Purpose

To announce a new Control-D report that CUNY and GOER can use to help ensure that enrolled employees have the correct pre-tax deductions for mass transit and parking programs.

Affected Employees

Employees who participate in pre-tax transit and pre-tax parking programs.

Background

Pursuant to IRS Publication 15-B, during 2017, an employer may exclude the value of employer provided transportation benefits from an employee’s wages, up to the following limits:

• $255 per month for transit passes.
• $255 per month for qualified parking.

When establishing these pre-tax programs an employer may also allow additional employee earnings to be contributed on a post-tax basis. 

CUNY and GOER, in cooperation with OSC, have established pre and post-tax deductions through employee paychecks for these programs.

Processing Date(s)

These pre-tax deductions have monthly limits and, therefore, do not coincide perfectly with a bi-weekly pay cycle.  Employees participating in the pre-tax programs will have deductions taken from the first two pay checks of each month of participation.  The total monthly pre-tax deduction for the transit pass program is limited to $255.  The total monthly pre-tax deduction for a qualified parking program is also limited to $255.

Deduction Information

Relevant deduction codes:

Control-D Reports

A new Control-D report – NPAY778 (Pre-Tax Transit/Parking Error Report) has been created to provide CUNY* (CUNY Pre-Tax Transit and Parking) and GOER** (NYS-Ride-transit only) with a list of employees whose:

• Bi-weekly deduction exceeds $127.50 (½ the monthly pre-tax limit) for deduction codes 421, 438 or 446.
• Bi-weekly deduction is less than $127.50 (½ the monthly pre-tax limit) for deduction codes 421, 438 or 446 and has a related post tax deduction (422, 439 or 447)
• Bi-weekly pre-tax deduction is zero and has a post-tax deduction code 422, 439 or 447.

*CUNY will only see their employees who meet the above mentioned conditions.

**GOER will see all employees who meet the above mentioned conditions for all deduction codes listed in the “Deduction Information Section” of this bulletin. GOER only needs to take action for deduction codes 421 and 422. If there are employees who meet the conditions, a new report will be available every Friday.

The date of the first report will be September 21, 2017. This report is sorted by Department ID.

Agency Actions

Agencies are to ensure all approved employees participating in a transit pass program and/or a qualified parking program have the correct pre and post-tax amounts deducted from each participant’s paycheck. CUNY and GOER must also ensure that the pre-tax limits identified in this bulletin are not exceeded. Employee’s whose pre-tax and post-tax deductions do not meet the IRS guidelines should be reviewed and changed as needed with authorization from the employee.

Error Messages and Instructions:

Pre-tax amount exceeds the federal pre-tax limit.
Instruction: Reduce the pre-tax amount, not to exceed the IRS guidelines of $127.50 (1/2 the monthly pre-tax limit) and notify the employee.

Pre-tax amount is less than the federal pre-tax limit and employee has a post-tax deduction. Instruction: Review the initial paperwork to ensure deduction amounts were keyed correctly. If amounts are correct, review with employee to determine if they want to increase their pre-tax amount (within the IRS limits) and reduce their post-tax amount.

Pre-tax amount is zero and employee has a post-tax deduction. Instruction: Review the initial paperwork to ensure the employee selected the post-tax deduction. If so, review with employee to determine if they want to increase their pre-tax amount (within the IRS limits) and reduce their post-tax amount.

GOER (Deduction Codes 421 and 422)

GOER should check every week to see if a NPAY778 report is generated. If changes are needed, GOER should notify the Payroll Deduction mailbox of all requested changes within five business days of the report date.

GOER should notify OSC of any remaining changes for each calendar year no later than the 1st of December.

CUNY (Deduction Codes 438, 439, 446 and 447)

CUNY should take the appropriate action based on the error message and corresponding instruction. Changes to the deduction amounts should be done each pay period and on-line entry in PayServ should be completed according to the Agency Submission Schedule.

CUNY should make changes in PayServ for the CUNY deductions before the 1st paycheck of December each calendar year.

The IRS has established the pre-tax limits on a monthly basis; not on a pay period basis and not on an annual basis. If an employee had insufficient pre-tax deductions one month, the difference cannot be made up in the following month. If a prior month’s pre-tax deductions were below the intended monthly deduction, the pre-tax benefit has been lost for that month and cannot be recouped.

OSC Actions

Provide CUNY and GOER with a Control-D report each pay period to assist them in verifying their employees’ pre-tax transit program deductions and qualified parking program deductions are being made timely and accurately.

Tax Information

The deductions withheld in the pre-tax programs are not considered taxable income and will not be included in the employee’s taxable gross and are not subject to employment taxes or income taxes.

The deductions withheld in the post-tax programs are taxable income and will be included in the employee’s taxable gross and are subject to all employment taxes and income taxes.

Questions

Questions regarding Deductions may be directed to the Payroll Deduction mailbox.

Questions regarding Taxes should be directed to the Tax and Compliance mailbox.