Taxation and Reporting for Non-Salary Payments Procedure

Effective Date:

August 15, 2016

Function:

Payment Taxation Compliance

Contact:

Ned Gellner

Basis for Procedure

The Research Foundation for SUNY ("RF") ensures that "Non-Salary" taxable payments to the following individuals are reported and taxed according to Internal Revenue Service ("IRS") rules:

Procedure Summary

This procedure describes the steps needed to ensure that Non Salary Payments are properly documented, taxed and/or reported.

Procedure Steps

Identifying the Taxable Benefit and Recipient

Step

Role or Responsibility

References or Tips

Identify benefits planned, paid or provided that represent Non-Salary Payments.

 

- Call or send questions to payroll@rfsuny.org if you still need help with determinations.

Operating Location

Refer to the "Taxation and Reporting for Non-Salary Payments – Guidance" document.

 

Refer to the “Business Expenditures and Personal Use” section of this document

Complete the “Non-Salary Payment Determinations” form and establish if taxable and/or reportable and document the circumstances.

Operating Location

Use of form:

- Required when amounts are taxable and / or reportable

- To document exempt or excluded amounts when no other RF form or documentation exists

Example: You would not use this form for substantiated business travel or IRS moving expenses reimbursements since other supporting RF forms exist.

Document the amount or Fair Market Value.

Operating Location

Refer to the Fair Market Value section of this document.

If the payment is not taxable and/or reportable, proceed with the payment and retain the documentation with the payment information.

Operating Location

 

If the payment is taxable and/or reportable, provide the completed form:

- RF Employees – to the appropriate RF payroll staff at your location for processing

- SUNY Employees – to RF central office at payroll@rfsuny.org for processing

Operating Location Payment Staff

- Refer to the "Processing for RF Employees" section of this document for RF employees.

- Refer to the "Processing for SUNY Employees" section of this document for SUNY employees.

Processing for RF Employees

Step

Role or Responsibility

References or Tips

Log in to Oracle.

 

Operating Location Payroll Staff

Refer to the "Enter a Nonrecurring Earnings or Deductions Element - Process Help (R12)" for more information about processing in Oracle.

Direct Payments

- Open the individual’s People form.

- Click the Assignment button to open the Assignment form.

- Click the Entries button to open the Element Entries form.

- Add the "Misc Inc Direct" element to the individual’s record.

- Click Entries to open the Entry Values form.

- Enter the amount and select the reason for the payment from the list of values.

Direct Payments - Payments or benefits identified and paid through the RF payroll system.

Non-Direct Payments

- Open the individual’s People form.

- Click the Assignment button to open the Assignment form.

- Click the Entries button to open the Element Entries form.

- Add the "Misc Imputed Inc" element to the individual’s record.

- Click Entries to open the Entry Values form.

- Enter the amount and select the reason for the payment from the list of values

Non-Direct Payments – Taxable payments or benefits provided outside the RF payroll system such as through the RF accounts payable system or from a vendor.

Note: The above instructions also apply to Non-Resident Aliens for tax purposes.

Processing for SUNY Employees

Step

Role or Responsibility

References or Tips

Call the RF central office when this activity is identified if you need additional guidance.

Operating Location

Send questions to payroll@rfsuny.org or contact the Payment Compliance Manager for further assistance

Discuss with the appropriate SUNY HR office staff to ensure that:

 

- SUNY policy and procedures are followed.

- The miscellaneous payment or benefit is consistent with sponsor requirements, is approval by the appropriate SUNY and sponsored programs staff to process.

Operating Location

SUNY is a separate employer and processing should be reviewed first as consistent with SUNY policies, procedures and practices. Refer to the Taxation and Reporting for Non-Salary Payments – Policy. For more information on the Ethics laws, see the SUNY Compliance website JCOPE page.

Ensure you collected the basic information needed to add the SUNY employee to Oracle on the Non-Salary Payment Determinations form.

Operating Location

The RF needs required information for year-end W-2 reporting, such as a social security number (SSN).

Send a copy of the Non-Salary Payment Determinations form to the RF’s central office at payroll@rfsuny.org.

Operating Location

As the office of record you keep original backup at your location

Central office payroll reviews the Oracle payroll records to determine if the individual is a previous RF employee:

- If yes – Central Office establishes the assignment with a “term process pending” status.

- If no – continue to next step.

Central Office payroll

 

Set up a SUNY biweekly assignment or continue with the RF assignment in “term process pending” status

Central Office payroll

IMPORTANT - A SUNY biweekly assignment is for Non-RF Non-Salary Payment activity and should not to be confused with SUNY monthly Income Fund Reimbursements ("IFR".)

Direct Payment:

- Open the individual’s People form.

- Click the Assignment button to open the Assignment form.

- Click the Entries button to open the Element Entries form.

- Add the "Non RF Misc Inc Direct" element to the individual’s record.

- Click Entries to open the Entry Values form.

- Enter the amount and select reason for the payment from the list of values.

- Ensure the SS and Medicare tax is set for withholding.

- For RF “term process pending” assignments ensure the income taxes are set to exempt.

- Forward a copy of the form to the central office award monitoring team for final action.

 

Non-Direct Payment:

- Open the individual’s People form.

- Click the Assignment button to open the Assignment form.

- Click the Entries button to open the Element Entries form.

- Add the "Non RF Misc Imp" element to the individual’s record.

- Add the associated deduction element.

- Click Entries to open the Entry Values form.

- Enter the amount and select reason for the payment from the list of values.

- Ensure the SS and Medicare tax is set for withholding.

- For RF “term process pending” assignments ensure the income taxes are set to exempt.

- Run a Quick pay to test for a net effect of $ 0.00

- Forward a copy of the form to central office award monitoring team for final action.

Central Office payroll

Direct Payments – Taxable Payments or benefits identified and paid through the RF payroll system.

 

Important note: Different elements exist for moving expense reimbursements as there are special rules for this type of activity.

Central Office payroll

Non-Direct Payments – Taxable payments or benefits provided outside the RF payroll system such as from a vendor.

 

Important notes:

- Different elements exist for moving expense reimbursements as there are special rules for this type of activity.

- This is a transaction to record taxable or reportable non salary payments or benefits. Since it was extended through a 3rd party, and not RF systems, SS and Medicare must also be part of gross. This solution also requires the grant to be charged for full employee and employer share of SS and Medicare.

Business Expenditures and Personal Use

When amounts or values are provided for business purposes, but could also lead to personal use (e.g. company car, club dues), the cost or value of the portion that is personal use must be calculated as a taxable benefit. Documentation must identify

Definitions

Employee- an individual engaged to provide services to an organization where the organization controls what services are performed and how they are performed.

Direct Payments- Payments or benefits identified and paid through the RF payroll system.

Non-Direct Payments– Taxable payments or benefits provided outside the RF payroll system such as through the RF accounts payable system or from a vendor.

Non-resident Alien (NRA)- IRS residency status for tax purposes that includes non-U.S. citizens that are not resident aliens.

Non-Salary Payments– Amounts paid or provided and generally processed outside the biweekly payroll process.

Reportable– Income required to be reported to the IRS on a year-end tax statement.

U.S. Citizen or "Resident Alien"- IRS residency status for tax purposes which includes US Citizens and non US Citizens that are Permanent Residents (Green Card) or a Resident Alien (meeting the Substantial Presence Test).

Related Information

RF

Non-Salary Payments Policy

Taxation and Reporting for Non-Salary Payments Guidance

Compensation Reporting Guidelines

Human Subject Payments

Establishing and Maintaining Campus Bank Accounts and Petty Cash Funds

Unrestricted Fund Expense Policy

Forms

Non-Salary Payments Determinations

Change History

Date

Summary of Change

August 15, 2016

New procedure.

 

 

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