OSPS E-News ~ Year End Net Pay Negative / Overpayment Reminder

[Announcements from OSPS to the users of the Oregon State Payroll Application]

To State Agency Payroll Professionals:

November is the last month in tax year 2012. Employee net pay negatives / overpayments are one of the items to monitor closely and to process before November run 2.

Your electronic reports for November run 1 include the E260-200 Net Pay Negative Report, which lists employees who have net pay negatives from prior pay periods that did not clear in November run 1. Review this report and make any needed entries for November run 2. Here are some things to consider:

If the employee will not repay all or part of an overpayment in the same year that the overpayment occurred, the amount still owed is taxable to the employee for that year. This is because the employee received and had use of those funds during the year (constructive receipt).

The timing and circumstances of the repayment dictate how to handle the overpayment at year-end.

If the employee has a net pay negative from a prior pay period and you are certain that December run 1 wages will cover it, allow OSPA to make the normal deduction. We will not do a corrected W-2 for either 2012 or 2013.

If the employee has a net pay negative in OSPA after November run 2 and will not have enough wages to cover it in December, reverse the entries that created the remaining negative. Work with your agency's accounting staff to set-up an account receivable for that amount. The employee's W-2 will include the amount the employee has not repaid. Request a corrected W-2 (W-2c) for the year of the overpayment when the employee has repaid the remaining amount.

If your agency has already reimbursed the joint payroll account for a 2012 overpayment that the employee will not repay by December 31, 2012, the employee's 2012 W-2 will not be correct. When you receive the W-2's for this year, pull the employee's W-2 and request a corrected W-2 for the amount of the overpayment still owed at year end.

If a repayment plan crosses tax year, request a corrected W-2 for the year of the overpayment when the employee has repaid it. PSS will request a refund of social security and Medicare taxes on behalf of the agency.

For additional information, see the Statewide Payroll Reference Manual, Income Tax Payroll Process http://www.oregon.gov/DAS/EGS/FBS/OSPS/docs/pubs/handbook/handbookincometaxes.pdf  and Year End Payroll Process http://www.oregon.gov/DAS/EGS/FBS/OSPS/docs/pubs/process/ProcessYearend.pdf

Questions? Contact the OSPS Help Desk, OSPS.Help at das.state.or.us<mailto:OSPS.Help at das.state.or.us> or 503-378-6777, opt zero
Katherine Bremser
Training Coordinator
Oregon Statewide Payroll Services
Financial Business Systems
Enterprise Goods and Services
Department of Administrative Services
503-373-0738
Online Resource Center: http://oregon.gov/DAS/EGS/FBS/OSPS/
Data Classification: Level 1 - Published

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