CAR Newsletter January 2024

Volume 34, Number 7 | Fiscal Year 2024 | Jan. 12, 2024

• Employee Banking Information Notification of Change – Process Automation
• Email Scam for W-2 Information
• Social Security Number Changes
• Employee Direct Deposit Verification of Bank Routing Number
• Updating Employee Bank Routing Numbers
• W-2 and 1095 Instructions
• Forms W-2 & W-2C Terminology
• Form W-2 Corrections
• Employee Tax Refunds
• Reporting Requirements for Repayments of Prior Year Wage Amounts
• Annual Withholding Tax Exemption Certification for Military Spouse

1099 INFORMATION

• 1099 File Format – Outside Agencies
• 1099 NEC & MISC Forms and Corrections
• 1099 Envelopes
• IRS Reporting – Form 1098-F Fines, Penalties and Other Amounts
• 1099 Reportable/Taxable Income – Social Media Influencers

HIGHER EDUCATION

• Federal Tax Payments Scheduling

AGENCY NEWS

• Mileage Rate for 2024

TRAINING

• OPERS – Roth 457 Seminars
• Payroll Law 

A process has been created and is now in Workday@OK to automatically update employee banking information when a notification of change (NOC) has been received through the banking system. Agencies have been receiving emails from the Central Payroll team notifying them of required banking changes for their employees. With the new automated process, agencies will no longer receive emails to make these changes. A file will be uploaded into Workday@OK and the changes made as applicable. If an employee’s current banking information in Workday@OK does not match what is on the file as the sent-out information, no change will be made.

In addition, employees who have a returned direct deposit due to closed or invalid accounts, etc., will also have their direct deposit information ended. Agencies must reach out to those employees to have them enter updated banking information. Once the changes are processed and reflected in the file, a report will distribute to agency payroll personnel if there has been any update to agency employees. This report is for your records.

As a reminder, an NOC is a non-dollar entry received by OST due to incorrect information processed on an electronic funds transfer (EFT). The report and file identify the entry sent, pinpoints the specific information that is incorrect, and provides the correct information that requires the change. Changes are required to be made within six banking days of receipt of the NOC information or prior to initiating another entry to the receiver’s account, whichever is later. The process will be run daily after the file is provided by OST.

The IRS and state tax agencies have once again renewed their warning about email scams requesting employee Forms W-2 from company payroll or human resources departments.

Agencies are urged to double-check any executive-level or unusual requests for lists of Form W-2s or Social Security numbers. Cybercriminals are tricking payroll and human resources officials by disguising emails to make it appear as if it is from an organization executive. An email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Form W-2s. The thieves then attempt to file fraudulent tax returns for tax refunds and/or post the information for sale on the darknet. Personnel should pay close attention to the sender's email address and confirm requests for any sensitive data verbally, via previously known phone numbers or in-person.

As part of the 2017 Security Summit effort, the Don’t Take the Bait education series focused on raising awareness of the critical need for increased computer security and caution when reviewing received emails – specifically email scams that identify themselves as a friend, customer or company. The series can be viewed on the IRS website. In addition, the Security Summit continues to meet annually to address areas of need and help raise public awareness. Information can be found here for the 2023 Security Summit.

The IRS is investigating phishing emails. If an agency receives an email of this type, immediately contact Lisa Raihl at 405-521-3258 or Jean Hayes at 405-522-6300.

Employees and agencies have access to update employees’ Social Security numbers (national ID) in Workday@OK. Once an update is made, the task comes to OMES Central Payroll to verify the change. We use the Social Security Administration’s Social Security Number Verification Service (SSNVS) to verify the name and SSN match. If they match  the SSNVS, we will approve the change. If they do not match, we will deny the change.

If an agency finds an employee is listed with the same SSN under two or more different EmplIDs, please contact the OMES Service Desk. Employees with multiple EmplIDs must be reviewed and, if needed, have information combined onto the one correct record.

Agencies may, on occasion, receive a report generated from the Office of the State Treasurer’s current ACH application. OST’s current ACH application automatically updates bank routing numbers based on the latest table of Federal Reserve Bank routing numbers. This update allows the items to continue processing for payment. When an update is made, the Participant Old/New Routing Number report is generated listing the employee, the incorrect bank routing number, and the correct bank routing number.

This report is distributed to agencies to update employee banking information. These updates must be made so transactions will continue to process without interruption. This report is sent out by OMES to the contact listed for the Updated Banking Information report. This report and process is separate from the new NOC automated process above.

Employees who hadn’t previously selected electronic only for their year-end tax documents should have received an email notification of a Workday@OK task with the option to select electronic only. Agencies are requested to encourage employees to select electronic only for both documents as this is a more secure method of distribution and helps save taxpayer dollars by reducing the expense of printing and mailing.

OMES will have W-2s ready electronically by Jan. 19, 2024. Employees that do not elect to receive electronic ONLY for their W2 will have their form printed and mailed on Jan. 31, 2024. The attached W-2 and 1095-C user guides have been created to assist employees in opting out of receiving the W-2 and 1095-C by mail.

The following are terms frequently used for different types of W-2s based on when the form is completed.

Original W-2: Form W-2 that was originally issued to an employee by Jan. 31.

Reissued W-2: Original Form W-2 reissued to an employee when an original form is lost, misplaced, not received, etc. Write "REISSUED STATEMENT" and the Reissued Date (MM/DD/YYYY) on the employee’s new copies. A reissued W-2 can be produced at any time because the data is not being changed.

Corrected W-2: A Form W-2 used to correct the original W-2 when an error has been discovered, before OMES submits the file to the Social Security Administration. “CORRECTED” must be written on the employee’s new copies along with a Corrected Date (MM/DD/YYYY).

NOTE: Corrected W-2 forms must be delivered to OMES by Jan. 24, 2024. Please send the original W-2, a copy of the corrected form and a memo explaining why the correction is needed. Do not send copies of checks or other items.

W-2C: The form used to adjust the original W-2 (or corrected W-2) information when an error has been discovered after OMES has submitted the file to the SSA.

NOTE: W-2Cs must be submitted to OMES as soon as completed and will be filed with the SSA. Please send a copy of the original W-2, Copy A of the W-2C and a memo explaining why the correction is needed. Do not send copies of checks or other items. The employee should receive a copy and the agency should keep Copy D for their records.

Corrected W-2 forms must be delivered to OMES by Jan. 24, 2024, for the corrections to be in the submission file. Due date for submission of Form W-2 information to the Social Security Administration is Jan. 31, 2024.

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 that is not to be replaced, include a letter asking that the warrant not be replaced.

NOTE: When a warrant has been canceled by statute there is no reason for a W-2 correction unless the payment was made in error. If it was a valid payroll payment, the employee is still entitled to a replacement warrant; therefore, the W-2 reporting is proper.

Any correction needed after this date must be sent to OMES as a W-2C for us to notify the SSA. This will ensure reporting is as accurate and complete as possible.

Employee payroll tax withholdings are not authorized to be refunded to an employee once withheld from payroll. Refunds will not be given for those employees who did not submit a W-4 in time for payroll processing. Employees should enter W-4 changes directly in Workday@OK.

Agencies that enter employee W-4 changes should have a deadline for employee submissions. The effective date should not be backdated in an attempt to refund taxes to the employee; this is not authorized by the IRS.

Repayments from employees made in the current year (2024) that are for overpayments of wages in a prior year (2023 or earlier) must be repaid at the gross overpayment amount in accordance with Internal Revenue Service regulations. A Corrected W-2 or a W-2C, as applicable, must be completed and sent to OMES. Only Social Security and Medicare wages and taxes are corrected on the Corrected Form W-2 or 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 as such, the amounts are taxable for federal and state purposes. The employee may be able to take into account such repayments on their current year (2023) income tax return. Please advise them to speak to their tax accountant. Additional instructions for Form W-2 and Form W2-C are available on the IRS website. For assistance, contact Jean Hayes at 405- 522-6300 or jean.hayes@omes.ok.gov or Lisa Raihl at 405-521-3258 or lisa.raihl@omes.ok.gov.

Agencies are reminded to review and ensure employees have a valid OTC Form OW-9-MSE, Annual Withholding Tax Exemption Certification for Military Spouses, on file for 2024. The form must be completed annually to continue the exemption for 2024. If a new exemption form has not been submitted for 2024, 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 Form OW-9-MSE 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 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 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. Federal withholding will still be calculated based on the IRS Form W-4 in effect.

The Oklahoma Tax Commission has additional information and a section of Frequently Asked Questions on its website.

NOTE: Agencies with employees who claim the military spouse exemption and are in other states must follow the specific state rules.

Any agency needing to submit an additional file for 1099M reporting should use the format listed in the CAR forms page (link below). Instructions are provided in a separate link as well as a listing of 1099M reportable account codes. Due to the sensitive nature of the data, please submit your file by a password protected email to alicia.reel@omes.ok.gov. It is recommended that these agencies submit a test file to have a Name and TIN Match done with the IRS.

The file instructions and format can be found on the OMES CAR Forms page:

• 1099 Detail File Format – Outside Agencies.
• 1099 Instructions – Detail File Format.
• 1099 Account Code Cross-Reference.

NOTE: This does not apply to higher ed institutions since they do their own 1099 reporting.

1099 NEC and MISC forms will be ready for email distribution the week of Jan. 16-19, 2024. Please review the 1099s you receive and contact Alicia Reel (info below) with any changes you determine necessary. Corrected 1099s can be created and submitted to your agency for distribution to the vendor. Please return as many changes as possible to OMES prior to Jan. 26, 2024.

Please note the following procedures pursuant to such changes in the 1099 documents:

• For missing addresses or address changes, send us a copy of the 1099 which includes the address you added or changed and include a notation as to the type of change as well as an updated W-9.
• For name or FEI/SSN changes, send us a copy of the original and the amended document as well and an updated W-9 or Vendor/Payee form so that we have appropriate documentation for the changes.
• For all amount changes, please send us appropriate documentation which explains the nature of the transaction changes.
• Any changes that need to be made after Jan. 26, 2024, still need to be sent to OMES as soon as possible and we will forward the information to the IRS.

In all instances, please make sure that your documentation includes enough information for us to understand your changes, the reasons for them and a contact person in case we still have questions.

FYI:

• As in recent years for 1099 reporting – To ensure security on Form 1099M & 1099 NEC, we will truncate the SSN and FEI numbers so that only the last four digits are shown, ex. xxxxx6789. If you have an inquiry on any 1099 NEC or MISC, please provide OMES with the Account Number which is found in the lower left portion of the form.
• In January, before submitting our 1099 file to the IRS, we will TIN match the file with the IRS e-Services system. Any vendors that mismatch in this process will need to be corrected before we can submit our final file to the IRS on Jan. 31, 2024.

Questions or comments should be directed to Alicia Reel at 405-522-1099 or alicia.reel@omes.ok.gov.

NOTE: This does not apply to higher ed institutions since they do their own 1099 reporting.

Agencies will print all 1099 Forms on traditional 8 ½ x 11 white paper. The forms can be tri-folded and will fit in a Standard No.10 windowed envelope. Sample printed forms can be provided, if requested. 

Please contact Alicia Reel at 405-522-1099 or alicia.reel@omes.ok.gov.

The Tax Cuts and Jobs Act of 2017 added Internal Revenue Code (I.R.C.) Section 6050X, which imposes a reporting requirement on certain government entities involved in settlements where I.R.C. Section 162(f) applies. Section 162(f)(1) disallows any deduction for amounts paid or incurred by a taxpayer, to or at the direction of a governmental entity, for violation of a law or the investigation or inquiry by such entity into the potential violation of a law. However, Section 162(f)(2) provides exceptions for amounts related to restitution, remediation and costs incurred by a taxpayer to come into compliance with a law.

Beginning with tax year 2022, the IRS required governmental entities to file IRS Form 1098-F for amounts required to be paid pursuant to a suit, court order or agreement with respect to any violation of law or the investigation or inquiry into the potential violation of a law, if the aggregate amount involved in all suits, orders or agreements in relation to the violation of the law equals or exceeds $50,000 (threshold may change in future years).

• Reporting is required for a suit, order or agreement that becomes binding on or after Jan. 1, 2023.
• The amount required to be paid includes costs to provide services or to provide property.
• A separate Form 1098-F must be filed with respect to each payer that is a party to the suit, order or agreement.
• Form 1098-F is not required for any person that doesn’t have a payment obligation or obligation for costs to provide services or to provide property.
• Forms are due to payers by Jan. 31, 2024.

Instructions for IRS Form 1098-F can be found here. 

A reporting document has been created for state agencies to provide OMES with the required information to create the 1098-F forms. Please complete and submit the reporting document just as soon as possible but no later than Jan. 19, 2024, to payrollreporting@omes.ok.gov.

NOTE: Institutions of higher education will not submit any information to OMES for 1098-F reporting. Please consult your tax accountant if you feel reporting may be required.

With the new age of social media, agencies may be using social media influencers as part of their overall marketing strategy. This type of service creates an independent contractor relationship and as such any payments by cash or noncash methods are considered payments for services. Influencers often receive free gifts or services such as trips, accommodations, food or swag, in exchange for their social media posts promoting the agency. Gifts or services related to this type of relationship are considered taxable income when the cumulative value to an individual influencer is $600 or more during a calendar year.

The agency will need to obtain the influencer’s taxpayer identification number using the IRS Form W-9, Request for Taxpayer Identification Number and Certification, for the income to be reported on Form 1099-NEC. For any noncash income to be reported for 2023, the 1099 Detail File Format spreadsheet must be completed and submitted no later than Wednesday, Jan. 10, 2024. If you have any questions, please contact Alicia Reel at 405-522-1099 or at alicia.reel@omes.ok.gov.

NOTE: This does not apply to higher ed institutions since they do their own 1099 reporting.

Please be aware of the processing time when entering the tax journal entry and scheduling the tax payment on the OST ACES system to ensure payments are entered and set to pay by the liability due date. Tax payment information must be provided by 10 a.m. for the payment to be released that day. With the release one day, the effective date must be at least one day in the future.

The IRS announced an increase in the mileage reimbursement rate effective Jan. 1, 2024, to $0.67 per mile. This is an increase from the $0.655 IRS rate for 2023. (Refer to Internal Revenue Notice 2023-239, released Dec. 14, 2023.) All state agencies may use the IRS rate for travel incurred on and after Jan. 1, 2024.

The Trip Optimizer law is still in place for determining the lowest cost of transportation for travel on state business. The new $0.67 rate is now used for the mileage calculation and for the OMES mileage reimbursement amount referenced in paragraphs E and F of 74 O.S. § 85.45l.

OPERS will have seminars providing an overview of the Roth 457 plan. Both the SoonerSave and Pathfinder plans will now have an option to contribute to the after-tax Roth plan.

Online webinar dates:
Jan. 17 at 10 a.m.
Feb. 1 at 2 p.m.

In-person seminar date:      Jan. 30 at 10 a.m.

Pathfinder participants can find registration and information here.
SoonerSave participants can find registration and information here.

Presented by Fred Pryor Seminars

Online Seminars

For more information, please visit their website.