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. 97-7

February 7, 1997

TO THE HEADS OF ALL STATE AGENCIES

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

I. PURPOSE

The purpose of this memorandum is to provide clarification 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

Effective January 1, 1995 Section 127 of the Internal Revenue Code (IRC) concerning "Educational Assistance Programs", was reinstated. However, under this section, graduate courses beginning after June 30, 1996 are not included.

Although Section 127 no longer applies to graduate courses, a different section of the IRC, Section 132, "Exclusion of Certain Fringe Benefits from Gross Income", does allow for some reimbursements of graduate courses.

III. DETERMINATION OF REPORTABILITY

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

  1. Non-Reportable

    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.

  2. Reportable

    Courses taken to meet the minimum educational requirements for your current position are reportable.

    Courses that are a part of a program of study that can qualify you for a new trade or business are reportable even if you are not seeking a new job.

    Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are reportable because that qualifies you for a new profession.

IV. PROCESSING PAYMENTS

Non-reportable Payments
1a. Non-reportable payments are submitted on form CO-17XP Employee Voucher to the Accounts Payable Division for processing if the payment is being made from agency funds.
1b. If the payment is being made from union funds the CO-17XP must be submitted to the Comptroller's Business Office for processing. Please include a statement in the "Remarks" Section that the payment is non-reportable.
Reportable Payments
2a. Reportable payments using agency funds are paid through the payroll system using D/OE code 1T - "Reportable Tuition", as established in Memorandum No. 91-48a, dated December 9, 1991.
2b. If reportable payments are being made from union funds,the CO-17XP must be submitted to the Comptroller's Business Office for processing. Please include the following information in the "Remarks" Section of the CO-17XP, D/OE Code 1T, Payroll Unit, the employee's number and a statement that the payment is reportable. A CO-19, Expenditure Batch Header is not required.

V. GENERAL

The IRS has clarified that a course ordinarily will be considered to begin on the first day on which regular classes begin for courses offered during that term. The date on which an individual registers for, or enrolls in, a class does not determine when the course begins.

The State Accounting Manual, Expenditure Section, regarding "Reportability of Educational Expenses and Reimbursements" will be revised with the next update.

VI. QUESTIONS

Questions may be directed to the Office of the State Comptroller as follows:

Accounts Payable Procedures: Accounts Payable Division, (860) 702-3396.

Payroll Procedures:

Forms and On-Line: Payroll Services Division, (860) 702-3463;

Remote Job Entry: Payroll Services Division, (860) 702-3462.

Memorandum Interpretation: Policy Evaluation and Review Division, (860) 702-3440.

NANCY WYMAN
STATE COMPTROLLER

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