CAR Newsletter November 2023

Volume 34, Number 5 | Fiscal Year 2024 | Nov. 13, 2024

ACCOUNTING

• Lapsing Funds
• Information on Federal Treasury Offset Program – Reminder!

PAYROLL

• 2023 1095-C and W-2 electronic option in Workday@OK
• Please Be Aware of Phishing Emails
• Employees Remote or Teleworking - Primary Location Outside of Oklahoma
• Health Saving Account (HSA) Refund Audits – Payroll Processing
• Deadlines for November Payrolls
• Taxability of Gift Cards, Certificates and Coupons
• OMES Form PWC, Payroll Warrant Cancellation
• Refunds of Taxes for Overpayments to Employees (Form 94P)
• Submission of OMES Form 94P
• Employee Overpayments Collected After Year End
• Reduction of Annual Leave Hours for Overpayments
• Deceased Employee Payroll Processing and Reporting
• Outstanding Wages Beneficiary Designation Option
• Agency Address Verification

HIGHER EDUCATION PAYROLL

• November Payroll Deadlines

1099 INFORMATION

• 2023 1099 Distribution
• 1099 Envelopes
• 1099 Reportable/Taxable Income – Social Media Influencers

TRAINING

• Payroll Law
• Form I-9 and E-Verify Webinars

Agencies are required to complete all transactions related to FY 22 appropriations no later than Nov. 20, 2023, or the funds will lapse.

Agencies should run the Lapse Fund Advance Notice – Appropriated Funds Report to identify all funds that are due to lapse. The path to this report in PeopleSoft: General Ledger > General Reports > Lapse Fund Adv Notice – Approp. 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 Service Desk. Be sure to indicate the specific funding lines with negative balances.

Additionally, some agencies had limits bills on their FY 23 appropriations, which changed them from non-fiscal (30 months) to fiscal (18 months with carryover ability). Those agencies must complete FY 23 transactions and process a budget carryover to FY 24 prior to the lapse date for those funds. The lapse date for these budgets is Nov. 15, 2023.

Please reach out to accounting@omes.ok.gov if you have any questions on this process.

The Treasury Offset Program (TOP) reviews payments to be made by the federal government for either grant draws or vendor payments to see if the payee has an outstanding debt to the federal government. All agencies of the state share the same federal employer identification (FEI) number; when one agency owes the federal government, any agency’s draws or payments from the federal government can be affected. These offsets for debt may reduce payments to a different agency than the one that owes the debt.

There are several notifications that, if addressed properly, can relieve some of the issues related to TOP:

• Notice of debt – Sent to the delinquent debtor by the federal agency that is owed. Goes to the last known address of the agency prior to the debt being turned over to TOP. This is the first opportunity to pay or negotiate with the federal agency notifying the debtor.
• U.S. Department of the Treasury Notice of Debt – Sent to the address of the debtor when a collection item is turned over to TOP. The agency has an opportunity to make the payment to the Department of Treasury prior to offsets.
• SAM Notification of Debt Subject to Offset – Sent to agencies with DUNS numbers registered with the state’s FEI number when debt has either been put into or cleared from the TOP system. This debt may not be related to the agency receiving the notice.
• TOP Offset Notice – Indicates an offset has happened and shows the amount of the original payment to be made and the offset amount. Generally sent to the agency hit with the offset and has important information that will help OMES determine which agency caused the offset.

If an agency receives either a Notice of Debt or an Offset Notice from the Department of Treasury, please forward copies of the notices to OMES CAR. OMES receives reports from TOP which may match with these notices and assist us in resolving offset issues.

Even though higher education agencies have switched to their own FEI number for payroll and other reporting, we are seeing that in some cases their debt is still tied to the state’s FEI number and causing offsets to other agencies for their debt.

When an offset is caused by debt of any state agency, including higher education entities, the debtor agency must immediately reimburse the agency shorted on their federal payment. Since the debtor agency did not take the necessary action when the Notice of Debt was sent, they cannot delay in reimbursing the shorted agency. If the debtor agency can resolve the debt as invalid, any reimbursement from the federal government will be made to the agency on record as the debtor agency. Again, these offsets can be avoided if the initial Notice of Debt is handled properly.

All agency finance officers must ensure that correspondence related to the TOP program is reviewed and forwarded to the appropriate division of the agency as well as forwarded to OMES CAR. This correspondence may come from the U.S. Department of the Treasury or the federal agency that is owed the delinquent debt.

Agencies are encouraged to promote electronic-only access to year-end forms. The following information is provided to distribute to employees.

To avoid waiting for your 2023 Form 1095-C or your 2023 W-2 to arrive by mail, you can opt to go paperless only. When you choose to go paperless only, you will receive an electronic copy of the documents (to download and print) earlier than if electing both paper and electronic. Once you select to receive an electronic-only copy, you do not need to make the selection again in the future. A 1095-C user guide and a W-2 user guide have been created to assist you in opting out of receiving the documents by mail. Those who have elected to receive both electronic and paper copies for their year-end documents will have them mailed by the required deadlines. Electronic versions will also be available by the deadlines. W-2s are due to employees by Jan. 31, 2024. 1095-C forms vary in the due date and may be between Jan. 31-April 1, 2024.

Agencies are reminded to double-check any executive-level or unusual requests for lists of Forms W-2 or Social Security numbers. Cybercriminals continue to trick 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 Forms W-2. 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 email address of the sender and verbally confirm requests for any sensitive data, using 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 email inboxes – 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.

The IRS continues to investigate 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.

Agencies continue to increase the number of state employees who work remotely and need to be cognizant of withholding and reporting requirements for these employees. Employees working remotely outside of Oklahoma requires the state, as the employer, to register and withhold income taxes for that state, as applicable, and to report/pay unemployment and other payroll-related taxes. The employee’s work location must be updated to reflect the state in which they are physically working for Workday@OK to correctly calculate the payroll related taxes. The employee tax elections will need to be timely updated to reflect the new tax jurisdiction for income tax and unemployment withholding/reporting purposes. Failure to update these items could result in penalties and interest being assessed by the work state and will be passed along to the agency.

If an agency has employees working outside of Oklahoma, email OMES Central Payroll so that we can timely register in the state and determine the required withholding and reporting for those employees.

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.

Please email OMES Central Payroll with any questions concerning employees working out of state. Note: This does not apply to Institutions of Higher Education.

Agencies that have received HSA refund audits from OMES Employee Benefits Department should process the employee refunds just as soon as possible but no later than on the last paycheck of this calendar year.

• For audits refunding 2023 HSA withholdings, processing the refund in the same calendar year will prevent the agency from having to complete a W-2C. If refunds are processed in calendar year 2024, agencies will be responsible for completing W-2Cs for those employees.
• For audits refunding prior-year HSA withholdings (2022 or earlier), agencies are responsible for completing W-2Cs for those employees after the refund has been processed. Employees should receive their copies of the W-2C and Copy A will need to be sent to OMES Central Payroll.

Contact Jean Hayes with any questions at 405-522-6300, jean.hayes@omes.ok.gov or payrollreporting@omes.ok.gov.

This is a partial reprint of our article from October to serve as a reminder for the remaining November holidays.

In planning your work for November, Veterans Day will be observed on Friday, Nov. 10. The Thanksgiving holiday is Thursday, Nov. 23, and Friday, Nov. 24. November biweekly payroll for state agencies will be paid on Friday, Nov. 3, and Friday, Nov. 17. November monthly payrolls will be paid on the last working day of the month, Thursday, Nov. 30.

With these dates in mind, agency staff should plan their work accordingly for the deadlines:

SUPPLEMENTAL: Workday supplemental payrolls are set to pay on Thursday, Nov. 09.

BIWEEKLY: The next biweekly pay date will be Friday, Nov. 17. Agencies must have these payrolls processed and paperwork forwarded to OMES by Thursday, Nov. 09.

For the Friday, Dec. 1, biweekly pay date, agencies must have these payrolls processed and paperwork forwarded to OMES by Wednesday, Nov. 22.

MONTHLY: Monthly payrolls will be set to pay on Thursday, Nov. 30. Agencies must have these payrolls processed and paperwork forwarded to OMES by Tuesday, Nov. 21.

Gifts to employees are restricted and should only be given as part of a formal employee recognition program. See 74 O.S. § 4121 and 74 O.S.  § 4122. Furthermore, any gift cards, certificates or coupons given to employees are to be included in the employee’s taxable income. The IRS considers these items cash or cash equivalent; they 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, or states the time to use the coupon, and any unused portion is forfeited. Cash equivalents do not meet the de minimis fringe benefit requirements.

Agencies needing help with processing gift cards in Workday@OK — reach out to HRMS Workday Support and the OMES Service Desk.

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 OMES Central Payroll. Scan the original warrant (marked void) and attach to the email with the PWC. After emailing the scanned copies, the original paper warrant and form, must be sent to OMES Central Payroll. These requests cannot be processed by fax.

Direct deposit cancellations: Email Form PWC to OMES Central Payroll. 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 before 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 five 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 email OMES Central Payroll.

Agencies need to review all outstanding employee overpayments and collect required amounts from employees. After collection, please submit OMES Form 94P, as applicable. If a refund of taxes is due to the agency, the form must be submitted by Friday, Dec. 15, 2023. 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 2023 W-2 for requests submitted through Friday, Jan. 5, 2024. Any corrections submitted after Jan. 5 will require a corrected W-2.

When an employee reimburses a payroll overpayment, please complete and submit OMES Form 94P as soon as the reimbursement is made. Timely submission helps ensure corrections are reflected in the quarter in which they occurred for proper reporting and also helps in the full recovery of Oklahoma Public Employees Retirement System 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. In addition, 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 be entered. This is for the employee's privacy and security. Please do not submit with the Social Security number or any other number. Instructions can be found here.

Employee overpayments collected in the next calendar year are to be repaid at the gross overpayment amount in accordance with IRS regulations. If an employee owes the agency, notify the employee that if the amount is not paid in full by Dec. 31, 2023, the amount due 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:

• Reduction of annual leave (for gross overpaid).
• Reduction of current gross salary (for gross overpaid) 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 net overpaid) 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.

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 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 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, 2023, the employee owes the agency the full $1,000 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 adjustment is required.

Agencies must complete Form DER (Deceased Employee Reporting) when an employee has passed away and payments are made after the date of death. The form is on the OMES HCM Human Resources Payroll Forms page. Complete all forms and email to OMES Central Payroll as soon as possible after all payments have been processed. Submission of this form will ensure year-end reporting is correct. Note: This does not apply to Institutions of Higher Education.

Amounts paid in the year of death are reported on the W-2 for Social Security and Medicare only. The amount that would have been reported as federal and state wages is required to be reported on a 1099-MISC to the individual(s) who received the payment(s). Payments made in the year after the date of death are not subject to Social Security and Medicare and are not reported on the W-2. The amount that would have been reported as federal and state wages is reportable on a 1099-MISC to the individual(s) who received the payment(s).

The Workday@OK Deceased Payroll Process guide is available on the OMES HCM Workday@OK Agency, HR, Payroll Practitioner Materials page to assist in processing payments after the date of death.

NOTE: Remember to put the term reason due to death - Terminate Employee > Involuntary > Death. Due to the timing of the deposit and date of death, Banks may return direct deposits for deceased customers. A return of an item will cause a delay to the beneficiary receiving the payment.

NOTE: Please let recipients know that they will be issued a 1099-MISC at year-end and that the amounts will be reported to the IRS and OTC. This will assist them in tax planning.

Statute 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 relieves stress and anxiety on family members after the employee's death. It also provides clear guidance on who is to receive final wage payments.

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 decedent’s surviving spouse, or to the decedent's estate if there is no surviving spouse.

For more information or sample forms and instructions, please email OMES Central Payroll.

Please verify the correct agency address is being used in Workday@OK. 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 contact the OMES Service Desk at 405-521-2444 or servicedesk@omes.ok.gov to have the agency’s address updated.

In planning your work for November, it is important to remember Veterans Day will be observed Friday, Nov 10. The Thanksgiving holiday is recognized Thursday, Nov. 23, and Friday, Nov. 24. 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.

All 1099 forms will be distributed as an Adobe PDF File through email, between Jan. 16-19, 2024.

Please email your agency's contact information to OMES Central Payroll with the following details for a primary and alternate contact:

• Agency number.
• Agency name.
• 1099 Contact name.
• 1099 Contact phone.
• 1099 Contact email.

NOTE: This does not apply to Higher Ed Institutions since they do their own 1099 reporting.

Agencies will print all 1099 Forms on traditional 8½ x 11 white paper. The forms can be trifolded and will fit in a standard No.10 window envelope. If requested, sample printed forms can be provided. Please contact 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.

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.

For the income to be reported on Form 1099-NEC, 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 any noncash income to be reported for 2023, the 1099 Detail File Format spreadsheet must be completed and submitted no later than Friday, Jan. 5, 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.

Live Online Seminars

Presented by Fred Pryor Seminars

For more information, please visit their website.

Multiple webinar choices and dates:

Form I-9: An overview of the Form I-9 requirements, including step-by-step instructions on how to complete each section, acceptable documents, retention and storage.

E-Verify overview: An overview of the E-Verify program including how the program works, key features, how to enroll, employer responsibilities, program highlights and a demonstration of the program.

E-Verify in 30: A quick overview of the E-Verify program including what it is, how to enroll and key features.

E-Verify for existing users: A detailed overview of the E-Verify program specifically for existing users. Topics include Form I-9, user roles, creating a case, case alerts, how to handle a TNC and common user mistakes.

For more information on the webinars, please visit the USCIS website. Some of the webinars are eligible for professional development credits with the Society for Human Resource Management (SHRM) and the Human Resource Certification Institute (HRCI).