FY2010-14: 2009 Tax Reporting and Year End Processing (issued 12/2/2009)

Comptroller Memo
FY#2010-14

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

W-2 Distribution

Tax Year 2009 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 1, 2010.

• 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 on or before 1/4/10. 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 12/31/2009 to make changes.

W-2 Questions

All W-2 questions should be referred to the Employee's Payroll Office. The Comptroller's Payroll Bureau (CTR-PRB) 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 on PayInfo for Employee Reference

An employee informational W-2 (not to be submitted to the IRS) will be available on PayInfo when W-2 forms are mailed. This will be a convenience for employee reference (all departments are available on PayInfo and the default PayInfo Administrator is the Payroll Director).

W-2 Brochure copies cans be found on the CTR website. Go to: Payroll and Labor Cost Management section > Tax Information.

W-2 Form Corrections- New Process ThisYear

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 Request for Correction Form and 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 Request for Correction Form.
• The Request Forms should be forwarded to:

Office of the Comptroller, Attn: Jim Box
One Ashburton Place, 9th Floor
Boston, MA 02108 Phone: 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).
• 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 Comptroller's Office will create the W-2C and W-3C Forms and file it with both the Social Security Administration (SSA) and the Department of Revenue (DOR). A copy will be mailed to the employee and the correction posted in HR/CMS Year End Form page. See: Home > Compensate Employees > Maintain Payroll Data (US) > Inquire > Year End Forms

HR/CMS will contain W-2C information for future reference and audit trail purposes.

YEAR-END BUSINESS

Final Wages/Deductions for 2009

The HR/CMS production run on Tuesday, December 22, 2009 (for pay period ending 12/19/2009) will produce the final employee compensation to be reported in Tax Year 2009. The final remittance advice/check date will be Thursday 12/24/2009 instead of the usual Friday due to the Christmas Holiday falling on paycheck/advice day. Direct Deposit and PayInfo will be available on the morning of December 24 while Pay Checks and Printed Advices will be available at Ashburton Place for courier pick up at noon and therefore to the employee later that day or Monday. Do not send employees to Ashburton Place to pick up their individual printed advices or checks. Please encourage employees to go paperless to eliminate the need to wait until late on the day of delivery.

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 are included on 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 12/5/09 or earlier submitted to Retirement Board by 12/18/09.
• Receipt vouchers for pay period ending 12/19/09 submitted to Retirement Board by 12/31/09.

Vouchers not processed by the December 31 ^st deadline will require a W-2C.

Ending 2009 HCSA/DCAP/HCSAF and COMECC Deduction Fields

Benefit Strategies is the new Plan Administrator for the GIC HCSA/DCAP pre-tax benefits. A Mass Update program will be run on 12/23/2009 to end date the 2009 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). HR/CMS will systematically insert a new row with an effective date and deduction end date of 12/19/2009. HR/CMS users will not have to manually end these deductions.

Note: 2009 deductions with an Effective Date prior to 12/19/09 and an End Date after 12/19/09 will be replaced by this new row. The last 2009 Tax Year deduction for DCAP, HCSA, HCSAF and COMECC will occur for the pay period ending 12/19/09 with an advice/check date of 12/24/09.

A HCSA/DCAP/HCSA Fee Deduction End Date Audit report (HMTAX006) and COMECC Deduction End Date Audit report (HMTAX005) will be available in DocDirect on the afternoon of 12/23/09 for HR/CMS users to verify that deductions have been end dated.

PREPARATION FOR 2010

Wages/Deductions for Tax Year 2010

There will be 26 pay periods reported in Tax Year 2010 beginning with the pay period ending 1/2/2010.

2010 Enrollment for HCSA, DCAP and COMECC

Departments can now begin entering HCSA/DCAP/HCSAF and COMECC deduction data for 2010 by using an Effective Date of 12/20/2009. New this year, you must end date the deduction with a December 18, 2010 date.

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 2010 DCAP remains $5,000.00. The annual limit for HCSA increased to $3,000.00 (minimum $500.00). The administrative fee (HCSAF) for the HCSA and DCAP has decreased to $1.66 per pay period.

Departments should familiarize themselves with the HCSA/DCAP/IRS 2 ½ month grace period when considering 2010 goal amounts. http://www.mass.gov/gic/.

For more information about the HCSA/DCAP pre-tax programs, contact Benefit Strategies at (877) FLE-XGIC (353-9442) or www.benstrat.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 12/20/2009 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 19 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 16, 2009.

Departments should notify their employees of the consequences of not filing a new W-4 by the February deadline.

To set-up an employee as exempt, use the 'Maintain Gross' button in the Tax Data Panel and leave the 'Additional Withholdings' as $0.

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