CAR Newsletter - December 2022
Volume 33 | No. 6 | Fiscal Year 2023 | Dec. 21, 2022
In This Issue...
- Deadlines for December Payrolls
- OMES Contact Information for Tax Year 2022 Reporting
- Agency Payroll Corrections – Year-End Review
- Employee Overpayments and OMES Form 94P Submission
- Taxable Fringe Benefits
- Employee Overpayments Collected After Year End
- Agency Address Verification
- State HCM System Use of Addresses for Year-End Tax Reporting Forms
- W-2 and 1099 Instructions
- Payroll – End of Calendar Year 2022
- Backup Withholding
- Correcting W-2s
- Federal Income Tax Withholding
- 2023 Rates and Maximums for FICA and Unemployment
- Social Security Administration Notification of Name/SSN Errors
- Internal Revenue Service Information Reporting Penalties
- Employee Name and Social Security Number Entries in HCM
Deadlines for December Payrolls
In planning your work for December, it is important to remember that the state holidays for Christmas this year are Monday and Tuesday, Dec. 26 and 27. Additionally, the New Year’s holiday is observed on Monday, Jan. 2, 2023. Remaining December biweekly payroll for state agencies will be paid on Friday, Dec. 16, and Friday, Dec. 30. December monthly payrolls will be paid on the last working day of the month, Friday, Dec. 30. With these dates in mind, staff should plan their work accordingly for the holiday deadlines:
Biweekly: The last biweekly payroll will be Friday, Dec. 30. Agencies must have these payrolls processed and paperwork forwarded to OMES by noon Wednesday, Dec 21.
Monthly: Monthly payrolls will be set to pay on Friday, Dec. 30. Agencies must have these payrolls processed and paperwork forwarded to OMES by noon Wednesday, Dec 21.
OMES Contact Information for Tax Year 2022 Reporting
Listed below is contact information for OMES personnel working on the IRS reporting project for tax year 2022. The fax number is 405-522-2186.
- Jean Hayes, Payroll Compliance officer – 405-522-6300; email@example.com.
- Alicia Reel, Payroll specialist – 405-522-1099; firstname.lastname@example.org.
- Lisa Raihl, State Payroll manager – 405-521-3258; email@example.com.
- Jennie Pratt, director of Statewide Accounting – 405-521-6160; firstname.lastname@example.org.
- Joy Fite, director of Benefits – 405-522-6691; email@example.com.
- LaCree Austin, Classification and Compensation analyst – 405-521-6337; firstname.lastname@example.org.
Agency Payroll Corrections – Year-End Review
Agencies should review all employee corrections for the year to ensure they have been processed by OMES CAR as requested. This includes cancellation of payroll warrants, overpayment refund requests, Social Security number changes and any other requests that affect W-2 reporting. For any requests identified as not yet processed, please contact Jean Hayes or Alicia Reel for a status update.
Agencies should review all outstanding employee overpayments and collect required amounts from employees. After collection, please submit OMES Form 94P as applicable. Agencies will be entitled to receive refunds for all forms submitted by Friday, Dec. 16, 2022. After this date, refunds cannot be returned to the agencies; however, agencies are still required to submit the form after this date for employee wage corrections. Corrections due to overpayments will be posted to the employee’s 2022 W-2 for requests submitted through Friday, Jan. 6, 2023. Any corrections submitted after Jan. 6 will require a corrected W-2 or W-2C as applicable.
Employee Overpayments and OMES Form 94P Submission
State agencies are encouraged to review employee overpayments as soon as possible. Overpayments may be due to incorrect hours paid, wage amounts or benefit allowance payments. Timely calculation and recovery of overpayments allows for the OMES Form 94P to be submitted for adjustments to be reported in the quarter in which the overpayment occurred. In addition, overpayments not reported to the retirement systems in a timely manner may result in less than a full recovery of funds for the agency due to employee payouts being processed prior to notification of the overpaid amount. Delays in notifying the retirement systems may also cause employee retirement calculations to be incorrect.
When submitting the Form 94P, please do not provide copies of personal checks. The form allows the agency to enter the amount recovered. Additional backup data is not required. Please do not submit the form with the Social Security number – the worker ID (EmplID) should be entered.
If an agency has questions, needs assistance, or would like the form reviewed prior to requesting the overpayment from the employee, please email email@example.com. The final form is to be submitted only after the agency has recovered the overpaid amount. Please sign completed form acknowledging receipt of employee repayment and accuracy of the form.
Taxable Fringe Benefits
Any taxable fringe benefits not yet recorded and reported this year must be included in the December payroll. The HCM 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:
- Employee use of state vehicles.
- Maintenance, car and housing allowances.
- Additional non-cash benefits.
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 may deduct the taxes associated with the wage item on a following paycheck in the next year as a miscellaneous deduction. The state is responsible for depositing the taxes. 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 and the items posted to the employee’s earnings record.
Please refer to the W-2 instructions and Publication 15A, Employer’s Supplemental Tax Guide, for additional information. Also, refer to OMES Human Capital Management rules to determine whether these payments are a valid pay plan for a particular agency.
Employee Overpayments Collected After Year End
The collection of any outstanding overpayments is especially important at year end. Employees who owe any monies back to the agency must reimburse the agency by Dec. 31 if they want to repay only the net amount. 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.
In addition, employees who do not reimburse the overpayment in the current year are subject to taxes on the overpaid amount and later, in the year the overpayment is reimbursed, the employee may be entitled to take a deduction or credit on their current year tax form and should discuss with their tax advisor.
For example, John Deere was overpaid in September 2022 by $1,000 regular wages. This was discovered in October and the agency calculated what the correct payroll should have been. The net check difference is $743.50. If John reimburses the overpayment before the end of the year (by personal check or miscellaneous deduction), he would pay $743.50 and his W-2 will correctly reflect his pay reduced by the reimbursement. If he reimburses the agency after year-end, he must pay $1,000, and his 2022 W-2 would include the $1,000 overpayment in taxable wages.
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:
- Reduction of annual leave (for the gross overpaid).
- Reduction of current gross salary (for the gross overpaid during the same calendar year) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred.
- Lump-sum cash repayment.
- Miscellaneous payroll deduction (for the net overpaid during the same calendar year) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred.
- Any combination of the above options.
For amounts reimbursed in subsequent years, the applicable W-2, corrected W-2, or W-2C for the year of the overpayment will only reflect a change in 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 taxable for federal and state purposes. Federal and state taxable wages or income taxes withheld will not be changed.
Agency Address Verification
Please verify the correct agency address is being used in Workday@OK. The agency address can be found on the employee’s earnings statement. Please contact the OMES Service Desk at 405-521-2444 or firstname.lastname@example.org and HRMS Workday Support team at HRMSWorkdaySupport@omes.ok.gov to have the agency’s address updated in Workday@OK.
State HCM System Use of Addresses for Year-End Tax Reporting Forms
Workday@OK uses the first address it finds for an employee based on the following order:
Payroll Tax Form
Payroll Tax Form
Please communicate to employees the need for an updated address in the system as this will be used on the file to the IRS.
- State agency W-2 forms will be printed from Workday@OK. Employees that have not elected to receive their W-2 electronically will be mailed by the central Payroll team.
- The format for the 1099 MISC forms is the same as last year. The forms will have three sections with the top third and the middle third of the page containing the two copies of the form. The bottom third of the page will contain the mailing addresses. Instructions will print on the back of the form. Standard No. 9 or No. 10 envelopes with left windows should work.
Sample printed forms of the Workday@OK W-2 and 1099 MISC can be provided if requested. Please contact the central Payroll team at email@example.com.
W-2 and 1099 Instructions
OMES will have W-2s ready electronically by Jan. 17, 2023. Employees that do not elect to receive electronic ONLY for their W2 will have their form printed centrally on Jan. 27, 2023, and mailed on Jan. 30, 2023.
1099 Misc and NEC files will be ready for release on Tuesday, Jan. 18, 2023. Agencies will receive the files electronically and be required to print the forms for mailing. See 1099 distribution article below.
Payroll – End of Calendar Year 2022
Dec. 16, 2022 – Last day that a refund of taxes due to overpayments can be returned to agencies (see above article).
Dec. 28, 2022 – Last day OMES will process payrolls for calendar year 2022. Payrolls must be received by noon on this date. Any payrolls received after this deadline may not process to pay timely.
Dec. 28, 2022 – Backup withholding payments from agencies must be received by OMES (see article below).
Jan. 6, 2023 – Payroll warrant cancellations, OMES Form 94Ps and earning adjustments for calendar year 2022 must be received by OMES no later than 5 p.m. Any 2022 payroll information received after this date will require a corrected W-2 from the agency.
Jan. 17, 2023 – W2 forms will be available to employees electronically (see article above).
Jan. 25, 2023 – Last date to submit corrected W-2 and 1099 forms for file submission (see articles below).
Jan. 30, 2023 – Printed W2 forms will be mailed to employees (see articles above).
Jan. 31, 2023 – Deadline for delivering forms to employees/vendors.
Feb. 15, 2023 – Form W-4 with exemption expires (see article below).
Agencies that have collected backup withholding on miscellaneous claims must submit payment to be received by OMES prior to Dec. 29, 2022. Please make interagency wires payable to the State Contribution Fund (Vendor 0000000467, ADDR # 002, LOC # 0002). After processing payment, please contact the central team at Payrollreporting@omes.ok.gov.
Corrected W-2 forms must be delivered to OMES by Jan. 25, 2023, for the corrections to be in the submission file. The due date for submission of form W-2 information to the IRS is Jan. 31, 2023.
Please send the original W-2, a copy of the corrected form and a memo explaining why the correction is needed. If the correction is due to a statutory canceled warrant which is not to be replaced, please also send a letter asking that the warrant not be replaced.
Note: Because a warrant has been canceled by statute is not a reason for such a W-2 correction. If it was a valid payroll payment, the employee is still entitled to a replacement warrant; therefore, the W-2 reporting is proper.
Federal Income Tax Withholding
Exempt from withholding: An employee who certified to his or her employer on the 2022 Form W-4 that the employee had no income tax liability for 2021 and anticipated no income tax liability for 2022 was entitled to an exemption from withholding for 2022. This exemption expires on Feb. 15, 2023, and must be renewed if conditions remain the same. To claim exempt status, the employee must complete only steps 1 and 5 and write ‘Exempt’ in the space below Step 4(c). If an exempt W-4 has any information in steps 2 through 4, the form is invalid. If you receive an exempt W-4 after Feb. 15, 2023, do not process a tax refund to the employee or submit a request to OMES. They will not be processed. If you receive an exempt W-4 after Feb. 15, 2023, the W-4 will take effect on the next pay cycle; per IRS regulations it is not retroactive to the beginning of the year.
Lock-in letter: The IRS has been issuing Letter 2800C, WHC Lock-in Letter to Employer (lock-in letter) with the permitted filing status and withholding instructions based on the new W-4 which no longer using withholding allowances. Follow all instructions in the letter and provide the employee their copy and begin withholding based on the date specified in the notice. If an employee has a lock-in letter in effect and submits a new W-4, you must ensure the new W-4 does not result in less being withheld than required by the IRS. If so, you cannot enter the W-4 and you must let the employee know it will not be entered in the system.
2023 Rates and Maximums for FICA and Unemployment
Year 2023 rates are provided for comparison purposes. View the table here.
Social Security Administration Notification of Name/SSN Errors
The Social Security Administration is mailing educational correspondence to employers that submit Forms W-2 containing employee names and Social Security numbers that do not match SSA’s records. This letter is to provide employers with resources to help ensure accurate year-end reporting. Employers may also receive letters if there are any name/SSN errors on W-2 reporting. The letters come directly to OMES. Agencies will be notified of any name/SSN errors on the report that applies to the agency.
Internal Revenue Service Information Reporting Penalties
Along with the SSA letters discussed in the article above, IRS information reporting penalties may apply for failure to file and failure to furnish correct information returns. A penalty for failure to file correct information returns can be up to $290 per form, indexed annually. A penalty for failure to furnish a correct information return could also apply to the same error if an employer furnished an incorrect form to an employee and failed to file a correct Form W-2. If both penalties are assessed, the amount could be as much as $570 per Form W-2. In addition, the penalty applies to the ACA reporting Form 1095-C. For one employee with an incorrect name/SSN combination who receives both a W-2 and a 1095-C, the total penalty could be as much as $1,130. IRS enforcement of accuracy-related penalties is evolving and penalty assessment may be increasing.
OMES verifies employee name and SSN combinations several times throughout the year through the SSA website. Agencies with mismatched results are notified and are required to correct the wrong information timely to ensure year-end reporting is correct. This process helps to ensure accurate reporting and reduces the risk of information reporting penalties.
Employee Name and Social Security Number Entries in HCM
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 as well. If the name and SSN do 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 ensure the employee completes the business process in Workday@OK in a timely manner. Not having the information entered will cause issues with year-end reporting. In addition, other required processes and reporting are delayed when this information is not timely entered and in a complete status, such as E-Verify, new hire report and retirement files.
You may enter the name that the employee currently uses as their preferred 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 for the legal name.
HIGHER EDUCATION PAYROLL
December Payroll Deadlines
In planning your work for December, it is important to remember that the state holidays for Christmas this year are Monday and Tuesday, Dec. 26 and 27. Additionally, the New Year’s holiday is on Monday, Jan. 2, 2023. With these dates in mind, please adjust your payroll processing schedules as needed. All payroll documents must be received by 3 p.m. five business days prior to the actual pay date to ensure adequate time for audit and processing.
Transparency Reporting – Reminders
Transparency (OpenBooks) files are due no later than the fifth business day of the following month. Files must be sent timely to comply with monthly FTE reporting as well as statutory requirements for posting the data to the website. The following are specific field data reminders:
- Jobcode – This must be a valid OMES job code. Contact OMES HCM Classification and Compensation at 405-521-2177 for assistance with job codes.
- Hours – This 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 – The warrant number must contain the required leading 2. This is the actual warrant number processed through the state’s financial system and paid through the Treasurer’s Office.
- Pay Date – this is the actual pay date of the payroll and should not be changed to any other date.
1099 Year-end Forms Distribution Change
Beginning with reporting year 2022, OMES will be distributing 1099 forms via a PDF Secure file. Agencies will be required to print and distribute the forms to suppliers. To send the files via email, we need contact information for each agency.
Please email your contact information to firstname.lastname@example.org with the following details for a primary and alternate contact:
- Agency number.
- Agency name.
- 1099 Contact Name.
- 1099 Contact Phone Number.
- 1099 Contact Email Address.
**NOTE: This distribution change is not applicable for the Institutions of Higher Education. Institutions of Higher Education are responsible for their own year-end reporting.
2023 – Valid EFT Date Calendar
The 2023 – Valid EFT Date Calendar is ready for your agency to utilize in preparation for submission of your EFT transactions. Please use the calendar to ensure that your EFT items process with the effective dates intended. The letter “H” identifies holidays on the calendar. The state’s 2023 holidays correspond with the federal institution/bank holidays with the exception of these four:
- Juneteenth – June 19, 2023.
- Columbus Day – Oct. 9, 2023.
- Additional Thanksgiving holiday observed –
Nov. 24, 2023.
- Additional Christmas holiday observed –
Dec. 26, 2023.
If your agency sends EFT items effective for these dates, the Treasurer’s Office will change the date to the next valid EFT date.
Please contact Deidra Salim if you have questions concerning the calendar.
Motor Vehicle Changes from OTC to Service Oklahoma
Effective Jan. 1, 2023, the Motor Vehicle division of the Oklahoma Tax Commission (OTC) will transfer to Service Oklahoma (SOK), a division of the Office of Management and Enterprise Services (OMES). OTC will no longer process titles or registrations, issue license plates, or offer public services for motor vehicle functions in Oklahoma. For services conducted after December 2022, in-person visits can be done at the SOK Service Center at 6015 N. Classen Blvd., Oklahoma City, OK 73118, and all payments should be paid to Service Oklahoma. Motor Vehicle employees’ phone numbers will remain the same.