5.4 Payroll Taxes
(Last Modified on January 26, 2018)
Under Federal and State regulations, employers are required to deduct and withhold federal, state, and local income taxes, Social Security taxes and Medicare taxes when employees are paid. The employer is also required to pay the full amount of taxes withheld, including employer share, to the appropriate agencies and file periodic tax returns.
As entities of the State of Georgia, institutions are not required to pay Georgia unemployment taxes as wages are paid. Instead, unemployment insurance premiums are paid to the State of Georgia in accordance with state regulations which is normally on an annual basis.
Institutions with employees located in tax jurisdictions outside the State of Georgia must comply with the regulations of any applicable tax jurisdictions.
Note: If the applicable agency changes requirements, institutions are expected to comply with the new requirements.
5.4.1 Federal and State Income Tax Withholdings
(Last Modified on January 30, 2018)
Income tax withholdings are based on tax tables and guidelines established by the IRS and other federal, state or local tax agencies, and the employees withholding form(s). (See IRS Publication 15 (Circular E) () published annually and Georgia鈥檚 State Employer Tax Guides ().
For institutions that utilize the OneUSG Connect system, the tax table information is managed and maintained in the OneUSG Connect system by the SSC.
For institutions that utilize the USG third party HR/Payroll system, the tax table information is managed and maintained by the third party provider.
5.4.2 Employee Income Tax Withholding Forms
(Last Modified on January 26, 2018)
Employees are required to complete a Federal Form W-4 Employee鈥檚 Withholding Allowance Certificate, as well as any applicable state or local withholding form(s). The state withholding is determined based upon the state in which the employee works. The majority of USG employees work within the state of Georgia and will need to complete the State of Georgia Withholding Certificate, Form G-4, as appropriate. However, if an employee works in a different state (for example, on line instructors), the institution should consult with the SSC to determine the appropriate state withholding forms to utilize.
If the employee does not provide an approved electronic or signed paper Federal Form W-4, the employer must set up withholding as if the employee were single with zero withholding allowances. Failure to provide a proper State withholding form will result in a similar default withholding in accordance with applicable state regulations.
Employees are responsible for submitting changes to their federal or state withholding form(s). Changes can be submitted electronically if the institution鈥檚 payroll system has an electronic submission process (such as OneUSG Connect鈥檚 employee self-service) or by submitting paper form(s) to the institution鈥檚 Human Resources/ Payroll Office.
The institution鈥檚 Human Resources/Payroll Office is responsible for entering payroll tax withholding information in the institution鈥檚 payroll system for any paper federal or state withholding forms received. Electronic submissions should automatically update the employee鈥檚 record in the HCM system.
Document Retention
Tax documents should be retained in accordance with the USG records retention requirements.
5.4.3 Annual Verification of Income Tax Exempt Withholding Status
(Last Modified on January 26, 2018)
Employees claiming 鈥渆xempt鈥 from Federal and/or State of Georgia withholding must renew their exempt filing status annually by February 15. The institution shall send an annual notification to any employee claiming exempt status advising that a new Federal Tax Withholding Form W-4 and/or Georgia State Withholding G-4 is required. If an institution has employees subject to state withholding other than Georgia, the institution should consult with the SSC to determine if a periodic verification is required.
If the employee has not completed a new Federal Tax Withholding Form (W-4) or Georgia State Withholding Form (G-4) by February 15 of the current year, the institution is required to withhold based on the W-4/G-4 submitted prior to the employee claiming exemption from withholding, if available. If not available, the institution is required to withhold as if the employee is single with zero withholding allowance (IRS Publication 15).
If on or after February 16 of the current year, the employee provides a new Federal Tax Withholding Form (W-4) or Georgia State Withholding Form (G-4) which claims exemption from withholding, the new form should be applied to wages paid after the receipt of the form(s). No refunds will be processed for taxes already withheld. (IRS Publication 15).
5.4.4 Social Security and Medicare Tax Withholdings
(Last Modified on January 26, 2018)
Social Security and Medicare tax withholdings are based on the employee鈥檚 classification and at the rates established by the Social Security Administration. The employee鈥檚 classification is established by the institution in accordance with Social Security Administration guidelines () and IRS Publication 15.
Employees that participate in TRS, ERS, or ORP are subject to Social Security and Medicare taxes.
Employees that participate in the Georgia Defined Contribution Plan (GDCP) are exempt from Social Security taxes but are subject to Medicare taxes. Reference BPM 5.1.6 Retirement Plan Participation for additional information.
Student workers that are enrolled and regularly attending classes are usually exempt from Social Security and Medicare taxes. Consult the SSC for clarification regarding student exemptions.
5.4.5 Quarterly Payroll Tax Reporting
(Last Modified on January 26, 2018)
Institutions are required to file quarterly payroll tax returns with the federal government and the State of Georgia. If an institution has employees that are working in a state other than Georgia, the institution should coordinate with the SSC to determine the appropriate tax reporting requirements, if any.
Federal Quarterly IRS 941:
Institutions should refer to the IRS website, Form 941 and 941 Instructions, for quarterly reporting requirements.
State of Georgia Department of Revenue Quarterly Reporting:
Institutions should refer to the Employer鈥檚 Tax Guide located on State of Georgia Department of Revenue website for quarterly reporting requirements.
For SSC supported institutions, a third party tax services provider completes and files the required tax reports. The SSC serves as a liaison between the institutions and the third party tax services provider to coordinate, review, and approve tax returns for submission to federal and state tax agencies.
The SSC will provide a submission schedule to the institutions for each tax reporting period (quarterly and annually). Institutions are responsible for the review and balancing of tax returns. The SSC will provide assistance to institutions with troubleshooting and balancing issues as requested. Institutions must approve the filing of the tax returns by submitting an approval notice via the SSC Case Management (Ticket) system.
SSC will coordinate the consolidated approval for the institutions and provide to the third party tax services provider for processing. The third party tax services provider will generate and file all returns on behalf of the USG by the due date in accordance with their service level agreement with the USG and with the guidelines set forth by Federal and State taxing agencies.
5.4.6 Georgia State Department of Labor Reporting
(Last Modified on January 26, 2018)
Institutions are required to report quarterly to the Georgia State Department of Labor (DOL) () a listing of employees and salary for the quarter. The listing includes all employees except student employees (student assistants and Federal Work Study Program employees).
Although the quarterly listings are captured on (DOL) forms normally intended for collecting unemployment taxes, the USG does not pay state unemployment taxes based on these quarterly payroll listings. Instead, the USG pays premiums on a 鈥渞eimbursable basis鈥 based upon claims history. The Department of Administrative Services (DOAS) () bills each institution annually.
For SSC supported institutions, a third party tax services provider completes and files the required reports on behalf of the USG following the terms of their service level agreement with the USG and in accordance with DOL guidelines.
5.4.7 Annual Payroll Tax Reporting
(Last Modified on January 26, 2018)
Federal IRS W-2 and W-3 Reporting:
A Federal Form W-2 Wage and Tax Statement must be completed and furnished to employees by the deadlines established by Social Security Administration. Generally this should be the last working day of January of each year. To meet the 鈥渇urnish鈥 requirement, the form must be properly addressed and mailed on or before the due date.
An electronic submission of the summary data and the detailed employee information must be provided to the Social Security Administration by the established deadlines. Generally this coincides with the date the W-2s are due to the employees. The summary data is comparable to the Form W-3 (Transmittal of Wage and Tax Statements).
Institutions are responsible for entering any taxable benefits (vehicle allowance, housing, tuition reimbursement, etc.), into the payroll system. This is usually accomplished through the final payroll for the year or an adjustment file and must be completed prior to the preparation of the W-2 forms.
Georgia Department of Revenue Annual Reporting:
Georgia Department of Revenue Form G-1003, must be filed annually with the State of Georgia. The Georgia Department of Revenue鈥檚 Employer鈥檚 Tax Guide provides information and deadlines for this reporting requirement. Usually the return for employee compensation are due by the last business day of February.
W-2 Process Flow
For SSC supported institutions, the SSC will work as a liaison between the institutions and the third party tax services provider to coordinate, review, and approve W-2 forms for submission to employees and the Federal and State Tax Agencies. The SSC will provide assistance to institutions with troubleshooting and balancing issues as requested. Institutions must approve the filing of W-2s by the scheduled deadline by submitting an approval notice via the SSC Case Management (Ticket) system. Once the institution approves the W-2s, the SSC will then forward the year-end W-2 data to the third party tax services provider for processing.
The third party tax services provider will generate and furnish (either by mail or electronically) all W-2鈥檚 and annual returns to the employees, appropriate tax agencies and the SSC by the due date in accordance with their service level agreement with the USG. The third party tax services provider will not distribute any data directly to an institution.
For institutions utilizing the third Party HR/Payroll system, the year-end W-2 information will be available to employees via the third Party HR/Payroll system Employee Portal.
For institutions utilizing the OneUSG Connect system, the year-end W-2 information will be available to employees via the OneUSG Connect Employee Self Service.
Employees have the opportunity to opt-in to receive an electronic copy. If employees do not opt to receive an electronic copy, their W-2 will be furnished via regular mail.
Document Retention
Tax documents should be retained in accordance with the USG records retention requirements.
5.4.8 Tuition Assistance Program (TAP) Payroll Tax Impact
(Last Modified on January 25, 2022)
Participation in the USG Tuition Assistance Program (TAP), BOR Policy 8.2.19 and/or 8.2.19.2, may result in taxable benefits for employees. The HRAP Manual鈥檚 section on Employee Continuing Education provides information for TAP program and references additional documentation relative to the USG TAP program, including a reference to
IRS Publications 15-B and 970 provide guidance relative to the tax impact of benefits received under the USG TAP program. () ()
Educational assistance benefits in excess of the IRS defined annual exclusion limits are taxable to the employee and should be reported on the employee鈥檚 Form W-2. Exclusion limits are specified in IRC Section 127. Note: The exclusion limit is $5,250 for tax years beginning after December 31, 2001.
The SSC will coordinate with the institutions to gather the value of the educational benefits and distribute the information to the appropriate institutions for documentation of any amounts that will be excluded from taxable earnings and the reporting of benefits that will be taxable.
To ensure regulatory compliance with IRS regulations, each institution鈥檚 TAP Coordinator is required to maintain a record of TAP program benefits by semester by USG TAP participating employee enrolled in classes at the institution. TAP program benefits should be based on net amounts after applying Pell grants. Participation and value will be determined after the semester鈥檚 schedule change period has ended. The TAP Coordinator should submit the information to the SSC by the published deadlines. Each semester the home institution鈥檚 TAP Coordinator should advise the participating employees in writing of the possible tax implications including the recommendation to consult their tax professional for additional guidance.
The SSC should compile the information from the providing institutions and report to the home institutions the educational assistance benefits received by the home institution鈥檚 employees. The home institution shall enter the taxable wages in the payroll system as soon as possible in order to spread any calculated tax withholding over multiple pay periods. The taxable wage must be entered prior to the end of the calendar year. The home institutions should include documentation of the education benefits, including the amounts determined to be non-taxable, in the employee鈥檚 personnel records.
If an employee terminates employment prior to the addition of the taxable educational benefits to the employee鈥檚 wages, the calculation of the tax liability should be calculated and applied to the employee鈥檚 final check. If the tax liability is not deducted from the employee鈥檚 pay, the tax liability should be treated as an accounts receivable, subject to the institution鈥檚 collection processes.
5.4.9 Common Paymaster
(Last Modified on January 26, 2018)
Under federal and Georgia state law, the term common paymaster only applies when two or more related entities concurrently employ the same individual and the employee is only paid by one of the entities. Since the institutions within the USG are related entities, the USG has applied the common paymaster concept for employees that are concurrently employed by multiple institutions. Therefore, only one institution is allowed to pay the employee at one point in time. Consult the Dual Appointment Section of the HRAP manual for additional guidance.
Employees that transfer between USG entities are considered employees of the two separate entities; therefore, they would not be considered 鈥渃oncurrently鈥 employed and the common paymaster rules would not apply. The balances for FICA, OASDI, and state unemployment are separate for each entity.
Entities within the USG that have implemented the OneUSG Connect system utilize a common ID to maintain employee balances for select limits, such as Section 403(b), Section 457, etc. This approach assists institutions and employees in monitoring year-to-date maximum contributions.
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