ATTACHMENT TO:
Payroll Memorandum
2002 Calendar Year Closing

Prior Year Cash Recovery

1) Agency receives a check or money order from the employee for the net amount of their original check plus federal and state tax deductions. The agency deposits these funds into their account.

If you have outstanding recoveries that you are collecting money on, the balance due is to be increased to add Federal & State tax withheld.

2) Complete forms COP-9 and CO-1081 to begin the recovery process. The COP-9 is to include the original gross pay, and the amount of the FICA/Medicare and retirement deductions in their appropriate boxes on line 1. If applicable, other deductions should be included in their appropriate boxes. On the COP-9, the amount of the check is to include the 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 that the agency received the necessary amount required to process the reversal.

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 the Department of Revenue Services, and if appropriate, receive a refund of federal and/or state taxes.

Note:

*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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