Purpose
To inform agencies of the new procedure to record receipt of Form AC3206 from employees who are receiving a prior year refund of Social Security and Medicare taxes for any reason, including Workers’ Compensation related refunds. There are now individual AC3206 forms for NYS and CUNY (links below).
Affected Employees
All NYS employees
Background
Internal Revenue Service (IRS) Rules and Regulations require employers to obtain a completed and signed consent form from each affected employee to file a claim for refund on the employee’s portion of Social Security and/or Medicare taxes. This form also certifies that the employee has not, and will not, file a claim with the IRS for the refund.
Receipt of the completed and signed consent form (AC3206) must be recorded to assist the Office of the State Comptroller (OSC) with the accurate identification of employee(s) that provided consent for the claim for refund.
Control-D report NTAX722 (Agency W-2C Report) was established to provide agencies with the information needed to inform their employees of corrections made to previously issued Form W-2s (non-monetary related changes do not appear on this report), including the tax year, batch number, and the amount of Social Security and/or Medicare tax refund or deficiency owed.
The report is created each time Form W-2Cs are printed.
OSC Actions
OSC has created a checkbox on the Employee W2C AC-3206 Status page to be used by agencies to record receipt of employee consent for claim for refund Form AC3206.
Agencies can access this checkbox via the following path: Payroll for North America > U.S. Annual Processing > W-2 Adjustments > Update Emp W2C AC-3206 Status.
Agency Actions
Agencies must obtain a completed and signed Prior Year Social Security and Medicare Tax Refund Certification Form (AC3206) for each employee due a refund of Social Security and Medicare taxes for a prior year, if OSC is to act on the employee’s behalf with the IRS. Agencies must also record receipt of the form in the payroll system by the established due date. Agencies must:
- Review the Control-D report NTAX722 to identify employees due a Social Security and Medicare tax refund.
- Identify the Year and the W-2c Batch Number.\
- Determine the refund amount (total boxes 4 - SS tax and 6 - Med tax) for each employee.
- Complete Section A of Form AC3206. Enter the following:
- Agency Code used in PayServ
- Tax Year
- W-2c Batch Number
- Employee Name as it appears in PayServ
- NYS Employee ID
- The Form Due Date (last date the agency payroll office will accept Form 3206 from the employee).
- Tax refund amount
- Reason for the refund and, if necessary provide an explanation
- Notify the employee of the tax refund due
- Provide Form AC3206 to the employee with Section A fully completed
- Inform the employee that for OSC to pursue Social Security and Medicare tax refunds from the IRS on the employee’s behalf, Section B must be completed in full, signed and returned to the agency payroll office on or before the Due Date identified in Section A of the Form.
- In PayServ:
- Access the AC3206 Status screen - Payroll for North America > U.S. Annual Processing > W-2 Adjustments > Update Emp W2C AC-3206 Status.
- Search for the correct employee record to update.
- Select the record that coincides with the W-2c Batch Number and the AC3206 (if multiple W-2cs).
- Verify the Social Security and Medicare Amounts.
- Check the Refund Consent Received checkbox.
- Save the page.
Agencies must retain a copy of the signed Form AC3206 in the employees personnel file for at least 4 years.
NOTE: Agencies must make every effort to notify employees and obtain consent for the refund. If an employee does not complete and sign form AC3206 or does not return the AC3206 by the Return Date on the Form, agencies should document their efforts and retain the documentation on file for at least 4 years.
Control-D Report
Agency W-2C Report (NTAX722) identifies employees receiving a Form W-2c.
Questions
Questions regarding Box 14Z reported on a NTAX722 should be directed to the Workers’ Compensation mail box.
All other questions regarding this bulletin should be directed to the Tax and Compliance mailbox.