OFFICE OF STATE UNIFORM PAYROLL MEMORANDUM #98-32
December 4, 1997
||All UPS Agencies
||Ronald S. Mitchell, Director
||Reporting and Correcting 1997 Wage and Tax Statement - W-2
The 1997 W-2 information, as reflected on the final 1997 W-2 Employee Detail Report (BL1572-01) generated by the Uniform Payroll System, will be transmitted on magnetic tape to the IRS, through the Social Security Administration, and to the Louisiana Department of Revenue by the Office of State Uniform Payroll. Only basic instructions and "reminders" for correcting and reporting W-2 information are given below. Therefore, obtain and refer to the actual state and federal forms needed and the appropriate literature on preparing and filing the necessary forms. The current Form W-2c has a revision date of 7/97.
NOTE:Forms W-2 should not be released to employees until the agency has completed the 941/W-2 Reconciliation and identified all W-2cs that will be required (from this reconciliation, the W-2 Exception Report, or any cafeteria reconciliation adjustments).
CORRECTING INFORMATION REPORTED ON MAGNETIC TAPE
The agency will be responsible for reporting corrections and/or additions to the W-2 information that is reported on the magnetic tapes.
Manual Forms W-2
- Due to W-2 magnetic reporting requirements and to prevent penalties assessed by IRS, agencies are advised not to use manual Forms W-2 to report additional wages, etc. or W-2 data that was never reported on the tape for an employee. See Forms W-2c.
- In addition to correcting 1997 W-2 information reported in error on the magnetic tape, use Form W-2c to report 1997 wages, etc. that were not reported on a system generated 1997 Form W-2.
- If a W-2c is necessary and there was no Form W-2 generated by UPS, the "as previously reported" amounts on the Form W-2c will be zero.
- Employees are to forward the appropriate copies of the original W-2 and the W-2c to the IRS and the Department of Revenue when filing their income tax returns.
- Three blank lines are available to correct amounts for advance earned income credit payments, fringe benefits, tax shelters and dependent care benefits. No space is provided to correct cafeteria reduction amounts or deferred retirement.
- Negative numbers (decreases) must be shown in column (c) in parentheses rather than in brackets.
- Remember that two Forms W-2c will be required if a "941" W-2 (reporting either both Social Security and Medicare, or no Social Security and no Medicare) was produced for an employee who should have contributed to Medicare only: one ("941" W-2c) to zero out all W-2 data and another ("Medicare" W-2c) to report all W-2 data correctly. The reverse of this is also true. Refer to the OSUP Reports Manual descriptor for the W-2 Employee Detail Report (BL1572-01) for definitions of W-2 kinds.
REASONS FOR FORMS W-2c - This office should be contacted immediately if Forms W-2c need to be prepared for any reason other than the following:
- If Forms W-2 are not produced, or any amounts on Form W-2 are incorrect, due to a 1997 Void or Supplemental document that did not appear on a 1997 Void or Supplemental Payroll Register for:
- A 1997 regular or supplemental payroll check that is voided.
- A supplemental payroll check issued in 1997.
- A negative net supplemental for an employee who reimbursed the agency in 1998 for overpayment of 1997 wages, and has no earnings in 1998.
- If any 1997 Social Security/Medicare taxable wages or taxes are updated in 1998 with a V/S document or ADJFW/ADJMW Current Pay Wage Adjustment.
NOTE: Be very careful when entering Social Security/Medicare information on Supplemental documents for these W-2cs. Normally, wages times the appropriate percent (6.2 or 1.45) should equal the employee and state portions of taxes. If the agency is paying both portions (e.g., due to a cafeteria adjustment for a terminated employee), the wages times the percent (12.4 or 2.9) should equal the state portion of taxes, zeroes must be entered for the employee's portion and net pay must be zero.
- If gross wages on the W-2 are incorrect as a result of an employee's yearly elective deferrals exceeding the IRS limitation (e.g., deferred compensation). (Please refer to IRS/W-2 instructions on this; some exceptions are made.) This does not apply to retirement system deferrals and cafeteria plan sheltered amounts. However, there are limitations on the Cafeteria Plan Flexible Spending Account (FSA) for Dependent Care. Group Benefits will inform agencies if the FSA limitation has been exceeded by any employees.
- If a Form W-2 is not produced for an employee because his/her W-2 records appear on the W-2 Exception Report. Research the exception; changes usually are required before the W-2c can be prepared. Reminder: the final W-2 Exception Report for 1997 will be for pay period 12/01/97 - 12/14/97. Do not confuse this with the first report for 1998 which will be for pay period 12/15/97 - 12/28/97.
- If final cafeteria plan and/or fringe benefit adjustments (and applicable taxes) were not processed in time to update 1997 W-2 records or if refunds of 1997 Cafe sheltered premiums were made in 1998. These corrections may also require adjustments to Social Security/Medicare wages and taxes.
- If payments were made to an employee for qualified moving expenses, these payments are not included in income, but must be reported in Box 13 of the W-2 and labeled with code "P" to identify it as a nontaxable reimbursement. The payment should not be included as wages in Boxes 1, 3, or 5 of the W-2 and employment taxes should not be withheld. UPS does not currently have a mechanism for reporting these payments as code "P" in Box 13 of the W-2; therefore, a W-2c will have to be prepared to report this information.
- If any other W-2 information is incorrect (e.g., name, address, social security number).
OFFICE OF STATE UNIFORM PAYROLL REPORTING
Correcting W-2 information - Agencies must follow the procedures outlined below on how to adjust employee payroll records for prior year data that updates current year records.
ADJUSTING EMPLOYEE MASTER RECORD FOR PRIOR YEAR ACTIVITY
Agencies must enter Payroll W-2 Balance Adjustments on Screen 216 to remove all 1997 W-2 data that has updated the employee's 1998 master record. This includes Social Security and Medicare wage and tax adjustments from ADJFW/ADJMW Payroll Adjustments for prior year and all 1997 W-2 figures on Void/Supplemental documents which update 1998 records. The codes to be used are found on pages 15-16 in the Appendix of the OSUP On-line System User's Manual.
Documentation for these balance adjustments is as follows:
- Proof that prior year activity updated current year records (e.g., copy of Void, Supplemental, and/or Current Payroll Register).
- Supporting documentation for the prior year activity (e.g., screen print of Payroll Current Wage Adjustment, original Void (UPR/F20) or Supplemental (UPR/F10) Documents.
- Copy of employee's original W-2.
- Copy of W-2c.
- Agency approval for entry and any other agency established criteria.
- Each time a Payroll W-2 Balance Adjustment is entered on-line, a corresponding adjustment is made to the OSUP biweekly tax payment. This payment adjustment will cause a deficit or surplus balance in the agency's payroll clearing fund. Agencies must make certain that the appropriate steps are taken to eliminate these clearing fund balances (e.g., prepare payables check request or deposit refund check into appropriate account in the clearing fund). Refer to OSUP Memorandum #98-31, for general information on year-end tax payments and over payments.
SOCIAL SECURITY ADMINISTRATION REPORTING
Magnetic Tape W-2 Information - Forms W-3 are not required. As noted in the 941/L3 & W-2c training class, OSUP completes Form 6559 (Transmitter Report and Summary of Magnetic Media) which replaces the W-3 as a cover sheet used to transmit the W-2 information on magnetic tape.
Manual W-2 Information - There should be no manual Forms W-2 to submit. If an employee did not receive a W-2, W-2 information should be reported using a W-2c. If there are any questions, contact this office for instructions.
Corrected W-2 Information - Remember, a separate Form W-3c must be used for each kind of W-2c (e.g., 941, Medicare). Mail the Original Copy of Form W-3c and Copy A of Form W-2c to:
Social Security Administration
Data Operations Center
P.O. Box 3333
Wilkes-Barre, PA 18767-3333
LA DEPARTMENT OF REVENUE REPORTING
Magnetic Tape W-2 Information - Form L-3 must be completed for W-2 magnetic tape information and submitted to Department of Revenue (in Baton Rouge). Note on Form L-3 that W-2's were submitted on magnetic tape by UPS.
Corrected W-2 Information - Mail Copy 1 of Form W-2c, an amended L-1, an amended L-3, and the Payables Check (if necessary) to:
Louisiana Department of Revenue and Taxation
P.O. Box 91017
Baton Rouge, LA 70821-9017
If additional taxes are due to the Louisiana Department of Revenue and Taxation due to a W-2c, contact this office immediately to get instructions on making this payment. The Louisiana Department of Revenue and Taxation will no longer accept paper checks.
Refer to OSUP Memorandum #98-31 for additional IRS, Social Security, and Dept. of Revenue reporting responsibilities which relate to tax liability and payment.
Proper reporting and correcting of W-2 information can be accomplished only if there is cooperation and coordination of activities/deadlines between agency personnel, payroll and accounting staffs. For further explanation or clarification on instructions, contact one of the following members of the User Services Unit at (504):