State of Connecticut

Payroll Memorandum
2002 Calendar Year Closing

Prior Year Check Reversal

Checks that are dated for the last check date of the year that must be cancelled, and are received in Payroll Services for processing no later than ten working days after the check date, are exempt from these procedures since there are guidelines provided by the IRS and DRS to handle this situation.

1) In addition to having the check or advice of deposit in their possession, the agency must receive a check or money order from the employee for the total amount of the federal and state tax deduction. The agency is to deposit these funds into their account.

Note: If an employee is due a check on the last check date of the year but did not receive one due to an error, the agency must request a petty cash check before 12/31, to allow Payroll Services to adjust that years W-2 form. All petty cash checks paid and recovered in the next calendar year, become wages paid in that year. This allows the State of Connecticut to remain in compliance with Federal and State regulations on constructive receipts.

2) Complete forms COP-9 and CO-1081 to begin the recovery process. The COP-9 is to include the original gross pay from the stub, and itemize the FICA/Medicare, retirement, health insurance and other deductions in their appropriate boxes, excluding federal and state withholding tax. The amount of the check on the COP-9 is to include the original net plus federal and state taxes withheld.
Form CO-1081 should reflect the total deductions being reversed, excluding federal and state tax withheld.

Forms COP-9 and CO-1081 are to be forwarded to the Payroll Services Division with a copy of the agency's deposit slip (showing the agency received the federal and state tax from the employee) and the original check or advice of deposit and it's stub.

3) The Payroll Services Division will process the reversal on the next payroll cycle. On that check date the agency will be credited the appropriate deduction amounts.

Payroll Services Division will also process the W-2c adjusting the employee's taxable wage and FICA/Medicare deductions for the appropriate tax year. The W-2c will be forwarded to the agency and should then be forwarded to the employee. Payroll Services will report the adjustments to the Federal and State Government.

It is the employee's responsibility to file an amended tax return with the IRS and DRS, and if appropriate, to receive a refund of federal and/or state taxes.


*The IRS and D.R.S. will not accept adjustments to an employee's tax return after 3 years.

*If an agency submits a prior year cancellation that includes federal and state deductions, Payroll Services will adjust the COP-9 and CO-1081 to remove the deductions. The agency will be responsible for getting this money back from the employee.

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