A refund of deduction is necessary in the event an employee has a deduction withheld during a payroll when it should not have been deducted.

There are two methods for processing a refund of deduction.

If the employee is to be reimbursed for the deduction withheld in error during the course of a normal payroll, proceed as follows:

1. Access the deduction withheld in error in USPSCN/DEDSCN.
2. Using the modify option, enter the amount withheld in error as a negative figure in the Error Adjustment field. This is the amount the deduction check will be reduced by and the amount to be refunded to the employee. Be sure there is no stop date on the deduction and that there is no maximum amount in effect for the deduction that would prevent it from being processed.
3. Process the payroll to completion in the normal manner. Check the PAYRPT for this employee carefully to insure the deduction is refunded for the correct amount.

If the employee will not be included in a future payroll or the district prefers to refund the deduction immediately, a separate check for the refund amount may be processed as follows:

1. Access the deduction withheld in error in USPSCN/DEDSCN.
2. Using the modify option, enter the amount withheld in error as a negative figure in the Error Adjustment field. This is the amount the deduction check will be reduced by and the amount to be refunded to the employee. Be sure there is no stop date on the deduction and that there is no maximum amount in effect for the deduction that would prevent it from being processed.
3. Run the INICAL program. Enter a pay of the month that corresponds to the deduction's pay cycle and select the special payroll option.
4. Access the USPSCN/REFSCN module. Using the Add function, add the employee in the REFSCN program. Once added the employee's ID and name will appear on the screen.

   --------------------------------------------------------------------------- | Find: _________ ______________ __________ | | SSN/ID Last Name First Name | | | | ID Name | | 222222222 JONES, JOHN | | | | | | | | | | | | | | | | | | | | REFSCN Refund of Deductions | | XX Top XX Find | | XX Help XX Add | | XX Exit XX Delete | | XX Next XX Lockmode | ---------------------------------------------------------------------------

   
   NOTE: Do not access this employee using USPSCN/UPDCAL_CUR at this time. This may cause incorrect amounts to be paid to the employee.

5. Complete the special payroll process by running CALCPAY, CHKPRT, and CHKUPD.
   During CALCPAY, the amount in the error adjustment field of the applicable deduction is placed in the net pay amount. No other records are processed for this type of check and there will be no gross pay.
6. During CHKUPD, the deduction accumulators are reduced by the amount in the error adjustment field. This reduction includes YTD and QTD amounts. No adjustments are made to the gross accumulators. You will need to update these fields manually.
   CHKUPD requires a USAS check number before it will process. Even though this payroll has no need of a USAS check, the number entered should be the next available number on file. This check number will not actually be used on the USAS side. It acts as a dummy value to allow CHKUPD to run. Once CHKUPD has been completed, the USAS check number can be re-used.
7. The employee will receive a check for the amount of the error adjustment. Direct deposit employees will receive a physical check rather than a direct deposit check. This same amount will be withheld from the next deduction check processed for that particular deduction company.

Situations may occur where the check numbers preprinted on check forms do not match what is recorded on the system. This may result from a data entry error where an incorrect chek number is used when generating checks or problems created when a printer becomes jammed with checks. In these situations it may be necessary to renumber the checks through the program CHKNUM.

• Physical Checks are the preprinted forms on which the checks are printed. These forms often have a check number preprinted on them.
• System Checks refer to the information which is stored on the system concerning each check that is written. The check number in this case is taken from the start number that is entered in the program that creates the check. Programs that create checks are like CHKPRT, PAYDED, etc.

It is important that the physical and system checks match for reporting and check reconciling purposes.

The CHKNUM program referred to in Examples 1, 2 and 3 is used to renumber or move system checks. More information on how CHKNUM works can be found in in the USPS Reference Manual.

Example 1, The physical check number entered is less than the system's highest check number on file and the physical and system check numbers overlap.

Starting System Check Number	30477
Starting Physical Check Number	30476

1. Using CHKNUM renumber the system checks to a check number outside of possible use (i.e. 900000). This step frees-up the correct system check numbers. In CHKNUM it would look like this,

   Revision 4.0a This program renumbers the Payroll checks Do you have the correct program? (Y/N <Y>): _ <CR> Enter old starting check no. ______ 30476 Enter old ending check no. ______ 30478 Enter new starting check no. ______ 900000 Enter new ending check no. ______ 900002 Old New Starting check number: 030476 900000 Ending check number : 030478 900002 Is this correct? (Y/N <Y>) _ <CR> *** Output report is CHKNUM.TXT *** *** Total no. of checks changed ** 3

2. CHKNUM can then be used to renumber the system checks into the correct sequence where 30477 is the starting check number. In CHKNUM it would look like this,

Revision 4.0a This program renumbers the Payroll checks Do you have the correct program? (Y/N <Y>): _ <CR> Enter old starting check no. ______ 900000 Enter old ending check no. ______ 900002 Enter new starting check no. ______ 30477 Enter new ending check no. ______ 30479 Old New Starting check number: 900000 30477 Ending check number : 900002 30479 Is this correct? (Y/N <Y>) _ <CR> *** Output report is CHKNUM.TXT *** *** Total no. of checks changed ** 3

Example 2, The physical check number is greater than the system's highest check number on file and the physical and system check numbers overlap.

Starting System Check Number	30477
Starting Physical Check Number	30478

1. Using CHKNUM renumber the system checks to a check number outside of possible use (i.e. 900000). This step frees-up the correct system check numbers.
2. CHKNUM can then be used to renumber the system checks into the correct sequence where 30478 is the starting check number.
3. Check number 30477 is open at this point. It can be put on the system as a dummy alignment check through the HANDCK program.

Example 3, The first three payroll checks were jammed in the printer. The rest of the checks printed correctly.

Starting System Check Number	30477
Starting Physical Check Number	30477

1. Using CHKNUM, renumber the jammed checks (30477 - 30479) to the next highest system/physical checks on file.
2. Type the correct checks.

According to the Internal Revenue Service, the cost of group-term life insurance an employer provides to an employee for coverage over $50,000 is to be included in the wages reported for the employee. This amount is subject to withholding for Social Security and Medicare, but not income tax. The cost is generally determined by using the uniform premium rates provided by the IRS. These rates set the cost of each $1000 of group-term life insurance for each month, according to the employee's age.

The following steps will ensure that the proper amounts will be taxed and placed on the W2 forms.

1. Calculate the taxable amount for each employee involved.

   Example
   
   A 35 year old principal receives $250,000.00 of board paid group term life insurance for an entire calendar year.
   The amount of excess coverage over $50,000.00 is used to determine the taxable coverage. In this example the amount of taxable coverage would be $200,000.00.

   $250,000.00 - $50,000 = $200,000.00

   
   Using this same figure, it must be determined how many thousands of dollars are involved.

   $200,000 / $1,000.00 = 200

   
   This figure will be used later to determine the annual cost.
   IRS Publication 15-A gives the cost per $1000.00 of protection for a 1 month period. The cost for this 35 year old is .09 per month. This must be multiplied by the number of months the coverage was in effect.

   .09 X 12 = $1.08

   
   The non-cash earnings amount is calculated by taking the number of thousands and multiplying it by the factor calculated in the previous step.

   $1.08 X 200 = $216.00

2. Using the USPSCN/UPDCAL_CUR or USPSCN/UPDCAL_FUT program, the amount should be entered using a pay type of NC1. This pay type represents one kind of non-cash earnings for the employee.
   This pay type will be treated differently for taxation purposes. Using this non-cash earnings amount, the tax amounts for Medicare and Social Security will be calculated during the CALCPAY and UPDCAL_CUR programs. No Federal, Ohio, or OSDI tax amounts will be calculated. All of these will be treated according to the federal rules. The software provides the ability to withhold city tax on non-cash earnings. This can be activated by setting the "Tax non-cash earnings" flag to Y (yes) on the city tax record in the USPSDAT/DEDNAM program.
3. Complete the payroll.
   The non-cash earnings amount will not be included in the gross pay amount, nor in the gross totals found on PAYRPT or PAYSUM. However, the non-cash earnings amount is being included in the adjusted gross figure because the amount is considered part of the taxable gross even though no tax is being withheld on it. Both the PAYRPT and PAYSUM reports will provide a total figure of all non-cash earnings in the total section. This extra total will help in balancing purposes.
   During the CHKUPD program, the total payment showing for NC1, will be added to the total and taxable gross figures on all the tax records including those for which no tax was withheld. The JOBSCN to-date figures (screen 3 of 3) will also be updated in the Non-cash earnings fields.

If the NC1 pay not was not used prior to the last pay of the calendar year, the following manual procedure must be used in order for the NC1 pay to show correctly on the W2 form and to insure that the QRTRPT balances. Follow these procedures prior to generating W2 forms.

1. Increase the YTD gross and the YTD taxable gross figures on the federal tax record by the amount of the taxable premium.
2. Increase the YTD gross and YTD taxable gross figures on the state tax deduction record to reflect the taxable premium.
3. Increase the YTD gross and the YTD taxable gross figures on the municipality tax deduction record IF required by the municipality. It may be necessary to contact the city tax department to determine if the premiums on life insurance over $50,000 are considered taxable or not.
4. Increase the YTD gross and YTD taxable gross figures on the FICA and/or Medicare deduction records to reflect the taxable premium.
5. Obtain payment from the employee for the FICA (6.2% of the taxable premium) and/or Medicare (1.45% of the taxable premium) withholding amounts. Include this amount on the YTD Deduct Total field of the FICA/Medicare Deduction record(s). The board of education must match these same amounts calculated in this step (process as a USAS transaction).
6. Enter the taxable premium of life insurance on the federal tax deduction record in DEDSCN on the "Life Insurance Cost" line.
7. Enter the taxable premium of life insuance on the to-date fields for Non-cash earnings on JOBSCN (3 of 3). This will insure that the QRTRPT non-cash earnings will balance.

This chapter contains scenarios that provide situations and procedures for correcting retirement system information in the event that errors occur.

The scenarios relate to situations that occur in the same fiscal year and are documented for both SERS and STRS retirement systems.

SCENARIO 1

An employee has money withheld for the wrong retirement system and will be working for the district in the future.

SERS withheld in error and information not reported to SERS

Corrective action Option 1:

1. On the 590 record for the employee, enter a stop date.
2. On the 400 record for the employee, enter a stop date.
3. On the JOBSCN record, change the retirement type to STRS.
4. Add the 591 record.
5. Add the 450 record.
6. Manually calculate the amount of STRS that should have been withheld and wasn't.
7. Calculate the difference between what was withheld for SERS and what should have been withheld for STRS and enter this amount as a positive error adjustment on the 591 record.
8. Using the 590 record, manually update the withholding figures on the 591 to include that from the pays where SERS was withheld in error.
9. Manually adjust the retirement gross figures on the 450 to include the wages from the pays where STRS was not withheld.
10. Manually update the board amounts on the 450 record if necessary or desired.
11. Once all information has been transferred to the STRS records, the SERS records can be cleared or deleted.

Corrective action Option 2:

1. On the 590 record for the employee, enter a negative error adjustment.
2. Process a refund of deduction payroll for this employee. This will get the money withheld in error, back to the employee.
3. On the 590 record for the employee, enter a stop date.
4. On the 400 record for the employee, enter a stop date.
5. On the JOBSCN record, change the retirement type to STRS.
6. Add the 591 record.
7. Add the 450 record.
8. Manually calculate the amount of STRS that should have been withheld and wasn't.
9. Enter this amount as a positive error adjustment on the 591 record to withhold the extra from the employee.
10. Manually adjust the retirement gross figures on the 450 to include the wages from the pays where STRS was not withheld.
11. Manually update the board amounts on the 450 record if necessary or desired.
12. Once all information has been transferred to the STRS records, the SERS records can be cleared or deleted.

SERS withheld in error and information reported to SERS

Corrective action:

1. On the 590 record for the employee, enter a stop date.
2. On the 400 record for the employee, enter a stop date.
3. On the JOBSCN record, change the retirement type to STRS.
4. Add the 591 record.
5. Add the 450 record.
6. Manually calculate the amount of STRS that should have been withheld and wasn't.
7. Enter the amount of STRS that should have been withheld as a positive error adjustment on the 591 record.
8. Manually adjust the retirement gross figures on the 450 to include the wages from the pays where STRS was not withheld.
9. Manually update the board amounts on the 450 record if necessary or desired.
10. On the next SERS monthly report filed, submit the correction form for this.
11. Contact SERS and request a refund of the overpayment for both employee and employer shares. Upon receipt of the money, deposit the employee portion into the payroll clearance account.
12. Run HANDCK to create a check to get this amount to the employee.
13. Once all information has been transferred to the STRS records, the SERS records can be cleared or deleted.

STRS withheld in error and information not reported to STRS

Corrective action Option 1:

1. On the 591 record for the employee, enter a stop date.
2. On the 450 record for the employee, enter a stop date.
3. On the JOBSCN record, change the retirement type to SERS.
4. Add the 590 record.
5. Add the 400 record.
6. Manually calculate the amount of SERS that should have been withheld and wasn't.
7. Calculate the difference between what was withheld for STRS and what should have been withheld for SERS and enter this amount as a negative figure on the 591 record.
8. Using the 591 record, manually update the withholding figures on the 590 to include that from the pays where STRS was withheld in error.
9. Manually adjust the retirement gross figures on the 400 to include the wages from the pays where SERS was not withheld.
10. Manually update the board amounts on the 400 record if necessary or desired.
11. Once all information has been transferred to the SERS records, the STRS records can be cleared or deleted.

Corrective action Option 2:

1. On the 591 record for the employee, enter a negative error adjustment.
2. Process a refund of deduction payroll for this employee. This will get the money withheld in error, back to the employee.
3. On the 591 record for the employee, enter a stop date.
4. On the 450 record for the employee, enter a stop date.
5. On the JOBSCN record, change the retirement type to SERS.
6. Add the 590 record.
7. Add the 400 record.
8. Manually calculate the amount of SERS that should have been withheld and wasn't.
9. Enter this amount as a positive error adjustment on the 590 record to withhold the extra from the employee.
10. Manually adjust the retirement gross figures on the 400 to include the wages from the pays where SERS was not withheld.
11. Manually update the board amounts on the 400 record if necessary or desired.
12. Once all information has been transferred to the SERS records, the STRS records can be cleared or deleted.

STRS withheld in error and information reported to STRS

Corrective action:

1. Contact STRS for a correction procedure.
2. Contact the SSDT if necessary to implement the correction recommended by STRS staff.
3. Contact SERS for a correction procedure.
4. Contact the SSDT if necessary to implement the correction recommended by SERS staff.

SCENARIO 2

An employee has money withheld for the wrong retirement system and will not be working for the district in the future.

SERS withheld in error and information not reported to SERS

Corrective action:

1. On the 590 record for the employee, enter a stop date.
2. On the 400 record for the employee, enter a stop date.
3. On the JOBSCN record, change the retirement type to STRS.
4. Add the 591 record.
5. Add the 450 record.
6. Manually calculate the amount of STRS that should have been withheld and wasn't.
7. Contact the employee to get the difference in the amount withheld.
8. Using the 590 record, manually update the withholding figures on the 591 to include that from the pays where SERS was withheld in error. Include the amount the employee gives the district with a personal check.
9. Manually reduce the taxable gross figures on all tax records by the amount obtained from the employee.
10. Deposit the personal check from the employee into the payroll clearance account.
11. Manually adjust the retirement gross figures on the 450 to include the wages from the pays where STRS was not withheld.
12. Manually update the board amounts on the 450 record if necessary or desired.
13. Once all information has been transferred to the STRS records, the SERS records can be cleared or deleted.

SERS withheld in error and information reported to SERS

Corrective action:

1. Contact SERS for a refund of the amount paid to them in error.
2. On the next SERS monthly report filed, enter the correction for this employee.
   After the refund has been received:
3. On the 590 record for the employee, enter a stop date.
4. On the 400 record for the employee, enter a stop date.
5. Add the 591 record.
6. Add the 450 record.
7. Manually calculate the amount of STRS that should have been withheld and wasn't.
8. Calculate the difference between what was withheld for SERS and what should have been withheld for STRS.
9. Contact the employee to get the difference in the amount withheld.
10. Using the 590 record, manually update the withholding figures on the 591 to include that from the pays where SERS was withheld in error. Include the amount the employee gives the district with a personal check.
11. Manually reduce the taxable gross figures on all tax records by the amount obtained from the employee.
12. Deposit the personal check from the employee into the payroll clearance account.
13. Manually adjust the retirement gross figures on the 450 to include the wages from the pays where STRS was not withheld.
14. Manually update the board amounts on the 450 record if necessary or desired.
15. Once all information has been transferred to the STRS records, the SERS records can be cleared or deleted.

STRS withheld in error and information not reported to STRS

Corrective action:

1. On the 591 record for the employee, enter a stop date.
2. On the 450 record for the employee, enter a stop date.
3. On the JOBSCN record, change the retirement type to STRS.
4. Add the 590 record.
5. Add the 400 record.
6. Manually calculate the amount of SERS that should have been withheld and wasn't.
7. Manually update the withholding figures on the 590 to include all the amounts withheld from the pays where STRS was withheld in error.
8. On the error adjustment line, enter the difference in the withholding between SERS and STRS as a negative amount.
9. Process a refund of deduction payroll to get this amount back to the employee. This will ensure the adjusted gross figures on the tax records are accurate.
10. Manually adjust the retirement gross figures on the 400 to include the wages from the pays where STRS was not withheld.
11. Manually update the board amounts on the 400 record if necessary or desired.
12. Once all information has been transferred to the SERS records, the STRS records can be cleared or deleted.

STRS withheld in error and information reported to STRS

Corrective action:

1. Contact STRS for a correction procedure.
2. Contact the SSDT if necessary to implement the correction recommended by STRS staff.
3. Contact SERS for a correction procedure.
4. Contact the SSDT if necessary to implement the correction recommended by SERS staff.

SCENARIO 3

An employee has no retirement withheld and should have and will be working for the district in the future.

SERS not withheld and information not reported to SERS

Corrective action:

1. On the JOBSCN record, set the retirement type to SERS.
2. Add the 590 record.
3. Add the 400 record.
4. Manually calculate the amount of SERS that should have been withheld and wasn't.
5. Enter the amount as a positive error adjustment on the 590 record.
6. Manually adjust the retirement gross figures on the 400 to include the wages from the pays where SERS was not withheld.
7. Manually update the board amounts on the 400 record if necessary or desired.