The CAR team is updating commonly used forms to modernize the format and make them easier for use. For current copies of our forms, refer to the CAR Forms page.

Higher education agencies must reconcile their Payroll Class Fund, 78900, regularly. Monthly reconciliation is recommended, allowing agencies to find errors on a timely basis so that taxes or other payments are not delayed due to lack of cash in the fund. 

All agencies should reconcile their Payroll Withholding Fund, 99400, on a monthly basis. This fund receives amounts for various voluntary and involuntary payroll withholdings to the 633XXX accounts after payroll processes, which the agency pays out on H vouchers. The fund should remain at a zero balance; it should never have a negative balance.

INT035c_Pay_Groups_Inbound, a new Workday@OK integration, has been created and is scheduled to run daily, based on pay groups, to pull in the PeopleSoft Financials (PSFS) data for all agencies with employees in the pay group. The integration is for both project and nonproject agencies. The process is scheduled daily, Sunday through Friday, 7:30 p.m. to 7:30 a.m. and should not impact agencies. Agencies should not run the INT035a process during this time to avoid errors in either process.

Once INT035c runs, all agencies with employees in the pay group will have their budget information updated in Workday@OK. This will relieve agencies from having to run INT035a unless a change is made in PSFS to their budget data or if processing with prior year funding. If budget changes are made in PSFS, the agency will still have the ability and can launch the INT035a integration for the updated budget information to correctly reflect on the Workday@OK budget report. If the payroll includes prior fiscal year funding, the INT035a process must be run for that specific fiscal year. While extensive testing has been completed, agencies are encouraged to continue comparing the budget report to the PSFS Allotment Budget and Available Cash (ABC) report. Report any noted discrepancies via a service ticket.

Agencies are reminded to review and ensure employees have a valid federal income tax withholding exemption election on file for 2025. The current exemption expires on Feb. 15, 2025, and employees must enter a new tax election to continue exemptions for 2025. If you receive an exempt W-4 after Feb. 15, 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 Workday@OK report, Expiring Exempt Tax Elections, can be run to identify employees in the agency who claim exempt. When running the report, use the current date as the exempt election as of date, enter "000 State of Oklahoma" as the company and choose Federal for the tax authority. Unselect the Include Terminated Workers box to provide a list of all agency employees claiming exempt from federal income tax withholding. The effective date on the report should be reviewed, and if prior to the begin date of the first payroll that paid in 2025, the employees will need to be notified to update their tax election. If employees do not update their tax election by Feb. 15, they must be changed back to the last valid W-4 on file prior to the exemption; if none is on file, set the marital status to Single with no other entries.

Some states require employees to renew their exemption annually. Oklahoma currently does not. Agency personnel must be familiar with the W-4 requirements for states in which they have employees. For agencies with employees in other states, there are two reports in Workday@OK that can be used to find employees claiming exemption from state income tax withholding.

Expiring Exempt Tax Elections – When running the report, use today as the exempt election as of date, enter "000 State of Oklahoma" as the company and choose the applicable state as the tax authority. Unselect the Include Terminated Workers box to provide a list of all agency employees claiming exempt from state income tax withholding. The effective date on the report should be reviewed, and if prior to the begin date of the first payroll that paid in 2025, the employees will need to be notified to update their tax election.

RPT00525 - Employee State Tax Elections – This is a new custom report that can also be run to identify employees claiming exempt from state withholding. Enter the specific company and the current date as the effective date. Once the results populate, filter on the Work State column to remove OK, then filter on the Exempt column as "Yes" to find employees in other states currently claiming exempt. The effective date on the report should be reviewed, and if prior to the begin date of the first payroll that paid in 2025, the employees will need to be notified to update their tax election.

If employees do not update their tax election by the date specified by the state, they must be changed back to the last valid W-4 on file prior to the exemption; if none is on file, set the marital status to Single with no other entries. Again, agency personnel must be familiar with the W-4 requirements for states in which they have employees and adhere to those requirements.

Agencies are reminded to review and ensure employees have a valid Oklahoma Tax Commission Form OW-9-MSE, Annual Withholding Tax Exemption Certification for Military Spouses, on file for 2025. This form must be completed annually to continue the exemption for 2025. If a new exemption form has not been submitted for 2025, the employee’s withholding status must go back to the last valid Form W-4 on file. Employees can enter the military spousal exemption directly in Workday@OK for their OK W-4 entries. The system will send notification of documentation and review/approval needed prior to the exemption taking effect. When an employee submits a paper OW-9-MSE form to the agency, they must also submit a completed Form OK-W-4. If you receive an exempt Form OK-W-4 with Form OW-9-MSE after processing a payroll, do not process a tax refund to the employee or submit one to OMES Central Payroll for processing. The new exemption form will take effect going forward; it is not retroactive to the beginning of the year.

As a reminder, a nonresident spouse of a nonresident service member may be exempt from Oklahoma income tax on income from services performed in Oklahoma. OTC Form OW-9-MSE must be completed and returned to the employer with the required documentation, along with OTC Form OK-W-4. The instructions contain a list of requirements the employer must meet before the withholding exemption will be allowed. The forms must be completed each year the exemption is to be claimed.

This exemption will require an update to the employees' state tax election in Workday@OK. The Military Spouse Exemption box should be selected and will kick off the approval process. This does not affect the federal tax withholding, which will still be calculated based on the IRS Form W-4 in effect.

The Workday@OK reports, PY/Payroll State Tax elections or RPT00525 - Employee State Tax Elections, can be run to identify employees in the agency claiming the military spousal exemption. When running the reports, enter the company and the current date as the effective as of date. This will provide a list of all employees’ state tax elections. Filter with "Yes" on the MSRR Exempt column. The list will show all employees with the exemption and the effective date. The effective date on the report should be reviewed, and if prior to the begin date of the first payroll that paid in 2025, the employees will need to be notified to update their MSRR exemption. If employees do not update their MSRR exemption by the date specified by the state, they must be changed back to the last valid W-4 on file prior to the exemption.

For agencies with employees in other states, the reports can be run to identify employees claiming the military spousal exemption in those specific states. Agency personnel must be familiar with the military spousal exemption requirements for states in which they have employees. The procedures detailed above will need to be followed as required for the specific states.

With employees working remotely outside Oklahoma, the state, as the employer, is required to withhold and submit income taxes to that state and report unemployment and other wages/taxes, as applicable. If an agency has employees working outside Oklahoma, the work location needs to be updated to the state where the employee is physically working. The employee tax elections need to be timely updated to reflect the new tax jurisdication for income tax and unemployment withholding/reporting purposes.

Please help communicate these requirements to agency HR recruiting and onboarding personnel, as many tasks are performed or initiated by them. Although OMES Central Payroll processes the actual payments and reports to the other states, agency personnel must be familiar with the requirements for any state in which employees are hired. Contact OMES Central Payroll with any questions concerning state agency employees working outside Oklahoma.

Repayments from employees made in the current year (2025) that are for overpayments of wages in a prior year (2024 or earlier) must be repaid at the gross overpayment amount in accordance with IRS regulations. An IRS W-2C form 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 the amounts are taxable for federal and state purposes. The employee may be able to consider such repayments on their current year (2024) 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 or payrollreporting@omes.ok.gov.

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.

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 correction is required. For assistance, contact Jean Hayes at 405-522-6300 or payrollreporting@omes.ok.gov.

OMES has created an automation process for timesheet entry and approval notifications to employees and managers. The automation takes the place of manual processes and emails for contacting employees and managers when time is not entered, submitted or approved.

The automation is set to send three reminder emails for the prior week's time beginning on a cadence of every four hours from noon on Mondays to noon on Wednesdays. Once an employee’s time has been entered, submitted or approved, they will be removed from future emails. Agency payroll personnel will also receive the emails so they can monitor the progress and determine action to take after the last reminder is sent. In addition, reports are generated listing entries that were successfully completed and how many notifications were sent before the entries were completed. Reports are generated daily, monthly, quarterly and annually and can be sent to agency leadership for review and analysis of trends.

OMES implemented the automation in 2024 and has seen a significant increase in the timeliness of employees and managers entering, submitting and approving time. This has allowed the payroll team to focus on processing payroll and other tasks and responsibilities without being pulled away to ensure that all time is approved prior to payroll processing. Several other agencies have since implemented the automation with more in queue to roll out this year.

Any agency interested in the automation can submit a service ticket requesting information on the timesheet entry and approval reminder automation. An automation team member will contact you to discuss the process and implementation.

The OMES Form PWC should only be used when an employee is not entitled, in part or whole, to the funds. All PWC forms OMES receives 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 immediately upon discovery.

Paper warrant cancellations: Email Form PWC to payrolltransprocess@omes.ok.gov. Scan the original warrant (marked void) and attach to the email. If physically sending the paper warrant and form, the original warrant must be marked “Void” and attached to the completed Form PWC and sent to OMES Central Payroll, located in the Lincoln Data Center, 3115 N. Lincoln Blvd., Ste. 2059. These requests cannot be processed by fax.

Direct deposit cancellations: Email Form PWC to payrollreporting@omes.ok.gov. The document must be password-protected, and the password should be included in a separate email or sent via another secure method. To ensure direct deposit funds are returned, the PWC request must be received by noon three business days prior to the effective pay date. Any request for cancellation of direct deposits after that cutoff will be subject to recall or reversal procedures that are subject to denial by the employee’s bank. An employee must be notified in writing of a reversing entry and its reason 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.

Your agency can modify the statement below and use it 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 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 four business days past the effective date will not be processed pursuant to NACHA rules. If agencies encounter erroneous entries more than five business days past the effective date, please contact OMES or the Office of the State Treasurer (OST) for consultation on options for recovering the funds.

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 a few. Before compensation is given to employees or former employees, agencies must determine the correct method of payment (payroll vs. accounts payable) and reporting required (W-2, 1099 or none). In an audit, the IRS will focus on the reason for the payment. 

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 determine 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. 

Note: Attorney’s fees paid on a settlement are reportable to the plaintiff if the settlement is a reportable settlement. For attorney fees paid through accounts payable, the amount must be reported to payrollreporting@omes.ok.gov. The attorney will automatically receive a 1099-MISC, reporting the amount in Box 10 on the 1099-MISC, if the correct account code is used on the voucher payment. The plaintiff reporting requires a manual entry and must be reported to OMES. 

If a payment settles a lawsuit, the auditor will focus on the basis of the lawsuit. 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 the plaintiff 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 Form 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 plaintiff in Box 3, Other Income.  

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, then applicable federal, state and FICA taxes must be remitted to OMES on the same day the settlement to the individual 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 email payrollreporting@omes.ok.gov. 

Beginning May 1, 2025, higher education employees with access to the state’s PeopleSoft HCM system will have the following accesses removed:

• Payroll HE Payroll View Only.
• Miscellaneous.

The access is no longer needed since the statute of limitations has passed for the years institutions were on the state’s system. The access removal date provides the agency time to run any reports they feel may be needed in the future. As a reminder, the institution's record is the system of record since not all information was provided on the file loads to process the payrolls. The only access remaining will be the Alpha List Load. 

PFT Reversal files should be submitted timely after notification from Transaction Processing that funds have been successfully retrieved from an employee’s bank or when submitting a paper warrant for cancelation on the MWC form. Failure to submit a file timely will result in the warrant not being canceled and the agency not receiving the funds back in the 789 class fund until a file is received.

When submitting the Validate PFT Funding report for a PFT Reversal file, please include a brief description of the reason for the PFT Reversal. For example, "PFT Reversal file for EWC Warrant 200000099" or "PFT Reversal file for year-end adjustments." This will assist us in identifying the PFT Reversal and notifying others if any EWC/MWC forms are being held waiting on a file.

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 CAR Higher Education Payroll Processing webpage.

When OMES processes an institution’s payrolls, the warrants are listed on the AP Check Register the following day. Payroll personnel should verify with Finance personnel that the payroll is listed on the report. This is a good verification that the payroll has been processed. If an expected payroll is not listed on the register, please email payrolltransprocess@omes.ok.gov.

A report is available for each agency to run that will give a summary of the 1099-MISC & 1099-NEC forms that have been produced for the 2024 Reporting Year. The report can be found in PeopleSoft Financials at: Suppliers>OCP 1099 Processes>Agency 1099 Report. Enter the Reporting Year 2024 for the year and your Agency/Business Unit in the From and To fields. If you have questions, contact Alicia Reel at 405-522-1099 or alicia.reel@omes.ok.gov.

Note: This does not apply to higher ed institutions, which process their own 1099 reporting.

All 1099 corrections for CY 2024 or for previous years must be submitted to OMES as soon as possible. OMES will report the correction to the IRS. This includes payments reported on 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, 1099-B, 1099-F and 1099-G. This also includes any 1099 that was not originally produced and now must be issued to the vendor. If you should have any 1099s that are returned by the vendor requiring changes, please submit those changes to OMES and include the original 1099 and any documentation to support the change. If you have questions, contact Alicia Reel at 405-522-1099 or alicia.reel@omes.ok.gov.

Note: This does not apply to higher ed institutions, which process their own 1099 reporting.