COMPTROLLER'S SEAL STATE OF CONNECTICUT
STATE OF CONNECTICUT
WILLIAM E. CURRY JR.
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
EDWARD J. FORAND JR.
DEPUTY COMPTROLLER

MEMORANDUM NO. 91-48

November 1, 1991

TO THE HEADS OF ALL STATE AGENCIES

Attention: Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers
Subject: Change in Method of Payment for Reportable Employee Allowances/Payments

Effective December 27, 1991 the Comptroller's ACCOUNTS PAYABLE DIVISION will not be processing reportable employee allowances/payments. These types of payments will be paid as a payroll item through our PAYROLL SERVICES DIVISION. The criteria for reportability of employee payments made on a CO-17XP can be found in the Expenditure Section of the State Accounting Manual, Paragraph 8.3 (B).

In accordance with Internal Revenue Code (IRC) Section 1.62-2T addressing "Employee Business Expenses - Reporting and Withholding on Employee Business Expense reimbursements and Allowances", effective January 1, 1989, employee business expenses that do not meet the following criteria will be considered wages. Reimbursements and other expense allowances are excluded from wages, if:

  1. a business connection exists - expenses are incurred in the performance of services as an employee;
  1. substantiation - the expenses are documented as to date, place, business purpose and amount;
  1. the excess amount of an allowance or advance is returned;
  1. the expenses are substantiated and the excess returned, if any, within a reasonable period of time.

Effective July 1, 1990, business expenses considered wages are subject to withholding and the payment of employment taxes. A listing of allowance payments that will be subject to withholding will be made available in a subsequent memorandum which will be issued shortly.

To facilitate the transfer, all reportable allowances/payments due employees for 1991 must be processed to the ACCOUNTS PAYABLE DIVISION no later than December 1, 1991. Payments for home office and clothing and cleaning due on or about December 1, 1991 must be in the ACCOUNTS PAYABLE DIVISION by that date to ensure prompt payment within the 1991 tax year.

Reportable allowances/payments payable to employees after December 1, 1991 will be processed under the new procedures for the PAYROLL SERVICES DIVISION. Due to the transfer of responsibility, there will be a processing delay of approximately three (3) weeks.

For 1992 and subsequent tax years, a single form W-2, Wage and Tax Statement, will be issued to all State employees. The ACCOUNTS PAYABLE DIVISION will no longer be issuing a supplemental form W-2.

Details outlining the Payroll procedures to be followed for pay periods beginning

December 13, 1991 (check date January 3, 1992) and employee tuition, travel and training procedures will follow in a subsequent amendment to this memorandum.

Questions may be directed to the Office of the State Comptroller, Accounts Payable Division at 702-3399.

WILLIAM E. CURRY JR.
STATE COMPTROLLER

WEC:BH:jrv

Back to Index of Comptroller's Memoranda
Back to Comptroller's Home Page