update calendar year-end procedures relating to taxable
travel reimbursements in order for the State to comply with
IRS reporting requirements. This Bulletin replaces Bulletin
|| Taxable travel reimbursements include:
Personal Car Mileage (PCM) Reimbursements
Per Diem Payments
payments taxable under the IRS One-Year Rule
PCM and Per Diem Amounts:
- IRS rules relating to employee business expense reimbursements
require withholding and W-2 reporting on any excess amounts
- "Excess amount" is the portion that is greater
than the applicable Federal rate and not substantiated by
maximum rate allowed by IRS for PCM is 40.5 cents per mile from 1/1/05 - 8/31/05 and 48.5 cents per mile from 9/1/05 - 12/31/05.
maximum Federal per diems for the continental US can be
found under the NYS Travel
|| Non-Overnight Meal Allowances
requires employers to report and withhold income and employment
taxes from meal allowances for non-overnight travel (day
|| One-Year Rule
requires employers to report travel reimbursements and withhold
income and employment taxes if employment away from home
at a single location is realistically expected to last more
than one year.
explanations of rules for excess PCM, Per Diem Amounts, Non-Overnight
Meal Allowances and One-Year Rule can be found in the Accounting
Controls and Special Procedures Manual, Volume XI, Section
|| Taxable travel reimbursement data
is transferred from the Central Accounting System (CAS) to PayServ
at month end, January through November.
a special transfer from CAS to PayServ will be run on 12/09/05.
transfer will include vouchers with taxable reimbursements
paid by the CAS from 12/1 through 12/9.
reimbursements will appear as "Taxable Expense" on Institution
payroll checks dated 12/22/05 and Administration payroll
checks dated 12/28/05.
amounts will be withheld from these payroll checks.
for Year-End Taxable Travel Payments
travel payments paid by the CAS from 12/10 through 12/31 will
be handled by an automated process when transferred to PayServ
This process will add these amounts to gross wages on
No taxes will be withheld in 2005 for these payments,
nor will these payments be reflected in paychecks dated 12/22
early 2006, PayServ will initiate Social Security/Medicare
tax deficiency deductions that apply to the 12/10 through
12/31 taxable reimbursements.
Employees who have already paid the maximum 2005 Social
Security amount will only have a Medicare tax deficiency deducted
from a 2006 paycheck.
avoid under withholding of income taxes for 2005 and subsequent
deductions for Social Security and Medicare tax deficiencies
in 2006, agencies
should avoid payment of taxable travel reimbursements between
12/10 and 12/31.
special VOU943, Listing of Taxable Employee Travel Payments
by Agency, for all taxable travel reimbursements made by the
CAS between 12/1 and 12/9 will be produced on 12/9 and distributed
to agencies. The
12/31 report will list only taxable travel expenses paid by
the CAS from 12/10 through 12/31.
Example: The CAS
issues Jane Doe a travel reimbursement check on 12/24/05,
and $99.00 of the payment is taxable.
Jane's pay stub for 12/28/05 shows year-to-date gross
wages of $63,000. The
12/31 VOU943 will show an IRS amount of $99.00 for Jane Doe.
Jane's W-2 will show gross wages of $63,099.
In early 2006, the Social Security and Medicare tax
will be calculated and withheld on the 2005 taxable expense
of $99.00. No
Federal or State income taxes will be withheld.
to excess amount payments on the PCM file must be made by
12/31/05, so that the amounts on the PCM010 can be reconciled
with the excess amounts reported on employees' 2005 W-2s.
corrections that agencies choose to make to the PCM file must
be made by 1/06/06 to be reflected on adjusted year-end reports.
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