|To:||Chief Fiscal Officers, MMARS Liaisons, and Payroll Directors|
|From:||Martin J. Benison, Comptroller|
|Date:||December 3, 2008|
|Re:||2008 Tax Reporting and Year End Processing||Comptroller Memo|
The purpose of this memo is to provide departments with instructions and important processing dates for year-end tax reporting and payroll processing.
TAX REPORTING and DISTRIBUTION
Tax Year 2008 W-2 Forms for employees, along with the "Comptroller's W-2 Form Instructional Brochure," will be mailed to each employee's 'Home' address on or before February 2, 2009.
- Notices will be printed on pay advices to remind employees to confirm their Home Address as printed on the pay advice.
- Updates to Home Address must be made before 12/31/08. The 'Home' address is located on the Personal Data panel in HR/CMS.
- Avoid using a PO Box as the Home Address. This may cause delays.
- Home Address cannot be outside of the United States. Departments must mail these individually.
- Undeliverable W-2 Forms will be returned directly to the Department Payroll Director for ultimate distribution to the employee. Each department is set-up with a Return Address for W-2s. The HR/CMS path is Home > Compensate Employees > Manage Annual Tax Rptg (US) > Setup > W-2 Department/Contact Info. Contact Theresa Zalewski 617-973-2414 no later than 12/31 to make changes.
All W-2 questions should be referred to the department's payroll office. The Comptroller's Payroll Bureau will help with any questions submitted by the Employee's Payroll Office. Do not refer employees directly to CTR-PRB.
W-2 Form Reprint Process
Departments can reprint W-2 Forms using Document Direct, the Report ID is HMTAX007. W-2s will not be available on Doc Direct until after the W-2s have been mailed out initially. The W-2s for employees working in multiple departments will be accessible to the department with the most recent effective date in HR/CMS JOB panel. When reprinting, departments must write or stamp "RE-ISSUED" on the W-2.
W-2 Employee Reference on PayInfo
An employee informational W-2 (not to be submitted to the IRS) will be available on PayInfo after W-2 forms are mailed. This will be a convenience for employee reference and available to all departments that have rolled out PayInfo (all departments are available on PayInfo and the default PayInfo Administrator is the Payroll Director).
W-2 Form Corrections
If a department or employee determines that the name, social security number, or any of the information reported on an employee's W-2 Form is incorrect, the department should submit a W-2C Form (Statement of Corrected Income and Tax Amounts), a signed W-3c Form (Transmittal of Wage and Tax Statements), a copy of the original W-2 and a detailed memo explaining the reason for correction to the Comptroller according to the following procedures:
- Department Payroll personnel should complete a W-2C and a W-3C Form. The Employer is the Commonwealth of Massachusetts, followed by the Department Name and Address.
- Blank W-2C and W-3C Forms and Instructions are available at the IRS, John F. Kennedy Building, Government Center, Boston, MA, and any other Regional IRS Office, or at the IRS web site: http://www.irs.gov. Go to section Forms and Publications. The department must use the official forms and not screen prints.
- Copy C of the W-2C should be provided to the employee.
- Copies A & 1 of the W-2C and W-3C Forms should be forwarded to: Office of the Comptroller, Attn: Jim Box One Ashburton Place, 9th Floor Boston, MA 02108 617-973-2311. Include a copy of the original W-2 and provide a detailed explanation of what happened and explain how the change affects each box amount (negatively or positively).
- The Comptroller's Office will file the W-2C and W-3C Forms with both the Social Security Administration (SSA) and the Department of Revenue (DOR).
- Update HR/CMS with corrections to non-tax information. Corrections that require updates to tax information will be made by the Comptroller's Office.
- The Employee's W-4 must also be updated to reflect accurate information.
The department must retain copy D of the W-2C for future reference and audit trail purposes.
YEAR END BUSINESS
Final Wages/Deductions for 2008
The HR/CMS production run of Tuesday, December 23, 2008 (for pay period ending 12/20/2008) will produce the final employee compensation to be reported in Tax Year 2008. The final remittance advice/check date will be 12/26/2008.
Pay Checks and Printed Advices will be available after noon on December 26. Direct Deposit and PayInfo will be on the regular schedule.
Reminder: Year-end balances on the pay stub may not match the W-2 values. Non-taxable earnings, such as travel reimbursements paid through HR/CMS will be included in the pay stub but excluded from taxable earnings. Only earnings subject to income taxes will be reported on the W-2.
Payroll Refund Receipt Voucher Deadline
All payroll refund receipt vouchers and PRRVs must be processed and submitted to the Retirement Board as follows:
- Receipt vouchers for pay period ending 12/6/08 or earlier, submitted to Retirement Board by 12/19/08
- Receipt vouchers for pay period ending 12/20/08, submitted to Retirement Board by 12/31/08.
Vouchers not processed by the December 31 st deadline will require a W-2C.
Ending 2008 HCSA/DCAP/HCSAF and COMECC Deduction Fields
SHPS is the Plan Administrator for the GIC HCSA/DCAP pre-tax benefits. The 2008 deduction data for the Health Care Spending Account (HCSA), Dependent Care Assistance Program (DCAP), the HCSA Fee (HCSAF), and the Commonwealth of Massachusetts Employees Charitable Campaign (COMECC) will be end dated on 12/24/2008. HR/CMS will systematically insert a new row with an effective date and deduction end date of 12/22/2008. HR/CMS users will not have to manually end these deductions.
Note: 2008 deductions with an Effective Date prior to 12/20/08 and an End Date after 12/20/08 will be replaced by this new row. The last 2008 Tax Year deduction for DCAP, HCSA, HCSAF and COMECC will occur for the pay period ending 12/20/08 with an advice/check date of 12/26/08.
A HCSA/DCAP/HCSA Fee Deduction End Date Audit report (HMTAX006) and COMECC Deduction End Date Audit report (HMTAX005) will be available in View Direct on the afternoon of 12/24/08 for HR/CMS users to verify that deductions have been end dated.
PREPARATION FOR 2009
Wages/Deductions for Tax Year 2009
There will be 26 pay periods reported in Tax Year 2009 beginning with the pay period ending 1/3/2009.
2009 Enrollment for HCSA, DCAP and COMECC
Departments can now begin entering HCSA/DCAP/HCSAF and COMECC deduction data for 2009 by using an Effective Date of 12/21/2008.
DCAP, HCSA, HCSAF and COMECC deductions are deducted every pay period. When entering the DCAP, HCSA and COMECC deductions in HR/CMS, be sure to enter the individual's pay period amount and annual goal amount. The annual limit for 2009 DCAP remains $5,000.00. The annual limit for HCSA remains $2,500.00 (minimum $500.00). The administrative fee (HCSAF) for the HCSA and DCAP will remain at $1.73 per pay period.
Departments should familiarize themselves with the new HCSA/DCAP/IRS 2 ½ month grace period when considering 2009 goal amounts. http://www.mass.gov/gic/.
For more information about the HCSA/DCAP pre-tax programs, contact SHPS at 1-866-862-2422 ( www.myshps.com) or visit the GIC website at http://www.mass.gov/gic/. All other questions on this memo should be directed to the Comptroller's Helpline at 617-973-2468.
Advance Earned Income Credit ( AEIC) Filing
Employees claiming the Advance Earned Income Credit (AEIC) status from withholdings must file a new AEIC form by December 31, failure to do so will result in tax withholdings based on current allowances.
Departments can activate AEIC status using an effective date of 12/21/2008 once the employee has submitted a new Form W-5. For eligible employees, the Office of the Comptroller will deactivate the Advance Earned Income Credit (AEIC) status flag after the completion of the December 20 pay period.
W-4 Filing (Employees must file W-4 Annually to Continue "Exempt" Status)
Employees must file a new form W-4 if they are making any changes to their withholding allowances or are claiming Exempt status or if the employee changes his or her name with the Social Security Administration. The deadline to continue with EXEMPT status is February 15; failure to submit a new W-4 will result in tax withholdings at single and zero allowances. For those employees that have not filed a new W-4, departments must establish the single and zero allowance rates for the payroll processed on Feb 17, 2008.
Departments should notify their employees of the consequences of not filing a new W-4 by the February deadline.
T o set-up an employee as exempt, use the 'Maintain Gross' button in the Tax Data Panel and leave the 'Additional Withholdings' as $0. Please refer to this HRCMS Job Aid for more information.