully to ensure the individual found is the correct person. The navigation is: Home > Workforce Administration > Personal Information > Statewide Employee View (0491).
Employee deferrals and employer contributions must be remitted to OPERS 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. The following link will take you directly to the SoonerSave website.
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 can 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 1-800-733-9008 or 405-858-6781.
Giving gifts to employees is restricted and should only be given as part of a formal employee recognition program. See 74 O.S. § 4121 and 4122. Furthermore, any gift cards, certificates or coupons given to employees are to be included in the employee’s taxable income. These items are considered by the Internal Revenue Service to be cash or a cash equivalent and do not meet the requirements to be excludable as a de minimis fringe benefit.
Even when an employer provides gift cards, certificates or coupons to purchase a turkey, ham or other nominal value property, these are considered wages and are subject to income and employment taxes. This is true even when the card restricts the items purchased, the time to use the coupon, and any unused portion is forfeited. Cash equivalents do not meet the de minimis fringe benefit requirements.
In the HCM system, process the gift card amount using the TRC Code of “GIFT,” which will show as earnings code “GFT.” The amount will be included as taxable income and will be taxed on the paycheck.
As we approach the end of the calendar year, be reminded that the payroll system has been structured to accommodate the reporting of non-cash, taxable fringe benefits. Of specific concern to state employees, the following benefits should be reviewed to determine if W-2 wage adjustments are necessary:
Reporting of these benefits is required by state and federal law and it 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 can 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 can choose to pay the employee’s share of taxes on group term life, auto fringe, and other non-cash 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 non-cash benefit valued at $100.00. The agency decides to pay the employee’s taxes on all non-cash 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. 100.00/92.35% = $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 Division rules to determine whether these payments are a valid pay plan for a particular agency.
Employee overpayments that are 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, let the employee know if the amount is not paid in full by Dec. 31, 2018, the amount they owe 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:
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 that 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 $1,000.00 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, 2018, the employee owes the agency the full $1,000.00 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.
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.
Agencies must complete Form DER, Deceased Employee Reporting 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 OMES/CAR payroll, (attention Alicia Reel) as soon as possible after all payments have been processed.
Procedures for processing payroll after the death of an employee are available in the 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.
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 would relieve stress and anxiety after the death of the employee on the family members. Also, agencies would have clear guidance on who is to receive final wage payments and avoid any potential difficulties in determining who should receive the payment(s).
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 decendant’s surviving spouse, or if there is no surviving spouse, to the decedent’s estate.
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:
Direct Deposit Cancellations:
Any faxed 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 which 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.
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 OMES or OST for consultation on options for recovering the funds.
Central Accounting and Reporting will be completing in-depth reviews of the Form 11 and 11a reconciliations beginning this year. Each account will be selected for review at least once per year. To complete the review, agencies will be required to submit selected backup information for the amounts presented on the reconciliation.
Requests to the Central Accounting and Reporting General Ledger team should be sent to the group e-mail to ensure a timely response. This group e-mail is monitored by all members of the team and requests will not be delayed due to any member being out of the office. The current members of this group include Jennie Pratt, Vivian Day, Patrick Granahan, Shirley Tran, Zara Ghaffar and Adriana Eudaley. The group e-mail is [email protected].
Some deposit corrections may be completed by the agency, but others require that deposit correction requests be submitted to either OMES or OST. The general guidance for who completes the correction and submission instructions is included here.
Agency Deposit Corrections – Corrections may include only treasury class fundings and must net to zero. The user should include the deposit number being corrected in the description or notes fields. Agencies must have documentation to support the correction (see August 2018 newsletter).
OMES Deposit Corrections – Corrections are submitted using OMES Form 76 and should be e-mailed to the Statewide Accounting group at [email protected] . The form must include the deposit number being corrected and should include a copy of the original deposit. Corrections may be made within clearing accounts and ASA accounts. Corrections cannot be made to change the business unit, class funding or amount.
OST Deposit Corrections – Corrections are submitted using OMES Form 76 and should be e-mailed to [email protected] . The form must include the deposit number being corrected and should include a copy of the original deposit. Deposit corrections that do not meet the specifications for agency or OMES entry must be submitted to OST. These will include corrections that include both treasury funds and clearing accounts or ASA accounts, and corrections which change the business unit or amount.
Mandatory statewide contracts are in place for state air travel. The state provides an Online Booking Tool (OBT) that incorporates the mandatory travel agent contract and the mandatory airline contract.
There are limited exceptions to using the statewide contract, including purchasing airfare at a lower cost than the contract provides. If this exception is used, the traveler or agency must document a cost comparison between the travel booked and the travel available through the online booking tool (CONCUR).
You must use the same parameters of travel in the comparison, for example, the same lead time from booking date to travel date, the same day of the week departure and arrival times so the comparison is accurate. Please email the Transaction Processing team at [email protected] if there are any questions on this.
A similar comparison procedure would also apply in cases where travelers opt to drive their personal vehicles and a cost comparison is required.
Effective Oct. 1, 2018, the GSA per diem rates are changing. The new standard rate will be $55 and the Oklahoma City (Oklahoma County) daily per diem will increase to $61. (This change does not affect the Oklahoma City lodging rate that will remain at $95.) All the different daily per diems are increasing slightly and the new six separate CONUS rates are as follows:
The Meals Expense (Per Diem) Reimbursement Rate Tables should be used to assist in calculating proper per diem amounts. The tables have been updated to reflect these increases and are available on the OMES website (for Regular and In Lieu of Subsistence).
OMES has implemented a new policy change where agencies are no longer required to delete Travel rejection scans. Going forward, rescan only the Voucher Jacket 15A and include any additional or corrected pages. Agencies do not need to rescan the entire travel claim. If you have any questions, please feel free to email the Transaction Processing team at [email protected].
Firefighter’s premiums paid to Comp Source – use account code 531310.
Document destruction services – use account code 515580.
Transaction fees for utility payments – if paid to a utility company or municipality use the same account code as the utility (i.e. 531350, 531370, etc.). If paid to a third party such as OPC Utl Service Fee – use account code 531600.
HUMAN CAPITAL MANAGEMENT (HCM)
The Oklahoma Health and Payroll Deduction Expo 2018 will be held on the second and fourth floors in the State Capitol on Wednesday, Sept. 19, 2018, from 8:00 a.m. to 3 p.m.
Representatives from voluntary payroll deduction vendors and the 2019 health, dental and vision insurance providers will showcase their plans to state employees. Immunizations, as well as health and wellness screenings, will be available all day. Various education sessions will also be offered.
Here is an accessible link to the Save the Date pdf.
Volume 29, Number 03
Presented by the Oklahoma City and Northeastern Oklahoma Chapters of the American Payroll Association
Thurs. Sept. 20 – Fri., Sept. 21, 2018
Metro Technology Center
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 Fred Pryor Seminars
Dec. 18, 2018 – Tulsa
For more information, please visit their website
Presented by the Oklahoma Society of Certified Public Accountants (OSCPA)
Friday, Dec. 7, 2018 – Tulsa, OK
For more information, please visit the OSCPA website