STATE OF CONNECTICUT
THE STATE COMPTROLLER
July 1, 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 Undergraduate Tuition Payments - Expiration of Section 127 of the Internal Revenue Code|
The purpose of this memorandum is to provide instructions on the reportability of undergraduate course tuition payments. Memoranda 97-7 and 97-7a remain in effect for graduate level courses. Tuition reimbursement payments for State employees were previously reimbursed under Internal Revenue Code (IRC) Section 127 instead of Section 132. Therefore, the processing of tuition reimbursements for State employees has changed as outlined below.
Effective July 1, 1997 the Internal Revenue Code (IRC) Section 127, "Educational Assistance Programs", expired. Section 127 states: "Employee benefits under an employer's nondiscriminatory educational assistance plan are not includable in the employee-recipient's gross income. The exclusion was limited to $5,250 per year. Reimbursements in excess of $5,250 per year are not excludable.
Since the above IRC section is now expired another IRC Section 132, "Exclusion of Certain Fringe Benefits from Gross Income", does allow for some educational reimbursements.
In the event that Congress reenacts IRC Section 127 "Employer Educational Assistance Program" retroactively, instructions will be issued immediately on how to correct employee payroll records. Please keep copies of all documentation to assist with possible retroactive processing of payments.
It is expected that the processing of tuition and travel reimbursements will be revised for the new calendar year and all employee reimbursements will be paid through the payroll system. New procedures will be distributed at the end of this calendar year.
The State Accounting Manual, Expenditure Section, regarding "Reportability of Educational Expenses and Reimbursements" will be revised with the next update.
Please use the following guidelines when determining reportability under Section 132 of the IRC.
Agency personnel are to use the following procedures when processing employee tuition reimbursement payments:
Questions may be directed to the Office of the State Comptroller as follows:
Accounts Payable Procedures:
Accounts Payable Division, (860) 702-3395.
Business Office Procedures:
Business Office, Michael Moschetti, (860) 702-3327.
On-Line: Payroll Services Division, (860) 702-3463;
Remote Job Entry: Payroll Services Division, (860) 702-3462.
Policy Evaluation & Review Division, (860) 702-3443 or 702-3437.
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