CAR Newsletter - October 2021
Volume 32 | Number 4 | Fiscal Year 2022 |Oct. 21, 2021
In This Issue ...
- Payroll Deadlines Reminder
- Deadlines for November Payrolls
- Submission of OMES Form 94P
- Employee Moving Expense Payments – Taxable
- Payroll Warrant Reversals
- Using State Vehicles to Commute
- Payroll Warrants Issued in Error
- Payroll Stat-canceled Warrants not Eligible for Reissue
- State HCM System Use of Addresses on W-2s/1095-C
- Agency Address Verification
- PeopleSoft Mail Drop for Year-end Processing
- Affordable Care Act Form 1095-C Distribution Updates
- AP Workflow Information
- Lapsing Funds
- Audit Report Deadline – Pensions/Component Units/College & Universities
- GASB 87 Template Guidance
- Review 1099 Reportable Transactions Report
- November Payroll Deadlines
- Higher Education Class 789 Reconciliations
- Transparency Reporting: Reminders
- The Complete Guide to Payroll Taxes and 1099 Issues – Virtual
- Payroll Law
Payroll Deadlines Reminder
Agencies are required to have payroll documents to OMES by 3 p.m. five (5) business days prior to the pay date. All required documents must be submitted by the deadline to ensure adequate time for audit and processing.
The following documents must be submitted by state agencies:
- Final budget checking report showing no budget deficit.
- Signed payroll claim document.
- CA GL interface trace log.
The paperwork should be submitted to firstname.lastname@example.org with a read receipt. For all payrolls processed and paperwork submitted by 3 p.m., the payroll will be released that day. If the paperwork is not received by 3 p.m., the payroll will be held until the paperwork is submitted. Any payrolls submitted after 3 p.m. will process the following business day, once the paperwork has been received.
If an agency is late submitting payroll and the payroll must process that day to pay timely, the agency must notify OMES either by contacting Elsa Kunnel at 405-521-6178 or Jean Hayes at 405-522-6300 or by emailing email@example.com as soon as the delay is known.
Institutions of higher education have different document requirements but the deadline obligations are the same.
The following is required from the institutions:
- The Validate PFT Funding report showing no budget deficit.
- Signed payroll claim document.
Deadlines for November Payrolls
When planning your work for November, remember Veterans Day is Thursday, Nov. 11. Thanksgiving is recognized on Thursday, Nov. 25, and Friday, Nov. 26, is also a state holiday. November biweekly payroll for state agencies (B or C biweekly schedules) will be paid on Friday, Nov. 5, and Friday, Nov. 19. November monthly payrolls will be paid on the last working day of the month, Tuesday, Nov. 30.
With these dates in mind, agency staff should plan their work accordingly for the following deadlines:
Supplemental: PeopleSoft supplemental payrolls are set to pay on Friday, Nov. 12. Agencies should have these payrolls processed and paperwork forwarded to OMES by Thursday, Nov. 4.
Biweekly: B and C biweekly payrolls are set to pay on Friday, Nov. 5. Agencies should have these payrolls processed and paperwork forwarded to OMES by Friday Oct. 29.
The next biweekly pay date for B and C biweekly schedule agencies will be Friday, Nov. 19. Agencies should have these payrolls processed and paperwork forwarded to OMES by Friday, Nov. 12. For the Friday, Dec. 3, biweekly pay date, agencies should have these payrolls processed and paperwork forwarded to OMES by Wednesday, Nov. 24.
Monthly: Monthly payrolls will be set to pay on Tuesday, Nov. 30. Agencies should have these payrolls processed and paperwork forwarded to OMES by Friday, Nov. 19.
Submission of OMES Form 94P
When an employee reimburses a payroll overpayment, please complete and submit the OMES Form 94P as soon as the reimbursement is made. Timely submission helps ensure corrections are reflected in the quarter they occurred for proper reporting and also helps in the full recovery of OPERS retirement amounts.
If the retirement system is not aware of an overpayment and the pending overpayment refund request, payouts to former employees may be incorrect, resulting in a loss to the agency. Additionally, retirement calculations may be incorrect if the overpayment is not reported timely.
Please do not provide copies of personal checks. The form allows the agency to enter the amount reimbursed. Additional backup data is not required.
The form requires the state employee ID. This is for the privacy and security of the employee. Please do not submit with the Social Security number or any other number.
Employee Moving Expense Payments – Taxable
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 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 nonpaying, taxable earnings so 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.
Payroll Warrant Reversals
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.
Agencies should not issue a replacement until the reversal is complete to mitigate any wage and tax balance discrepancies. 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 all wage and tax balances will be correct after the reversal is completed.
Using State Vehicles to Commute
O.S. 47 § 156.1, as amended, prohibits the personal use of state-owned motor vehicles but permits the use of the vehicles for commuting in very specific situations. 2007 OK AG Opinion 18 also addresses this issue.
When a state employee is allowed to commute in accordance with the statute or the attorney general opinion, the agency must notify the governor, the president pro tempore of the Senate and the speaker of the House of Representatives. Additionally, when an employee is using a vehicle from OMES Fleet Management, the agency must complete CAM/FLEET MGMT – FORM 022 Authorization for Commuting in State Vehicle.
The IRS considers commuting to be a noncash taxable benefit to the employee even when the use of the vehicle is for the benefit of the employer. There are very few exceptions to the taxability of commuting. Exceptions are for certain vehicles that are not likely to be used for personal use because of their design. These vehicles are listed in IRS Publication 15-B.
- The method of calculating the taxable fringe benefit is dependent on the employee’s status.
- Commuting rule: Most state employees may use the commuting rule. Under this rule, the value of a vehicle provided to an employee for commuting is computed by multiplying each one-way commute by $1.50. If more than one employee commutes in the vehicle, this value applies to each employee. This amount must be included in the employee’s wages or reimbursed by the employee.
- Cents per mile: A cents-per-mile method may also be used by most state employees.
- Automobile lease valuation rule: Elected officials or employees whose compensation is at least as great as a federal government employee at Executive Level V (for 2021; $161,700) are not allowed to compute taxable income under the commuting rule. These officials and employees must use the automobile lease valuation rule to calculate taxable income.
- All valuation methods are described in detail in IRS Publication 15-B.
The employee may 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 taxable amount, if not paid by the employee, must be processed through payroll so that taxes are calculated and amounts are reported on the employee's 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 recommend the vehicle usage be included in the employee’s payroll each pay period to prevent a large sum from being included in the employee’s last pay of the calendar year, resulting 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.
For more information, contact Jean Hayes at 405-522-6300 or firstname.lastname@example.org.
Payroll Warrants Issued in Error
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 that – for any cause – remain outstanding or unpaid for a period of 90 days shall be revoked and canceled under the provisions of O.S. 62 § 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.
Payroll Stat-canceled Warrants not Eligible for Reissue
Agencies should be reviewing the PS Financials Payroll 36-Month Statutory Cancellation Report on a regular basis. If a payroll warrant is listed and the employee is entitled to the funds, please complete OMES Form 20R and send to OMES CAR Transaction Processing so a replacement warrant can be issued to pay the employee.
If a payroll warrant is listed and the employee is not entitled to the funds, the issuing agency must notify OMES under O.S. 62 § 34.80. Notification should include the warrant number, date and be signed by an agency approving authority.
Please send notification to OMES CAR Transaction Processing that the warrant should not be reissued. Additionally, the amounts must be removed from the employee’s earning record. Contact Jean Hayes at 405-522-6300 or email@example.com.
State HCM System Use of Addresses on W-2s/1095-C
As a reminder, in the HCM system, the W-2 process loads the employee’s mailing address for IRS Form W-2 reporting. The same is true for the 1095-C for ACA reporting. If there is no value in the mailing address field, then the employee’s home address will be used on the W-2 and 1095-C. If there is a value in the mailing address field that is not to be used on these forms, it must be updated or inactivated.
Agency Address Verification
Please verify the correct agency address is being used in 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 call the OMES Service Desk at 405-521-2444 to have the agency’s address updated in the HCM system.
PeopleSoft Mail Drop for Year-end Processing
The HCM system employee W-2 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.
State agency W-2 forms will be printed from the PeopleSoft HCM system. The format for the W-2 forms will be the same as last year. Envelopes that fit the 2020 PeopleSoft W-2 forms should fit the 2021 W-2 forms.
The format for the 1099 MISC forms is the same as last year. The forms will have three sections, with the top and middle sections of the page containing the two copies of the form and the bottom section of the page containing mailing addresses. Instructions will be on the back of the form. Standard No. 9 or No. 10 envelopes with left windows should work. The new 1099-NEC will also fit the envelopes.
Sample printed forms of the PeopleSoft W-2, 1099 MISC and 1099-NEC can be provided upon request. Contact Jean Hayes at 405-522-6300 or firstname.lastname@example.org, or Alicia Reel at 405-522-9479 or email@example.com.
Note: This is not applicable for institutions of higher education, as they are responsible for their own year-end reporting.
Affordable Care Act Form 1095-C Distribution Updates
OMES will once again distribute the 1095-C forms via a secure file to agencies during our year-end processing. For us to send the file we need updated contact information from each agency.
- Agency number.
- Agency name.
- ACA contact name.
- ACA contact phone number.
- ACA contact email address.
AP Workflow Information
The AP Workflow process within PeopleSoft provides a means for invoices to be approved within the system without routing paper or emails throughout the agency. It also enables the agency to track unpaid invoices through the process so that accounts payable staff can easily see the status of an invoice.
Once the invoice is entered into PeopleSoft, the voucher routes for approvals to the appropriate individuals as specified by the agency in the initial setup of the module.
Routing can vary based on the amount of the invoice, the departments or other criteria. Vouchers can be held for further review, pushed back or denied if not accurate or if the agency is waiting on a service or product before submitting the voucher for payment.
The process also eliminates the need for a batch slip and the voucher jacket (15A) signature, as the approval in PeopleSoft serves as the Approving Officer signature.
This functionality has been rolled out to seven agencies so far, and there is no additional cost to the agency for using it. If you are interested in using AP Workflow, email firstname.lastname@example.org.
Agencies are required to complete all transactions related to FY 20 appropriations by the expiration/lapse date, generally Nov. 21, 2021. Although the funds are still valid and available through Nov. 21, due to the holidays, we recommend agencies complete all transactions related to the lapsing funds by Nov. 15.
The following steps should be taken immediately to ensure completion before the lapse date:
- Run the LAPSED FUNDS REPORT – APPROPRIATED FUNDS. The path is: General Ledger > General Reports > Lapse Fund Adv Notice – Approp.
- Reconcile requisition and PO balances to zero or positive amounts.
- Process any necessary change orders.
- Process any necessary expenditure corrections.
- Process final payments for goods and services encumbered on FY 20 funds.
- Finalize voucher, requisition and PO funding lines as appropriate.
Additionally, certain agencies that had limits bills on their FY 21 appropriations, which changed them from non-fiscal (30 month) to fiscal (18 months with carryover ability), must complete FY 21 transactions and process a budget carryover to FY 22 prior to the lapse date. These budgets generally have a Nov. 15, 2021, lapse date.
Although the funds are available to spend or carryover until Nov. 15, we recommend that actions are completed by Nov. 8 due to the holiday. In addition to the above steps, the following step must be completed:
- Process Budget Revisions and Carryover Budgets through OMES Budget Division (for fiscal budgets).
The LAPSED FUNDS REPORT APPROPRIATED FUNDS report shows all appropriated funding lines that will lapse within the next 60 days. The report must run prior to the lapsing date. If any lines have negative encumbrances or pre-encumbrances, these amounts need to be resolved. If you are unable to resolve the differences, submit a case to the OMES Helpdesk. Be sure to indicate the specific funding lines with negative balances.
Please run this report and begin working on it immediately, as it could take several days to resolve cases.
Audit Report Deadline – Pensions/Component Units/College & Universities
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 by bond issuers and the GFOA. One potential risk of missing the deadline is 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 by Oct. 31.
GASB 87 Template Guidance
We would like to thank agencies for their feedback as they have been entering data into the GASB 87 Lease Template. Following are responses to a couple of frequently asked questions:
Initial Lease Date: It has come to our attention that some leases have existed for many years, often being renewed numerous times. For this reason, gathering information about historical terms can be daunting. The good news is that this is not necessary. For the purpose of GASB 87 implementation, the only expectation is that the data for the option currently active at July 1, 2021, (along with future options) be included. For those leases, the initial start date would be the first day the current option took effect.
Incremental Borrowing Rate: For lease arrangements where no discount rate is stated in the agreement (we are learning that describes most lease agreements for the State of Oklahoma), GASB 87 allows the government to substitute their incremental borrowing rate. We have decided to use the Internal Revenue Service’s Applicable Federal Rate for mid-term debt for this purpose. For the implementation of GASB 87, the applicable rate for lease agreements without stated discount rates will be 1.02%.
Review 1099 Reportable Transactions Report
Each agency should review their 1099 reportable transactions for the first three quarters of the calendar year 2021. 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 >
Specify your agency number and select the date range as 01/01/2021 through 09/30/2021.
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 must 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, verify the address where the 1099 should be sent. The report contains the amounts; therefore, you can ensure all payments are accounted for as you reconcile.
Return the report and all available W-9s to document your changes (even if it is only an address change) to OMES by Friday, Oct. 29, 2021. Your timely review and response to this report will allow us time to update the vendor file and have the best information possible for the final report.
The 1099 report is processed in a PDF format. Insert any changes or comments through Adobe Acrobat and save. Email the corrected report to email@example.com or firstname.lastname@example.org. Please password protect the document and send the password in a separate email. If you have any questions or comments regarding this matter, call Alicia Reel at 405-522-9479 or Beth Brox at 405-522-1099.
HIGHER EDUCATION ENTITIES
November Payroll Deadlines
In planning your work for November, it is important to remember Veterans Day is Thursday, Nov. 11. Thanksgiving is recognized on Thursday, Nov. 25, and Friday, Nov. 26, 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 business days prior to the actual pay date to ensure adequate time for audit and processing.
Higher Education Class 789 Reconciliations
OMES CAR is working with higher education entities to confirm that Class-funding 789 account reconciliations are complete. Detailed instructions and specialized accounts were set up to provide ease of balancing and tracking. Here is a link to key documents, resources and reconciliation tips. Agencies that have not yet reconciled Class-funding 789 should do so immediately.
Institutions that are current with the fund’s reconciliation should find account reconciliations relatively simple. However, some institutions continue to experience cash shortages on payroll tax deposits because their 789 fund is not reconciled.
If voucher payments are not using the correct account numbers, corrections should be made using journal vouchers. If voucher payments were processed from a different class-funding that should have been made from the 789 fund, journal vouchers must also be processed to keep the 789 fund reconciled. Additionally, if vouchers were paid from the 789 fund for amounts that were not included in the payroll fund transfer for the payroll claim, journal vouchers should be processed changing the funding on the payment to another fund.
Agencies should have regular processes to ensure the correct accounts are used and the fund is reconciled monthly at a minimum. Any remaining balance should be due to timing and identifiable to specific vendors.
Transparency Reporting: Reminders
We receive frequent requests for payroll information and must ensure updates to the transparency sites are posted in a timely manner.
Transparency (OpenBooks/Alpha List) files are due by the fifth business day of the following month. Files must be sent promptly to comply with monthly FTE reporting as well as statutory requirements for posting the data to the website. These are specific field data reminders:
- Jobcode – Must be a valid OMES job code. Call OMES HCM Classification and Compensation at 405-521-2177 for assistance with job codes.
- Hours – Must be an employee’s accurate hours. The hours reported here will also be used for FTE reporting, along with the pay frequency entered in the file.
- Warrant Number – Must contain the leading numeral 2. This is the actual warrant number processed through the state’s financial system and paid through the treasurer’s office.
- Pay Date – Must be the actual warrant issue date processed through the state’s financial system and paid through the treasurer’s office.
The Complete Guide to Payroll Taxes and 1099 Issues – Virtual
Presented by the Oklahoma Society of Certified Public Accountants.
Time: 8:30 a.m. to 4 p.m.
Date: Monday, Oct. 25, 2021.
Visit the OSCPA website for more information.
Live online seminars Presented by Fred Pryor Seminars Visit their website for more information.