Finance
NEW HANDBOOK
Handbook F-66E, Investment Policies and Procedures — Postal Support and
Information Systems
We have created Handbook F-66E, Investment Policies
and Procedures - Postal Support and Information
Systems. It contains requirements for performance metrics,
a clearly defined risk analysis process, and enhanced program compliance status reporting for investments that
require a Decision Analysis Report (DAR). We will not
distribute printed copies.
Handbook F-66E is available on the Postal ServiceTM
PolicyNet Web site.
• Go to http://blue.usps.gov.
• Under "Essential Links" in the left-hand column, click
on References.
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• Under "References" in the right-hand column, under
"Policies," click on PolicyNet.
• Then click on HBKs.
(The direct URL for the Postal Service PolicyNet Web
site is http://blue.usps.gov/cpim.)
We are in the process of revising the other modules in
the F-66 series - F-66A, F-66B, F-66C, and F-66D. We
will announce the availability of these additional modules
on the Postal Service Intranet in future Postal Bulletin
articles.
— Capital Program and Evaluation,
Finance, 1-5-06
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CORRECTION
2005 Tax Information
The article "Notice: 2005 Tax Information" published in Postal Bulletin 22170 (12-22-05, pages 46-48 and 73-76) contained an incorrect address for Internal Revenue Service Form 1099. Employees must mail questions regarding or requests
for duplicate copies of Form 1099 for contract cleaners to the following address:
CONTRACT CLEANERS UNIT
SAN MATEO ACCOUNTING SERVICE CENTER
2700 CAMPUS DR
SAN MATEO CA 94497-9426
— Payroll, Finance, 1-5-06
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NOTICE
Form W-4 Completion for Calendar Year 2006
Internal Revenue Service (IRS) regulations permit employees who anticipate no federal tax liability for 2006 to
continue to claim total exemption from federal tax withholding provided they owed no federal taxes for 2005. These
regulations also require that a new Form W-4, Employee's
Withholding Allowance Certificate, be submitted every
calendar year. Because of PostalEASE, however, employees no longer need to file a hardcopy Form W-4.
IRS filing requirements concerning Form W-4s are met
by either logging onto PostalEASE via the Postal ServiceTM
Intranet at blue.usps.gov, click PostalEASE, or by calling
PostalEASE toll-free at 877-477-3273. Follow the Form
W-4 instructions provided by PostalEASE, and your form
will be updated for calendar year 2006.
Employees currently in an exempt status who do not use PostalEASE to submit a new Form W-4 claiming a continuation of their exempt status will have their status converted
to taxable, effective pay period 05-06. For exempt information on a Form W-4 to remain effective into the next year,
the IRS requires completion, submission, and acceptance
of the form no later than February 15. Since February 15
falls within pay period 04-06, the new information on the
Form W-4s must be entered into PostalEASE by no later
than Friday, February 3. |
Employees who claimed exempt status for 2005 who do
not update in PostalEASE will have federal taxes withheld
at the rate that would normally be applicable to single employees with no dependent allowances. Employees with a
current exempt status (as of pay period 26-05) will receive
printed messages on their earnings statement during pay
periods 02-06 and 03-06 reminding them that a new Form
W-4 is required.
Reminders
• Personnel offices must not provide tax advice to employees concerning the completion of Form W-4s.
• In January 2004, the practice of sending certain hard
copies of the forms to the Eagan Accounting Service
Center was discontinued since all employees must
now use PostalEASE to update their Form W-4s. The
IRS now follows different procedures to review Form
W-4 information.
— Payroll,
Finance, 1-5-06
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NOTICE
IRS Reporting Requirements of Attorney Fees, Back Pay, or Wages
The purpose of this notice is to ensure that employees
are aware of changes in income reporting requirements
made by the Internal Revenue Service (IRS). The changes
apply to calendar year 2005 earnings.
The IRS has changed the manner in which an attorney's
fees awards are to be treated for tax reporting purposes
based upon the Supreme Court's decision in Commis-
sioner v. Banks, 125 S. Ct. 826 (2005). Previously, when a
payment of an attorney's fees was made directly to the attorney, only the payment to the attorney was reported to the
IRS on Form 1099-MISC, Miscellaneous Income. In Commissioner v. Banks, the Supreme Court concluded that an
attorney's fees awarded as part of a plaintiff's settlement of
an employment discrimination suit are gross income to the
plaintiff just like any other economic gain. Thus, these fees
cannot be excluded from the plaintiff's gross income for tax
purposes by assigning the gain in advance to another party,
such as the plaintiff's attorney.
Following are a number of different situations requiring
variations in the reporting requirements:
Separate Attorney Fees
The accounting service center (ASC) will report any
attorney's fees payment as income to the employee on the
employee's Form 1099-MISC. Further, the ASC also will
report any attorney's fees payment made directly to an
attorney on the attorney's Form 1099-MISC.
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Back Pay or Wages
Where the payment to the employee constitutes back
pay or wages, the entire amount (including any amount that
the employee may subsequently pay to his or her attorney
from the back pay or wages) will be reported on the employee's Form W-2 (and will be subject to income tax withholding). Where the employee alone is to receive a check
from the Postal ServiceTM (and the employee is required to
pay his or her attorney from that amount), the ASC will not
issue a Form 1099-MISC to the employee's attorney.
Payment Jointly to Employee and Attorney
If the payment is issued to both the employee and the
attorney, then the ASC must report the entire amount of the
payment (assuming that the payment is not for back pay or
wages due the employee) on Form 1099-MISC for the employee. In addition, the ASC will report the entire amount of
the payment (less any withholding) to the attorney on Form
1099-MISC.
— Payroll,
Finance, 1-5-06
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