(USA) Administering Additional U.S. Payroll Functionality

This chapter discusses how to:

• Allocate tips.

• Administer U.S. Savings Bonds purchases.

• Adjust imputed income for U.S. group-term life insurance.

• (E&G) Certify time and effort.

See Also

(USA) Setting Up Additional U.S. Payroll Functionality

Setting Up for FLSA Calculation

Administering Garnishments

Allocating Tips

This section provides overviews of the tip allocation process and tip allocation calculation methods, lists prerequisites, and discusses how to:

• Enter employee tip allocation data.

• Select the tip allocation end date.

• Calculate allocated tips.

• Update allocation balances.

• View allocations for an establishment.

• Review the tips allocation process status.

Understanding the Tip Allocation Process

Most large hospitality industry employers must report additional information to the Internal Revenue Service (IRS) concerning the establishment’s receipts and the employees’ tip incomes, by establishment. A large establishment is one that employs more than 10 people on a typical business day.

Tip allocation is required when the amount of tips reported by tipped employees for a pay period is less than a specified percentage of the establishment’s gross receipts for that period. The amount that you allocate is the difference between the total reported tips and the specified percent of the establishment’s gross receipts. You can apply for a lower percentage, if you can show, in writing, that the tip rate at the establishment is less than the specified percent.

Each tip establishment allocates tips. An establishment is an individual restaurant, hotel, and so on, at a unique location. If a company has 15 restaurants, it allocates tips separately for each restaurant. In addition, allocated tips are not subject to withholding; therefore, the system does not withhold taxes. However, the system maintains the year-to-date allocated tips shortfall balance and reports it on the employee’s Form W-2. Also, the system reports allocated tips on the paycheck stub as memo earnings because memo earnings do not add to the check gross and are not included in taxable grosses.

The tip allocation process consists of four steps:

1. Calculate the allocated tips.

2. Use the Structured Query Report (SQR) reports to check the results.

   You can calculate allocated tips any number of times for an allocation date before approving the calculation.

3. Approve the tip allocation results.

   After you approve the calculation for an allocation date, you cannot recalculate for that date.

4. Update the allocated tip balances.

   Allocated tips must be approved before the balances can be updated.

Reporting on the Tip Allocation Process

The system provides the following tip allocation reports:

• Allocation Earnings (PAY052)

• Employee Gross Receipts (PAY055)

• Allocation by Establishment (PAY050)

• Allocation by Employee (PAY051)

See Also

PeopleSoft Enterprise Payroll for North America Reports

Understanding Tip Allocation Calculation Methods

There are three acceptable tip allocation calculation methods:

• Gross receipts

• Hours worked

• Good faith agreement

In each method, the company allocates tips once per month, quarterly, annually, or for each pay period.

Gross Receipts Method

This method calculates an allocation amount for each directly tipped employee, using the gross receipts that are attributable to directly tipped employees. These steps are based on Form 8027.

To use the gross receipts method:

1. Calculate the allocation base for an allocation period:

   gross receipts in that period × specified percent

2. Calculate the tipped employee allocation base:

   allocation base − total tips reported by indirectly tipped employees

3. For each directly tipped employee, calculate the employee’s gross receipt ratio:

   total gross receipts for all tipped employees / gross receipts attributable to the employee

4. Calculate the employee’s share of the allocation base:

   tipped employee allocation base × employee’s gross receipt ratio

5. Calculate the employee’s shortfall:

   employee’s share of the allocation base − employee’s reported tips

   If the amount is less than zero, it is considered zero.

6. Calculate the total shortfall by summing all employees’ shortfall amounts.

7. Calculate the total tips by summing all the tips that are reported by directly and indirectly tipped employees.

8. Calculate the total allocation amount:

   allocation base − total tips

9. Calculate the employee’s shortfall ratio:

   employee’s shortfall / total shortfall

10. Calculate the employee’s allocated amount:

    total allocation × employee’s shortfall ratio

Hours Worked Method

This method calculates an allocation amount for each directly tipped employee using the hours that are worked by the employee.

Note. Only establishments that employ fewer than 25 employees (tipped and nontipped) during a pay period can use this method.

To use the hours worked method:

1. Calculate the allocation base for an allocation period:

   gross receipts in that period × specified percent

2. Calculate the tipped employee allocation base:

   allocation base − total amount of tips reported by indirectly tipped employees

3. For each directly tipped employee, calculate the employee’s hours worked ratio:

   employee’s total hours worked during this period / total hours worked by all tipped employees that worked during this period

4. Calculate the employee’s share of the allocation base:

   tipped employee allocation base × employee’s hours worked ratio

5. Calculate the employee’s shortfall:

   employee’s share of the allocation base − employee’s reported tips

   If the amount is less than zero, it is considered zero.

6. Calculate the total shortfall by summing all employees’ shortfall amounts.

7. Calculate the total tips by summing all tips that are reported by both directly and indirectly tipped employees.

8. Calculate the total allocation amount:

   allocation base − total tips

9. Calculate the employee’s shortfall ratio:

   employee’s shortfall / total shortfall

10. Calculate the employee’s allocated amount:

    total allocation amount × employee’s shortfall ratio

Good Faith Agreement Method

A good faith agreement is a written agreement between the employer and at least two-thirds of the employees in each occupational category that receives tips (for example, waiters, waitresses, and bus persons). The agreement must provide an allocation of the difference between total tips reported and the specified percent of the gross receipts among the tipped employees. The company decides how to configure the system to allocate tips; however, the formula the company creates must allocate tips based on the actual distribution of tip income among the employees.

Prerequisites

Before you can allocate tips, you must set up the following information for tipped employees:

• Company table.

• Pay Group table.

• Federal and state Tax table.

• Tip Establishments table.

• General earnings code information.

• Earnings code tax information.

• Earnings code tax calculation information.

• Job Data record.

• Form W-2.

See Also

Setting Up the Payroll System for Tip Allocation

Pages Used to Allocate Tips

Entering Employee Tip Allocation Data

Access the Employee Gross Receipts page.

Input Date	Enter the input date, which should be between the start date and the end date (posted date) of the period for which you’re calculating or approving the tip allocations.
Empl Rcd Nbr (employment record number)	Enter an employment record number for employees with multiple jobs.

Receipts Data

Selecting the Tip Allocation End Date

Access the Allocation End Date page.

Calculating Allocated Tips

Access the Allocated Tips Calculation page.

Posted Date	Select the end date of the period for which you’re calculating or approving the tip allocations.
Start Date	Select the start date of the period for which you’re calculating or approving the tip allocations.
Calculate Allocated Tips	Select to run or rerun the calculation process. You can run the calculation process as many times as you like until you run the approve process. After you run the approve process, you cannot run the calculation process again for that company and allocation date.
Approve Allocated Tips	After you check the results of the calculation process, and you are satisfied with the calculation, select this check box to run the approve process.

Viewing Employee Allocations

Access the Employee Allocations page.

Note. You can view all the allocations of an individual employee even if that employee has allocations for more than one establishment. This page is display-only.

Updating Allocation Balances

Access the Tip Allocation Balance Update page.

Company	Enter the company which you are updating tip allocation balances.
Posted Date	Select the end date of the period for which you’re updating tip allocation balances. The value comes from the Allocation End Date page.

Viewing Allocations for an Establishment

Access the Establishment Allocations page.

Note. Access the Employee Allocations page to view allocations for an individual employee.

Reviewing the Tips Allocation Process Status

Access the Tips Allocation Status page.

Tips Allocation Status

This group box indicates the company’s tip allocation status as of the allocation end date.

Note. At the end of the process, all boxes should be selected as complete for that cycle.

Administering U.S. Savings Bonds Purchases

This section provides overviews of U.S. Savings Bonds purchases and the Bond Purchases report and discusses how to:

• Enter data to purchase savings bonds.

• View bond purchase and amount activity.

• Produce magnetic media output in Federal Reserve System format.

• (USF) Produce magnetic media output in Federal Reserve System format for U.S. Federal Government.

• (USF) Refund employees for cancelled bond elections.

Understanding U.S. Savings Bonds Purchases

As part of their employee benefits package, many employers offer their employees the opportunity to purchase U.S. Savings Bonds through a Payroll Savings Plan. PeopleSoft delivers the U.S. Savings Bond table complete with all savings bond types that employees can purchase through a payroll deduction. The system uses this table to edit employee bond specifications and to process bonds during pay confirmation.

Payroll for North America enables you to:

• Keep track of bond owners, beneficiaries, and purchase distribution information.

• Deduct the appropriate installments from employee paychecks.

• Define different deduction characteristics for each pay group within your company.

• Track the accumulation of funds for each denomination, for each bond owner.

• Automatically process the resultant deduction amounts and goal balances for:

  • Deductions from employees' pay.

  • Reporting.

  • Magnetic media output in Federal Reserve System format.

• Enable the employee to purchase multiple bonds, using a single general deduction.

Understanding the Bond Purchases Report

The Bond Purchases report (PAY016A and FGPY011A), lists all bonds that have been purchased since the report was last run. The system marks a bond as having been purchased (that is, when the employee’s deductions are sufficient to cover the cost of the bond) by setting the BOND_LOG_STATUS to R (ready to purchase) in the PS_BOND_LOG table. The Bond Purchases report SQR selects all Bond Log rows with a BOND_LOG_STATUS of R and prepares the report. It then sets the status to D (disbursed) for each row that is selected. The report also identifies relevant information on co-owners and/or beneficiaries.

PAY016A or FGPY011A also prepares a Bond Purchase file; each transaction contains the fields shown in the following table:

You can change this format to accommodate your particular interface requirements.

See Also

PAY016A - Bond Purchases

Pages Used to Administer U.S. Savings Bonds Purchases

Entering Data to Purchase Savings Bonds

Access the U.S. Savings Bond Specificatn page.

Priority

Bond Owner Employee

Other Registrant

Note. The bond owner, co-owner, or beneficiary must be either the employee or someone on the employee’s dependent/beneficiary list (on the Dependent/Beneficiary pages in the Benefits menu). The system does not allow you to specify the same person as both the bond owner and co-owner/beneficiary. If there is another registrant, select dependent/co-owner; then you can enter the appropriate ID.

Portion of Deducted Amount

The fields in this group box determine how the bond deduction is distributed.

Delivery Address

If a dependent is selected as the bond owner, co-owner, or beneficiary, you can have the bond certificate mailed to a dependent’s address.

To send a bond certificate to an address other than the employee’s, clear the Same Address as Employee check box. The Which Dependent's Address? group box appears within the Delivery Address group box asking you whether the delivery address should be for the bond owner or other registrant. The default is Bond Owner and the bond owner address displays. If Other Registrant is selected, the address of the other registrant displays.

Viewing Bond Purchase and Amount Activity

Access the U.S. Savings Bond Activity page.

This is a display-only page that is maintained by the system to show the status of bond activity. The system doesn’t purchase bonds for you, but it does show how much money has been deducted toward bond purchases and how many units that money will buy. It’s updated when you run the Pay Confirmation COBOL SQL process (PSPCNFRM).

(USF) Purchase Details

These fields are updated after the Treasury/Bond Interface is run. This group box appears for U.S. federal organizations only.

Producing Magnetic Media Output in Federal Reserve System Format

Access the Bond-Federal Reserve File page.

PAY016B works the same way as PAY016A), but it produces magnetic media output in Federal Reserve System format for the purchase of bonds.

Note. You must use the file name PSBOS.DAT when submitting savings bond purchase data to the Federal Reserve Bank on diskette. In some environments, you might need to rename the PAY016B.SQR output file as PSBOS.DAT when creating the diskette.

(USF) Producing Magnetic Media Output in Federal Reserve System Format for U.S. Federal Government

Access the Bond-Federal Reserve page.

FGPY011B works the same way as FGPY011A, but it produces magnetic media output in Federal Reserve System format for the purchase of bonds. The output file name is BONDFILE.

(USF) Refunding Employees for Cancelled Bond Elections

Federal Employees are allowed to cancel U.S. Savings Bonds elections. Any money that has been deducted from the employee's paycheck must be refunded. Only bonds with Not Ready to Disburse Status can be cancelled.

These are the steps for processing a U.S. Savings Bond refund:

1. Set up an earnings code for the refund and enter it in the Refund earnings code field on the Pay Group Table - Calc Parameters page.

   Be sure to add the earnings code to the appropriate earnings program for the pay group. You can create different refund codes for different pay groups.

2. Cancel the U.S. Savings Bond deduction:

   • If the employee has just one bond deduction, enter a deduction end date on the General Deduction Data page for the U.S. Savings Bond deduction.

     The system changes the bond activity status on the Bond Activity Log to Refunded Balance when you save the page.

   • If the employee has multiple bond deductions, delete the appropriate row on the U.S. Savings Bond Specificatn page.

3. The system creates an Additional Pay record for the correct refund amount and processes it in the next pay run.

   The effective date is the end date entered on the General Deduction Data page. If the employee had multiple bonds, the effective date is the system date at the time of deleting the row on the U.S. Savings Bond Specificatn page.

Adjusting Imputed Income for U.S. Group-Term Life Insurance

This section provides an overview of the Imputed Income COBOL SQL process (PSPIMRUN), lists a prerequisite, and discusses how to

• Run the Imputed Income process.

• View imputed income calculation results.

See Also

Setting Up Group-Term Life Insurance in the U.S.

Understanding the Imputed Income COBOL SQL Process

Payroll for North America addresses imputed income every pay period. Although imputed income calculations are accurate with the information available in a pay period, you might require adjustments at the end of the year, as a result of changes in coverage or an employee being terminated. To make adjustments, use the Imputed Income Adjustment process.

The Imputed Income process performs calculations and creates a file containing one-time adjustment records for all employees who require them.

Review the calculation results using the Imputed Income Adjustment report before loading the transactions into paysheets.

When you’re ready to load the imputed income transactions into paysheets, run the Imputed Income process in Update Paysheets mode, and the system makes the adjustments as one-time deductions with a taxable benefit deduction classification. The system establishes these one-time deductions as off-cycle manual checks (paylines).

The manual checks that the Imputed Income process creates do not have an amount in the Total Gross and Net Pay fields. This is not necessary, because the imputed income adjustment that the process creates is a taxable benefit deduction class, and it does not affect gross or net pay.

When the Imputed Income process creates the adjustment paysheet, it changes the Deductions Taken field value on the By Paysheet - One-Time Deductions page to None. This prevents the system from taking normal taxable benefits and employer deductions on the adjustment check.

You cannot rerun the Imputed Income process. For example, suppose you run the process once and it produces an error after loading some paysheets. If you run it again using the same run control information (the same company, pay group, pay end date, date range, and so on), you receive another error, because the system attempts to insert duplicate rows into the database. Therefore, if you must rerun the process, delete the paysheets that the process added previously.

Attach your adjustment paysheets to a pay calendar that does not contain any other off-cycle paysheets. In other words, there should be no other off-cycle paysheets entered for the same calendar in which you create the imputed income adjustments.

Example

Joanne is a CCB employee in a monthly pay group. Her coverage changes in the middle of the year. From January 1 to June 30, she has basic and supplemental life. Her basic life is fully employer-paid; her supplemental life is fully employee-paid:

1. Because the IRS does not consider the first 50,000 USD of coverage taxable, the system performs no imputed income calculations for Joanne during the first half of the year.

2. On July 1, however, Joanne suddenly gets a big increase in her basic life coverage:

   Plan Type	Description	Coverage	Premium
   20	Life	50,000 USD	Employer-paid premium: 30 USD
   21	Supplemental Life	25,000 USD	Employee-paid premium: 1.25 USD

3. Because Joanne now has coverage totaling 75,000 USD, starting with the next payroll after July 1, 25,000 USD is considered taxable as imputed income.

   Joanne is 37 years old. In this age bracket, the Uniform Premium table calls for a calculation of .11 USD per month per 1,000 USD of coverage:

   25,000 USD / 1,000 USD x .11 USD = 2.75 USD

4. The system subtracts Joanne’s employee-paid, after-tax contribution to the coverage:

   2.75 USD – 1.25 USD = 1.50 USD taxable benefit.

These calculations are correct beginning with the end-of-July payroll. However, the IRS stipulates that any contributions that are made by the employee must be factored into the equation. In Joanne’s case, you must include all her contributions from January 1 to June 30. The result is a reduction in her true tax liability for the year as a whole.

At the end of the year, Imputed Income processing:

1. Recalculates Joanne’s imputed income (without subtracting her monthly contributions) for every month of the year.

2. Adds up the monthly figures to arrive at a total.

3. Adds up her monthly contributions.

This table shows the process:

Joanne’s total imputed income for the year is 16.50 USD; her contributions amount to 15 USD. On this basis, her taxable benefit for the year should be only 1.50 USD (16.50 − 15 USD). However, because the system calculates her taxable benefit on a month-by-month basis, her taxable benefit is 9 USD (6 months × 1.50 USD per month). Therefore, the system must reduce Joanne’s taxable benefit for the year by 7.50 USD:

Total taxable benefit from month-by-month calculations (9.00 USD) – total taxable benefit from end-of-year calculation (1.50 USD) = end-of-year adjustment (1.50 USD).

See Also

Understanding Imputed Income Calculation for U.S. Group-Term Life Insurance

Prerequisite

Before running imputed income adjustment processing, you must establish the taxable benefit deduction that you plan to use for adjustments. You can use either an existing deduction code or establish a new deduction code only for adjusting imputed income. The deduction code should have plan type in the range 20–29, 2Y, or 2Z.

See Also

Setting Up Group-Term Life Insurance in the U.S.

Setting Up Benefit Plans

Pages Used to Adjust Imputed Income for U.S. Employees

Calculating Imputed Income adjustments

Access the Imputed Income Calculation page.

Process From Month and Thru Month

Enter a numerical value for the first and last months in the date range. (Ordinarily, this is 1 through 12—January through December).

Processing Mode

Apply GTL/DPL adjustments to

Use this group box to designate the deduction codes to which you want the system to apply the imputed income transactions when it loads the transactions into paysheets.

Important! This COBOL process takes one or two minutes to process each employee. If you have many employees, the process could take hours or even a full day.

Viewing Imputed Income Calculation Results

Access the Imputed Income Adjustment Rpt page.

Note. If you used the process to load adjustment transactions into paysheets, use the Paysheet or Payline pages to view the one-time deductions.

(E&G) Certifying Time and Effort

This section provides an overview of time and effort certification and discusses how to:

• Specify time and effort earnings codes.

• Run the time and effort report.

Understanding Time and Effort Certification

Higher education organizations can use the Grants Time and Effort Certification report (GMTEC002) to satisfy A-21 Certification requirements. Time and effort certification applies to any individual who receives funding through your institution's sponsored programs office and to anyone who charges more than one funding source or project/grant. Each institution handles this reporting requirement differently.

See Also

PeopleSoft Grants PeopleBook

Pages Used to Certify Time and Effort

Specifying Time and Effort Earnings Codes

Access the Time and Effort Certification page.

Earnings Code

Select the earnings code to include in the time and effort certification. The SQR normally includes all regular earnings hours and amounts, but each employee can have a number of other earnings (additional pay, overtime, bonus, parking allowance, expense reimbursement, and so on). You will not want all of these earnings to be included in the GM Time and Effort Certification report. You can control which of these other earnings to include in the report by listing the specific earnings codes on this page.

Running the Time and Effort Report

Access the Time/Effort Certification Rpt page.

This page is identical to the common run control page used for many payroll processes and reports.

See Using the RUNCTL_PAYINIT and RUNCTL_PAYINIT2 Pages.