NYS Comptroller Seal

 

Bureau of State Payroll Services

 

  Date:  July 1, 2003 Bulletin No.  416

Subject Prior Year Tax Refunds Resulting from Workers’ Compensation Board Awards
Purpose To describe changes in the processing of prior year Social Security and Medicare wage adjustments resulting from Workers’ Compensation Board awards.
Affected Employees Employees in the Company NYS who have a Workers’ Compensation Board Award for a prior tax year and the Award is Credited to NYS.
Overview

When the Workers’ Compensation Board issues an award of compensation for a prior year disability period, and any portion of the award is “credited to NYS”, the State Insurance Fund sends a C8/EMP Info form to OSC.  This form identifies the period of disability and the amount of the Award “credited to NYS” as reimbursement for wages previously paid on the State payroll.

The amount of the Award is exempt from taxes, including Social Security and Medicare withholdings.  Since the employee originally had taxes withheld when previously paid on the State payroll, OSC must adjust the Social Security and Medicare wages for the applicable tax year(s).  A refund of the Social Security and Medicare taxes must also be processed based on the adjusted wages.  OSC reports both wage and tax adjustments to the Federal government as a W2C correction.

The Statute of Limitations for reporting these adjustments is 3 years, 3 months, and 15 days following the last day of the calendar year in which the disability period occurred.
Path Compensate Employees>Maintain Payroll Process (US)>Inquire>Workers’ Comp Refund
System Processing Changes

The upgraded payroll system provides a new method for processing prior year wage adjustments and refunds beginning with the tax year 2001.

Note:  OSC will continue to use the voucher method when processing refunds for tax year 2000 and previous years.   Also, the method currently used for processing current year wage adjustments and refunds via the Time Entry panel will also remain the same.

The new method for processing prior year refunds beginning with tax year 2001 is as follows:
  • OSC’s Workers’ Compensation Unit will enter the disability period and amount of the adjusted wage into the Payroll System for the applicable tax year.
  • The system will calculate the amount of the refund and create a W2C correction, which will report the wage and tax adjustments to the Federal government.
  • A record of the adjusted wages and the status of each will be maintained in the payroll system on the Workers’ Comp Refund page.  Agencies will have view access to this page.
  • All refunds will be loaded to the Time Entry page, using the Earns Code TF7 (Prior Yr Social Sec/Med Refund).
  • The refund will be paid in a separate check in the agency in which the employee is currently employed or, if inactive, in the last employing agency.  There will be no direct deposit and the refund checks will be delivered with the regular paychecks.
  • After the refund checks are produced, the agency will be mailed a listing that will identify all employees receiving refunds.
Agency Changes

The agency can view the Workers’ Comp Refund page to obtain information regarding prior year Social Security and Medicare wage adjustments. The information on this page will assist the agency with keeping accurate records and in answering employee questions.

The fields on this page include:
  • Calendar Year - The tax year for which wages and taxes are adjusted.
  • WC W2-C Claim # - Carrier Case Claim number assigned by SIF.
  • Start Date and End Date – Disability from and to dates within a specific tax year that were awarded as Credit NYS by the WCB.
  • WC State Credit - Amount of the Social Security and Medicare wage adjustment.  If the employee is over the maximum Social Security wage, this amount will reflect the Medicare adjustment only.
  • WC SS Wage Adj - Amount of the Social Security wage adjustment.  For employees who have reached the maximum Social Security wage for the corresponding tax year, and are only due a partial adjustment which will bring the employee under the maximum Social Security wage, this will represent only the portion eligible for a reduction.
  • Processing Status – Status of the refund.
  • WC Status Date - The end date of the payroll period in which the refund was paid.
  • W2C Batch - The system’s processing batch number for the Federal wage adjustment.
The Processing Statuses that track the stages are:
  • Initiated - Wage adjustment has been entered into the system.
  • Processed – The refund has been calculated based on the adjusted wage and the adjustments have been recorded on the W2C panel.
  • Paid – The refund has been loaded to the Time Entry page and has been, or will be, processed in the same payroll period as the date in the WC Status Date field.
  • Error – There was an error in entry. Most errors will be corrected and then processed.  However, if an error will not be corrected, the reason will be explained in the General Comments page.
Questions

Questions that relate to changes in the processing of tax refunds related to Workers’ Compensation board awards resulting from the Payroll System (PayServ) upgrade may be direted to the Payroll Audit mailbox.

Prior to August 4, questions will be answered within two business days.  After August 4, questions will be answered within 24 hours.