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Date: December 10, 2009

Bulletin Number: 952

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Subject

Refund of Social Security and Medicare Tax Withholdings Related to Military Stipend Earnings for 2009

Purpose

To inform agencies of the automatic processing of
Social Security and Medicare tax withholding refunds
related to Military Stipend wages.

Affected Employees

Employees who received Military Stipend wages for paychecks dated from January 7, 2009 through August 13, 2009.

Effective Date(s)

Refunds will be processed in a separate check beginning the week of December 21, 2009.

Background

The Internal Revenue Service issued new regulations in 2009 making Military Stipend earnings exempt from Social Security and Medicare taxes.  OSC will automatically issue refunds for affected employees for whom wages were not exempted from Social
Security and Medicare tax withholdings for the paychecks issued January 7, 2009 through August 13, 2009.   Agencies may refer to Payroll Bulletin No. 914 (Change in Taxation of Military Stipend) issued July 29, 2009 for additional information.

OSC Actions

OSC will identify employees who had Social Security and
Medicare taxes withheld, calculate the amount due and issue a separate check for the refund.

There will be no direct deposit for this check.

Questions

Questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.