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STATE OF CONNECTICUT |
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NANCY WYMAN
COMPTROLLER |
OFFICE OF
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775 |
MARK OJAKIAN
DEPUTY COMPTROLLER |
MEMORANDUM NO. 2001-63
November 6, 2001
TO THE HEADS OF ALL STATE AGENCIES
ATTENTION:
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Chief Administrative and Fiscal Officers, Business
Managers, and Payroll and Personnel Officers
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SUBJECT:
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Extension of Exclusion for Employer-Provided Educational Assistance
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I. PURPOSE
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The purpose of this memorandum is to provide notification of an extension
and expansion of Section 127 of the Internal Revenue Code (IRC) for
employer-provided educational assistance up to $5,250 per year. This
memorandum will outline how tuition reimbursements for state employees should
be processed. This memorandum replaces all previous memoranda on the subject
of employer-provided educational assistance including Memoranda Nos. 2000-23
and 2001-20.
II. AUTHORITY
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The Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law
107-16, contains a section affecting the exclusion for employer-provided
educational assistance. The exclusion is made permanent for undergraduate
courses and is expanded to include graduate courses that begin after
December 31, 2001.
III. EDUCATIONAL ASSISTANCE PROGRAMS - SECTION 127 IRC
- Employee benefits under an educational assistance program are not
included in the employee's gross income. The exclusion from gross income
is limited to the first $5,250 of educational assistance per calendar year.
Educational assistance benefits over $5,250 are generally not excludable
unless the educational assistance payments qualify as a working condition
fringe benefit.
IV. DETERMINATION OF REPORTABILITY UNDER SECTION 132 IRC
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Educational assistance exceeding the $5,250 limit may be excludable under
IRC Section 132, "Exclusion of Certain Fringe Benefits from Gross
Income." Please use the following guidelines when determining
reportability under IRC Section 132.
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- A. Non-Reportable Courses
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- If the course is not required for the employee's current
position, or the course maintains or improves skills needed in the employee's
current position, it is non-reportable.
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This includes refresher courses, courses on current developments, and
academic or vocational courses.
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- NOTE: Non-reportable reimbursements are not
included with the employee's wages and are not subject
to Federal or State withholding tax.
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- B. Reportable Courses
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- Courses taken to meet the minimum educational requirements for an
employee's current position are reportable.
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- 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.
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- 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.
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- NOTE: Reportable tuition reimbursements are
included with employee's wages and are subject to taxes.
V. REQUESTS FOR PAYMENT
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The following procedures are to be used when processing employee tuition
reimbursement payments:
- A. Non-Reportable Tuition Reimbursements - Agency Funds
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- Payments that meet the criteria outlined in Section IV, A are
non-reportable. These tuition payments must be submitted on form CO-17XP-PR
and processed through the payroll system using D/OE Code 1T -
Non-Reportable.
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B. Reportable Tuition Reimbursements - Agency Funds
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- Payments that meet the criteria outlined in Section IV, B are
reportable, and the processing of these tuition payments, using agency
funds, is through the payroll system. Form CO-17XP-PR must be completed
using D/OE Code 2G-Reportable.
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- C. Fund 9916 - Reportable Tuition Reimbursements
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- Payment requests for reimbursement of tuition and other professional
development costs from fund 9916, meeting the criteria outlined in Section
IV, B, must be processed by submitting a form CO-17XP-PR to the
Comptroller's Management Services Division - Support Services Unit.
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- D. Fund 9916 - Non-Reportable Tuition Reimbursements
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- Non-reportable tuition reimbursements continue to be submitted on form
CO-17XP to the Comptroller's Management Services Division Support Services
Unit, for processing.
VI. GENERAL
- Please direct questions to the Office of the State Comptroller as follows:
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Fund 9916 Tuition Payments: Management Services Division, (860) 702-3327;
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Payroll Procedures: Payroll Services Division, (860) 702-3463;
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Memorandum Interpretation: Policy Services Division, (860) 702-3440.
NANCY WYMAN
STATE COMPTROLLER
NW:CH
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