COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

NANCY WYMAN
COMPTROLLER

OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775

MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 2001-20

May 8, 2001

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers
SUBJECT:    Employee Graduate Tuition Reimbursement Payments

I. PURPOSE

The purpose of this memorandum is to provide information on the reportability of tuition payments for graduate courses. A "graduate course" is any course taken by an employee who has a bachelor's degree or is receiving credit toward a more advanced degree, if the course can be taken for credit in a program leading to a law, business, medical or other advanced academic or professional degree.

II. AUTHORITY

Internal Revenue Code (IRC) Section 132, "Working Condition Fringe", and Section 1.162-5, "Expenses for Education", qualifies some reimbursements as a working condition fringe benefit.

III. DETERMINATION OF REPORTABILITY

Please use the following guidelines when determining reportability under IRC Section 132.

A. Non-Reportable Graduate Courses

If the graduate course is not required for your current position, or the course maintains or improves skills needed in your current position, it is non-reportable.

This includes refresher courses, courses on current developments, and academic or vocational courses.

NOTE: Non-reportable graduate course reimbursements are not included in employee's W-2 statement and not subject to Federal or State withholding taxes.

B. Reportable Graduate Courses

Graduate courses taken to meet the minimum educational requirements for an employee's current position are reportable. Graduate courses that are a part of a program of study that can qualify for a new trade or business are reportable, even if the individual is not seeking a new job.

Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are reportable, because these courses may qualify an employee for a new profession.

NOTE: Reportable tuition reimbursements are included in the employee's W-2 statement and are subject to Federal or State withholding tax.

IV. REQUESTS FOR PAYMENT

The following procedures are to be used when processing employee graduate tuition reimbursement payments:

A. Non-Reportable Tuition Reimbursements - Agency Funds

Payments that meet the criteria outlined in Section III. A are non-reportable, and the processing of these graduate tuition payments, using agency funds, must be submitted on form CO-17XP-PR and processed through the payroll system using D/OE Code 1T - Non-Reportable.

B. Reportable Tuition Reimbursements - Agency Funds

Payments that meet the criteria outlined in Section III. B are reportable, and theprocessing of these graduate tuition payments, using agency funds, are paid through the payroll system. Form CO-17XP-PR must be completed using D/OE Code 2G-Reportable.

C. Fund 9916 - Reportable Graduate Tuition Reimbursements

Payment requests for reimbursement of graduate tuition and other professional development costs from fund 9916, meeting the criteria outlined in Section III. B, must be processed by submitting a form CO-17XP-PR to the Comptroller's Management Services Division - Support Services Unit.

D. Fund 9916 - Non-Reportable Graduate Tuition Reimbursements

Non-reportable graduate tuition reimbursements continue to be submitted on form CO-17XP to the Comptroller's Management Services Division Support Services Unit, for processing.

V. GENERAL

Please direct questions to the Office of the State Comptroller as follows:

Fund 9916 Tuition Payments :
Management Services Division, (860) 702-3327
 
Payroll Procedures:
Payroll Services Division, (860) 702-3463
 
Memorandum Interpretation:
Policy Services Division, (860) 702-3440.
 

NANCY WYMAN

STATE COMPTROLLER

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