OFFICE OF THE COMPTROLLER DEPARTMENT OF BANKING AND FINANCE STATE OF FLORIDA TALLAHASSEE

Transcription

1 ROBERT F. MILLIGAN COMPTROLLER OF FLORIDA OFFICE OF THE COMPTROLLER DEPARTMENT OF BANKING AND FINANCE STATE OF FLORIDA TALLAHASSEE January 2, 2003 DBFBP SUBJECT: IRS Error on 2002 Form W-2 (Earned Income Credit Limits) The Internal Revenue Service (IRS) has announced an error on 2002 Form W-2, Notice to Employee on the back of Copy B. The earned income limitations shown in the Earned income credit (EIC) notice are incomplete and should have included the income limits for taxpayers who file married filing jointly. The earned income limit for taxpayers who file married filing jointly should be $1,000 more than the amount shown for each listed scenario. The relevant text in the second paragraph of the notice should have read as follows: You may be able to take the EIC for 2002 if (a) you do not have a qualifying child and you earned less than $11,060 ($12,060 if married filing jointly), (b) you have one qualifying child and you earned less than $29,201 ($30,201 if married filing jointly), or (c) you have more than one qualifying child and you earned less than $33,178 ($34,178 if married filing jointly). You and any qualifying children must have valid social security numbers (SSNs). Employing agencies should alert all affected employees about the IRS 2002 Form W-2 error and the correct income limitations as soon as possible. The following options are available: Provide employees with a copy of Notice 797 (Rev. November 2002), Possible Federal Tax Refund Due to the Earned Income Credit (EIC) (You can obtain this notice by calling , or by computer at Send an agency-wide memo or informing employees of the correct EIC limitations. Inform your employees of the correct EIC earned income limitations in another appropriate manner. For example, post a notice informing employees of the correct EIC limitations. The notice should be posted in a place where employee notices are normally placed.

2 The attached Notice to Employees was prepared to assist agencies with alerting employees of the error. Agencies may use this notice for informing its employees of the correct EIC earned income limitations for If you have any questions, please feel free to contact Ernest Thompson at (850) , Suncom , or by at JB/ET:sd Attachment

3 NOTICE TO EMPLOYEES ERROR ON 2002 FORM W-2, BACK OF COPY B EARNED INCOME CREDIT (EIC) LIMITS The Internal Revenue Service (IRS) has announced an error on 2002 Form W-2, Notice to Employee on the back of Copy B. The earned income limitations shown in the Earned income credit (EIC) notice on the back of Copy B are incomplete and should have included the income limits for married filing jointly. The earned income limit for taxpayers who file married filing jointly should be $1,000 more than the amount shown for each listed scenario. The relevant text in the second paragraph of the notice should have read as follows: You may be able to take the EIC for 2002 if (a) you do not have a qualifying child and you earned less than $11,060 ($12,060 if married filing jointly), (b) you have one qualifying child and you earned less than $29,201 ($30,201 if married filing jointly), or (c) you have more than one qualifying child and you earned less than $33,178 ($34,178 if married filing jointly). You and any qualifying children must have valid social security numbers (SSNs). For additional information on Earned Income Credit, see IRS Notice 797, (revised November 2002) Possible Federal Tax Refund Due to the Earned Income Credit (EIC). This booklet may be obtained by calling , or by computer at

4 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER May 19, 2003 DFSBP SUBJECT: Year-End Bonus Payments Additional Guidance and Reminder This is to inform you that Year-End Bonus Payments will not be submitted through the People First system this year. As a result, agencies may submit approved bonus payments through either the COPES Personnel System or through the PC Payment System on any of the following payrolls: Processing Date Payroll Type Warrant Date 6/3/2003 Supplemental Payroll 6/9/2003 6/9/2003 Biweekly Payroll 6/13/2003 6/17/2003 Supplemental Payroll 6/23/2003 6/20/2003 Monthly Payroll 6/30/2003 6/23/2003 Biweekly Payroll 6/27/2003 Agencies may also submit approved bonus payments using the PC Payment System only on any of the following payrolls: Processing Date Payroll Type Warrant Date 5/30/2003 Awards Payroll 6/4/2003 6/4/2003 Awards Payroll 6/9/2003 6/11/2003 Awards Payroll 6/16/2003 6/18/2003 Awards Payroll 6/23/2003 6/25/2003 Awards Payroll 6/30/2003 *An Awards Payroll is a warrant only payroll and will not generate EFT payments. Agencies are reminded of the following guidance regarding the processing of Year-End Bonus Payments: 1. For actual payroll warrants to be generated, agencies MUST submit the bonus requisition actions on an Awards payroll. Submission on the Supplemental, Biweekly or Monthly payrolls will result in direct deposit for employees with direct deposit authorization. ACCOUNTING & AUDITING/BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

5 2. The allocation approved by OPB is for gross salary charge. This equals the gross salary plus employer contributions. 3. Agencies must use Appointment Status Code YE. 4. Fiscal year-end bonus payments must be voucher and warrant dated in June. Agencies are also reminded to refer to memorandum DFSBP dated 4/14/2003 (please disregard all references in this memorandum to the People First System) and to COPES processing guidance when preparing and submitting bonus payments. Special Note: Agencies may NOT use the On-Demand Payroll System to process Year-End Bonus Payments. Should you have any questions concerning this matter, please contact Yvette McCullough at , SUNCOM , or or Cindy Langley at , SUNCOM , or JB/JC:sd

6 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER May 23, 2003 DFSBP SUBJECT: Fiscal Year-End Payroll Processing Schedule Changes This is to inform you of the following changes to the payroll schedule for 2003: The Supplemental Payroll scheduled to process on June 30, 2003, has been rescheduled to process on July 2, 2003, voucher on July 3, 2003, with a warrant date of July 9, Payroll warrants and reports will be released to agencies on July 7, To ensure a successful fiscal year crossover there will be no cancellations or adjustment runs processed on July 1, While agencies will be allowed to enter and approve On-Demand Payroll transactions on July 1, 2003, these transactions will not be processed until July 2, 2003, and will warrant date on July 7, Special Note: The On-Demand payrolls scheduled to process on June 27, 2003, and June 30, 2003, will be charged to the Fiscal Year but will warrant date in the Fiscal Year. Should you have any questions concerning the payroll processing changes, please contact Yvette McCullough at , SUNCOM , or ymccullo@dfs.state.fl.us or Cindy Langley at , SUNCOM , or clangley@dfs.state.fl.us. Should you have any questions concerning the cancellation and adjustment runs for July 1, 2003, please contact Cynthia Murphy at , SUNCOM , or cmurphy@dfs.state.fl.us or Pattsy Burgess at , SUNCOM , or at pburgess@dfs.state.fl.us. JB/JC:sd JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

7 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER July 16, 2003 DFSBP SUBJECT: Criminal Justice Incentive Program Payments In early fall, we will be changing the Authorization File we currently use to process Criminal Justice Incentive Program (CJIP) payments. Currently, the Authorization File is based on class codes. However, with the implementation of broadbanding codes and the new People First personnel system, class codes will no longer be a viable means of producing CJIP payrolls. Therefore, we are going to build a new Authorization File and it will be based on Position Number and Social Security Number. We will develop the initial Authorization File based on position numbers from the most recent regular payroll. Please find attached a report of your CJIP employees that will be paid on July 16, 2003 with a comparison to a June regular payroll for retirement code, position number and class code. In order to insure that your employees continue to receive their CJIP monies, it is imperative that any incorrect position numbers in the CJIP Authorization File or the CJIP payroll be corrected as soon as possible. We ask that you please send an to Cindy Langley at the address below certifying that the position numbers in the regular payroll for your employees are correct no later than August 29, Special Note: If retirement codes do not match, this could affect the employee s withholding tax calculation on the CJIP payroll. Also, some class code discrepancies are provided as an audit tool (not all agencies will have them). We anticipate having a smooth transition to the new CJIP Authorization File and want to thank you in advance for your support and cooperation. Should you have any questions concerning this matter, please contact Cindy Langley at (850) , SUNCOM , or clangley@dfs.state.fl.us. JB/CL:sd JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

8 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER July 18, 2003 DFSBP SUBJECT: Request for Information (State Income Tax Withholding by Agency) The (BOSP) is in the process of enhancing the state s payroll system to include on W-2 forms state and/or local income taxes withheld by agencies for their out-of-state employees, including the state name and agency state identification number. This will eliminate the need for agencies to manually add this information to W-2 forms at year-end. In order for us to make the necessary payroll system changes, we need all agencies having payroll deductions for state and/or local income tax withholdings to provide us with the following information by August 15, 2003 for each state income tax deduction code utilized: 1. Agency OLO and name 2. Agency contact person for reporting state and/or local income tax (name, address, telephone, address) 3. Payroll deduction code(s) utilized for state and/or local income tax withholding 4. State and/or local taxing authority name and address for reporting and remitting 5. State and/or local identification number (issued to the agency for remitting and reporting) Note: Please send your information directly to Ernest Thompson, BOSP. Should you have any questions, please contact Ernest at (850) , SUNCOM , or, ethompso@dfs.state.fl.us. JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

9 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER September 5, 2003 DFSBP SUBJECT: Criminal Justice Incentive Program (CJIP) Payroll Modifications and Guidelines This is to inform you that effective October 9, 2003, we will be implementing the following modifications and guidelines regarding CJIP payrolls: 1. All CJIP payments will be dropped whenever an employee s CJIP position number or Tax ID Number is not on the CJIP Authorization file. 2. The (BOSP), using the last regular payroll processed in September for CJIP employees and the CJIP payroll processed in September, will do the initial load of position numbers into the CJIP Authorization File. 3. If an employee is not paid CJIP in the month of September, you will need to complete and submit a DBF- BP-CJIP Form to BOSP in order to have this position number added to the file. The DBF-BP-CJIP Form must be submitted at least five business days prior to the CJIP payroll processing date and must be signed by the agency head or designee. 4. If an employee changes positions and you determine that the employee s correct position number is eligible for CJIP payments, you will then need to complete and submit the DBF-BP-CJIP Form to BOSP in order to have the new position number added to the file and the old one deleted. Note: There will be a one-month overlap in the two position numbers. 5. If the correct CJIP eligible position is not on the CJIP Master File, your agency/university must submit a CJIP change order, using the PC Payment System, for either the CJIP payroll scheduled to process on September 11, 2003 or October 9, 2003 to correct the employee s CJIP master record maintained by BOSP. These changes are needed in order to prevent ineligible employees from receiving CJIP payments. We apologize in advance for any inconveniences that may result from our modifications and appreciate your support in this matter. If you have any questions about this memorandum, please feel free to contact Cindy Langley at (850) , SUNCOM , or at clangley@dfs.state.fl. JB/CL:sd JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

10 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER September 29, 2003 DFSBP SUBJECT: Payroll Deduction Code for Purchase of Computers The Department of Management Services has determined that it is no longer in the State s best interests to have a payroll deduction code (Code 0673) for the purchase of computer equipment from the Union First On Line (UFOL) Corporation. Therefore, effective immediately, agencies are not permitted to enter any new accounts utilizing this deduction code. In addition, we will keep this deduction code active until November 11, This will allow all current participating state employees to finish paying for their computer purchases from this corporation. Please address any questions to Steve Isted at (850) , SUNCOM , or, sisted@dfs.state.fl.us. cc: Steven Lustig, UFOL Corporation Robert Wallerius, UFOL Corporation Tom Clemons, Department of Management Services JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

11 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER December 3, 2003 DFSBP SUBJECT: Expiration of Excluded Employment Form (DFS-BP-5) Reduction or Exemption from Withholding Reminder Certain types of income are either exempt from federal withholding or eligible for reduced withholding under the Internal Revenue Code or income tax treaties. The Internal Revenue Service requires that most exemptions from withholding are valid for one year and must be renewed each year. Agency payroll report PW4RYX06 (RDS Form ID Q**X) lists your employees having a Form DFS-BP-05 (Reduction or Exemption From Withholding) that will expire on December 31, The report lists only those employees who have been paid since July 1, This report is available through the Report Distribution System (RDS). If you need assistance in viewing or printing your report, please contact your agency s RDS administrator. Eligible employees may claim the exemption for year 2004 by completing a new DFS-BP-05 form. This form is available on the web at In order to continue uninterrupted exemption from withholding, agencies must enter a new DFS-BP-05 form into the W-4 subsystem no later than 5:00 P.M. on December 29, We caution against entering records for year 2004 prior to the last two weeks in December. This is because these pending records will prevent you from entering W-4 changes for these employees until the system is updated on January 2, Agencies and universities are responsible for monitoring the residency status of employees and the time limitations under income tax treaties. When an employee is no longer eligible for the reduction or exemption from withholding, the W-4 system should be updated as soon as possible. Refer to Volume V, Section 3 of the Payroll Preparation Manual for Form W-4 and Form DFS- BP-5 procedures. JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

12 December 3, 2003 Page 2 Agencies and universities should also review the records of employees who are exempt from Social Security and Medicare to ensure they still meet the eligibility requirements under the Internal Revenue Code. These employees should be coded with a non-contributory retirement code. If you have any questions concerning the input of these forms, please contact Pattsy Burgess at (850) , SUNCOM , or pburgess@dfs.state.fl.us. If you have questions concerning the taxation nonresident aliens, please contact Elda Quijano at (850) , SUNCOM , or equijano@dfs.state.fl.us. MN/PB:sd

13 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER December 4, 2003 DFSBP SUBJECT: Earned Income Credit Advance Payment Certificate Expiration This is to inform you that Earned Income Credit Advance Payment Certificates (Form W-5) for 2003 will expire on December 31, This includes any W-5 forms for 2003 that are added between now and the end of this calendar year. Additional guidance follows: Agency payroll report PW4RYX05 (RDS Form ID Q**W) lists your employees who have a Form W-5 that will expire on December 31, This report is available through the Report Distribution System (RDS). If you need assistance in viewing or printing your report, please contact your agency s RDS administrator. Eligible employees who want to receive advance payments of the earned income credit during 2004 must complete a 2004 Form W-5. In order to continue uninterrupted participation, the 2004 W-5 Form must be entered in the W-4 system no later than 5:00 P.M. on December 29, We caution against entering W-5 forms for 2004 prior to the last two weeks in December. This is because these records will remain pending and will therefore prevent you from entering W-4 changes for these employees until the system is updated on January 2, Refer to Volume V, Section 3 of the Payroll Preparation Manual for Form W-5 procedures. IRS Form W-5 for 2004 is available from the Internal Revenue Service (IRS). You will be able to obtain Form W-5 by calling the IRS toll-free number or by accessing the IRS website ( You are encouraged to maintain a supply of W-5 Forms for your employees. Please contact Pattsy Burgess at (850) , SUNCOM , or at pburgess@dfs.state.fl.us if you should have any questions regarding this memorandum. MN/PB:sd JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

14 DEPARTMENT OF FINANCIAL SERVICES TOM GALLAGHER CHIEF FINANCIAL OFFICER December 8, 2003 DFSBP SUBJECT: CALENDAR YEAR END INFORMATION The following payroll related information is provided to assist agencies in complying with the calendar year end reporting and processing schedule. Information concerning upcoming payroll changes and activities is included. Here are the topics we cover: 1. Vehicle Fringe Benefit Reporting 2. Moving Expenses 3. Forms W-2 & 1042-S Distribution 4. Duplicate Forms W-2, W-2c and 1042-S 5. Cancellations and Adjustments 6. Refund of Current Year Salary Overpayment 7. FICA Tax Changes 8. On-Demand Payroll and Revolving Fund Reimbursements 9. Taxable Tuition Waivers and Taxable Education Assistance 10. Nonresident Alien Non-Cash Scholarships 11. State Income Taxes Deducted in Employee s Withholding Allowance Certificate Form W Expiration of Advance EIC Payments Form W Qualified Transportation Fringe Benefit Limits 15. Pension Plan Contribution Limits Vehicle Fringe Benefit Reporting The deadline for reporting vehicle fringe benefits for November 1, 2002 through October 31, 2003 is December 29, Vehicle fringe benefits must be reported utilizing the non-cash adjustments on-line system. Agencies collecting FICA taxes through the payroll process in December should exercise care to ensure that the values are entered and approved prior to the processing of their agency s last payroll of the year. Any on-line adjustments entered after the last payroll for 2003 has processed, or adjustments by agencies that elect to pay FICA taxes from their FLAIR accounts, must be entered and approved in the JOHN BENNETT BUREAU CHIEF BUREAU OF STATE PAYROLLS 200 EAST GAINES STREET TALLAHASSEE, FLORIDA (850) FAX (850) Affirmative Action / Equal Opportunity Employer

15 on-line system by 5:00 p.m. on December 29, 2003 in order to be considered as 2003 business. This is the date of the last cancellation and adjustment run of the year. Any reported benefits entered into the online system after that date will result in the affected employee receiving a corrected Form W-2 (W-2c) for calendar year Instructions for completing on-line non-cash adjustments are found in Volume V, Section 7, of the Payroll Preparation Manual. Questions regarding this issue should be directed to Pattsy Burgess, 850/ , SUNCOM or at pburgess@dfs.state.fl.us. Elected officials and employees whose calendar year 2003 compensation is greater than $125,400 are not eligible to use the commuting valuation method. Instead, they must use the Annual Lease Value Table. Please note the four-year recalculation requirement when using the Annual Lease Value Table. Please refer to Volume VI, Section 3, of the Payroll Preparation Manual for instructions. 2. Moving Expenses Comptroller s Memorandum No. 1 ( ) and Payroll Preparation Manual, Volume VI, Section 3, contain information regarding the Federal tax and reporting requirements applicable to payments or reimbursements for employee moving expenses. 3. Forms W-2 & 1042-S Distribution Original Forms W-2 and Information Statements for calendar year 2003 will be distributed to all agencies by January 16, The design of the Form W-2 has not changed from last year. The dimension of the form and the address placement are the same as last year s Form W-2. The envelopes for mailing W-2 Forms to employees can be purchased using state commodity # The alpha list of original W-2 s will ONLY be available to the agencies in RDS. The RDS Form ID is U**6 (**represents your agency ID). RDS administrators should establish this report for all necessary personnel before January 8, Information about the Report Distribution System is located in Volume VIII, Section 2, of the Payroll Preparation Manual. Original Forms 1042-S for nonresident aliens will be distributed to all agencies no later than March 5, The design of the Form 1042-S has not changed from last year. 4. Duplicate Forms W-2, W-2c and 1042-S The last day in 2003 that 2000, 2001, or 2002 duplicate Forms W-2, W-2c and 1042-S will be available via the on-line request system will be December 29, Duplicate 2001, 2002, and 2003 Forms W-2 and W-2c should be available via the on-line request system by January 20, 2004 or shortly thereafter. Duplicate 2001, 2002, and S Forms should be available via the on-line request system in March Cancellations and Adjustments All cancellations and adjustments, including salary refunds, made to year 2003 earnings must be added and approved in the on-line system by 5:00 p.m. on December 29, 2003 in order to be considered as 2003 business for W-2 production and withholding tax restoration. There will be at least a 4-month delay in restoration of withholding tax for any adjustments processed after December 29, No adjustments will be processed from December 30, 2003 through January 2, Any cancellations and adjustments made to year 2003 earnings that are approved after December 29, 2003, will result in the issuance of a W-2c Form. Cancellations and adjustments entered and approved January 5-7, 2004, will 2

16 result in the message Employee: Please Hold for W-2c" being printed on the employee s original W-2 Form. Any employee receiving a W-2 Form with this message should refrain from filing a tax return until the W-2c Form is received. Adjustments processed after January 7, 2004, will generate a W-2c Form. However, original 2003 W-2 Forms will not display a message. W-2c Forms resulting from adjustments processed January 5-7, 2004, will be mailed directly to affected employees at their home address. However, agencies will be contacted if the mailing information on file is insufficient. W-2c Forms initiated after January 7, 2004, may be mailed directly to the affected employees by the or distributed to the employing State agencies. 6. Refund of Current Year Salary Overpayment In order to be considered in the production of the original 2003 W-2 form, refunds must be added and approved in the on-line system by 5:00 p.m. on December 29, Agencies must enter the refund information into the system by December 31, 2003, in order for the system to calculate the correct withholding tax for the net refund. Employees must repay the net refund by December 31, In addition, the records must be approved by 5:00 p.m. on January 6, All records entered into the system on or before December 31, 2003, and not approved by January 6, 2004, will be deleted. Records entered after December 31st with year 2003 warrant dates will not have withholding tax or W-2 Gross adjusted. Information concerning the processing of salary overpayment refunds can be found in Volume V, Section 6, of the Payroll Preparation Manual. 7. FICA Tax Changes The Social Security wage base will increase from $87,000 to $87,900 in year The Social Security tax rate will remain at 6.2% for both employee and employer contributions. The Medicare tax rate of 1.45% for both employee and employer will also remain the same. 8. On-Demand Payroll and Revolving Fund Reimbursements All Revolving Fund payments for wages made to employees in calendar year 2003 must be calculated and reimbursed in year 2003 utilizing the On-Demand Payroll System. All transactions in the On-Demand system must be approved by 5:00 p.m. on December 29, 2003, to be considered as 2003 business. On- Demand transactions not approved by this time will be purged from the On-Demand system. If a revolving fund transaction is not reimbursed in the same calendar year as the payment to the employee, an incorrect W-2 Form will be created necessitating the issuance of a W-2c Form. In addition, the unapproved On-Demand revolving fund reimbursement transaction will be deleted after 5:00 p.m. on December 29, Note that revolving fund payments can only be reimbursed through the On-Demand Payroll System for the exact amount calculated by the On-Demand Payroll System in the calendar year the Revolving Fund was paid to the employee. For additional information on Revolving Fund regulations, please refer to Chapter 69I , Florida Administrative Code, titled Wage Payments from Revolving Funds". Also refer to Volume IV, Section 11 of the Payroll Processing Manual for additional information on the On-Demand Payroll System. 9. Taxable Tuition Waivers and Taxable Education Assistance Taxable tuition waivers and education assistance must be reported in the current calendar year utilizing the non-cash adjustments on-line system. Agencies collecting FICA taxes through the payroll process in December 2003 should exercise care to ensure that the values are entered and approved prior to processing the last payroll of the year. Agencies electing to pay FICA taxes from their FLAIR account, or on-line adjustments entered after the last payroll for 2003 has processed, must enter and approve the 3

17 transaction by December 29, 2003 (the last daily cancellation and adjustment run of the year). Instructions for completing on-line non-cash adjustments are located in Volume V, Section 7, of the Payroll Preparation Manual. Information concerning the reporting of taxable tuition waivers is located in Volume VI, Section 3, of the Payroll Preparation Manual. 10. Nonresident Alien Non-Cash Scholarships For nonresident aliens, the Internal Revenue Service requires that all U.S. sources of non-qualified scholarships, fellowships, grants, and financial aid be reported on IRS Form 1042-S. The IRS may assess interest and penalties on items not timely reported. Agencies should report non-cash scholarships, using the on-line non-cash adjustment system, by December 29, 2003 for calendar year Before entering the adjustment, you must ensure that the scholarship recipient has a W-4 form. Instructions for entering these types of payments into the system are located in Volume V, Section 7, of the Payroll Preparation Manual. In addition, the non-cash adjustment system will collect the withholding taxes from the FLAIR account code entered with the transaction. 11. State Income Taxes Deducted in 2003 Agencies electing to provide state income tax withholding for its employees must assume the remitting and reporting responsibilities. Each agency must register with the appropriate taxing authority of the state or local government; obtain an agency tax identification number and the required information and forms for meeting its remitting and reporting responsibilities. BOSP must be notified when new registrations are obtained, providing the name of the state or local government taxing authority, the agency tax identification number, deduction code utilized, and the agency contact name and telephone number. Prior to year 2003, agencies were required to add each employee s state and local government income tax deductions to Form W-2 before distribution to employees. Beginning with year 2003 the Chief Financial Officer s payroll system will add these deduction amounts to W-2 forms. Agency reports will be available in the Report Distribution System (RDS) in January 2004 listing employees having state and local government income tax deductions in year The RDS Form ID is U**K (** represents your Agency ID). RDS administrators should establish this report for all necessary personnel before year-end (December 31, 2003). Information about RDS is located in Volume VIII, Section 2 of the Payroll Preparation Manual. Information about State Income Taxation is located in Volume VI, Section 4. Questions should be directed to Ernest Thompson, 850/ , SUNCOM , ethompso@dfs.state.fl.us. 12. Employee s Withholding Allowance Certificate Form W-4 Agencies should remind employees to file a new Form W-4 with their agency personnel office if the address, marital status, allowances or exempt status has changed since the last W-4 was filed. A W-4 claiming exempt status for 2003 expires February 15, Employees claiming exempt status must file a new W-4 each year. If a new W-4 is not filed, the Internal Revenue Service requires the employer to withhold tax as if the employee is single with zero allowances. In order to continue uninterrupted exempt status for 2004, a new W-4 must be entered into the payroll system by 5:00 p.m. February 9, Expiration of Advance EIC Payments Form W-5 Earned Income Credit Advance Payment Certificate for 2003 expires on December 31, This includes any 2003 W-5 Forms added between now and year-end. Eligible employees who want to receive 4

18 advance payments during 2004 must complete a 2004 Form W-5. In order to continue uninterrupted participation, the 2004 W-5 must be entered into the W-4 system by 5:00 p.m. on December 29, Qualified Transportation Fringe Benefit Limits For taxable years beginning in 2004, the monthly limitation under Section 132(f), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $100. The monthly limitation regarding the fringe benefit exclusion for qualified parking is $195. Refer to IRS Rev. Proc Pension Plan Contribution Limits 2004 The annual additions limitation for defined contribution plans under IRC Section 415(c) is increased from $40,000 to $41,000. The annual compensation limit under Section 401(a)(17) is increased from $200,000 to $205,000. The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $300,000 to $305,000. The limitation on the exclusion for elective deferrals under Section 402(g) (e.g., 403(b) plans) is increased from $12,000 to $13,000. The limitation under Section 457 concerning elective deferrals to deferred compensation plans of state and local governments and tax-exempt organizations has increased from $12,000 to $13,000. The limitation under 414(v) for catch-up contributions to 403(b) and 457 plans for individuals age 50 and over is increased from $2,000 to $3,000. For additional information, refer to IRS Notice If there are any questions concerning this Calendar Year End information memorandum, please do not hesitate to contact our office at (850) or SUNCOM JB/ET:sd 5