State of Connecticut Office of the State Comptroller MEMORANDUM NO. 97-38
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. 97-38

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
  1. PURPOSE

    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.

  2. AUTHORITY

    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.

  3. GENERAL

    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.

  4. DETERMINATION OF REPORTABILITY

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

A. Non-Reportable
 
If your education is not required for your current position and it 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.
 
B. 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.

 

  1. REQUESTS FOR PAYMENT

    Agency personnel are to use the following procedures when processing employee tuition reimbursement payments:

Non-reportable Tuition Reimbursements
 
A. Non-reportable payments are submitted on form CO-17XP Employee Voucher to the Accounts Payable Division for processing.
 
Reportable Tuition Reimbursements
 
B. Reportable payments using agency funds are paid through the payroll system using D/OE code 2G - "Reportable Tuition", as established in Memorandum No. 93-11a, dated November 26, 1993.
 
Reportable Tuition Reimbursements for 9916 Funds
 
C. Reportable payments being made from union funds should include the following information in the "Remarks" section of the CO-17XP, employee number, payroll unit level 2 code and D/OE code 2G - "Reportable Tuition". Submit the CO-17XP and two copies of all applicable documentation to the Comptroller's Business Office for approval and payment.

 

  1. QUESTIONS

    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.

    Payroll Procedures:

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

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

    Memorandum Interpretation:

    Policy Evaluation & Review Division, (860) 702-3443 or 702-3437.

NANCY WYMAN
STATE COMPTROLLER

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