Finance

NEW HANDBOOK

Handbook F-3, Treasury Management

Handbook F-3, Treasury Management, is now available. It replaces Handbook F-5, Banking and Cash Management. This handbook contains treasury management policies and procedures and includes new sections on anti-money laundering compliance, risk management, and business evaluation.

A copy of the new handbook was sent to each area Finance manager, area Treasury coordinator, and district Finance office. You may view the handbook on the Postal ServiceTM Intranet or order additional printed copies from the Material Distribution Center (MDC).

Viewing Online

Handbook F-3 is available on the Postal Service PolicyNet Web site:

• Go to http://blue.usps.gov.

• Under "Essential Links" in the left-hand column, click on References.

• Under "References" in the right-hand column, under "Policies," click on PolicyNet.

• Then click on HBKs.

(The direct URL for the Postal ServiceTM PolicyNet Web site is http://blue.usps.gov/cpim.)

Ordering Printed Copies

You can order Handbook F-3 from the MDC and use touch tone order entry (TTOE): Call 800-273-1509.

Note: You must be registered to use TTOE. To register, call 800-332-0317, option 1, extension 2925, and follow the prompts to leave a message. (Wait 48 hours after registering before placing your first order.)

Use the following information to order Handbook F-3:

PSIN: HBK F-3
PSN: 7610-08-000-4678
Unit of Measure: EA
Minimum Order Quantity: 1
Quick Pick Number: N/A
Bulk Pack Quantity: 100
Price: $1.3896

— Corporate Treasury,
Treasurer, 1-18-07

NOTICE

2006 Tax Information

Form W-2, Wage and Tax Statement

Current Mailing Address

To facilitate processing of 2006 tax information and to ensure correct and timely receipt of a 2006 Form W-2, Wage and Tax Statement, all employees must have a current mailing address on file. If you need to change your current mailing address, you have two options (in order of preference):

Option 1: Use the internal Web site address https://addresschange.usps.gov/ to update your employee information file. You need both your Social Security number and personal identification number in order to gain access to this application. Change your mailing address. The Postal Service uses this address to send not only your W-2, but other important postal information.

You can also reach this page from the Postal Service Intranet:

1. Go to http://usps.blue.gov.

2. Under "Essential Links," click on the PostalPEOPLE link.

3. Under "Links," click on the Employee Self-Service link.

4. Click on Employee Change of Address (right side of the page).

Option 2: Use PS Form 1216, Employee's Current Mailing Address. Send Copy 1 to the following address:

HRSSC
BENEFITS COMPENSATION
PO BOX 970400
GREENSBORO NC 27497-0400

General W-2 Information

If an employee has earnings for more than one state or locality, then a separate Form W-2 will be issued for each state. The format of the 2006 Form W-2 has not been modified from the 2005 version. All box numbers remain the same as the 2005 form.

See pages 8 and 9 for an example of the 2006 Form W-2.

Inquiries

Employees may direct all inquiries concerning payroll items, such as employee business expense, equipment maintenance, rent, T-Cola, money differences between earnings statement and W-2 (see Reconciliation Formula on Form W-2), leave buy backs, erroneous state or local tax deductions, TSP, FSA, etc., to the Accounting Help Desk at 866-974-2733. Callers should be ready to provide the following information:

1. Employee's name.

2. Current mailing address.

3. Social Security number (SSN).

4. Name of office where employed (or previously employed if you are not currently a Postal Service employee).

5. Year(s) involved.

6. Specific question.

Employees may also submit questions regarding W-2s in writing. The request must include the following information:

1. Employee's name.

2. Current mailing address.

3. SSN.

4. Name of office where employed (or where previously employed if not a current Postal Service employee).

5. Year(s) involved.

6. Specific question.

7. Employee's signature.

General Information

Imputed Income Life Insurance

The imputed income life insurance amount shown in Box 35 of the 2006 W-2 form is the net result of the IRS computation for taxable insurance benefits less the amount an employee pays for optional insurance in the calendar year.

The IRS requires that the Postal Service report as income the cost of Group Term Life Insurance in excess of $50,000, which is paid by the employer. The formula is based on an employee's age, salary, and life insurance coverage.

Thrift Savings Plan

The following facts will clarify some of the common tax questions regarding the Thrift Savings Plan (TSP):

1. Box 12a or 12b, See instructions for box 12, may contain employee TSP contributions including TSP catch up.

2. TSP contributions are reported in Box 12a or 12b with a code "D". Letter code "D" is explained on the reverse side of Form W-2 under "Notice to Employee."

3. Box 1, Wages, tips, other compensation, has been reduced by the amount of the employee's TSP contributions shown in Box 12a or 12b.

4. Box 16, State wages, tips, etc., has been reduced by the amount of employee TSP contributions in Box 12a or 12b for all states, except New Jersey, Pennsylvania, and Puerto Rico.

5. New York City, NY; Kansas City, MO; Detroit, MI; St. Louis, MO; and Madison County, KY, are the only localities that allow income deferral for TSP. Box 18, Local wages, tips, etc., will be reduced by the amount of employee TSP contributions only if New York City, NY; Kansas City, MO; Detroit, MI; St. Louis, MO; or Madison County, KY, is indicated in Box 20, Locality name.

Employee Business Expense

Equipment maintenance allowance (EMA), carrier drive- out, vehicle hire, supervisor vehicle usage, and special delivery are all considered employee expenses. Box 32, Employee business expense (EBE), will contain the non- taxable (not the total) EBE amount, while Box 33, Taxable employee business expense, will contain the taxable EBE amount. The taxable amount shown in Box 33 will also be included in Box 1, Wages, tips, other compensation.

Flexible Spending Account

The amount contributed to an employee's flexible spending account (FSA) for health care is included in Box 40, FSA health care, and the amount contributed to dependent care will be included in Box 10, FSA dependent care benefits. Both amounts have been deducted from Box 1.

Health Benefit Pre-Tax

The amount that an employee contributed for health benefit premiums is considered pre-tax unless the employee declined the pre-tax benefit. The health benefit pre- tax amount is shown in Box 37, Pre-tax health benefits, and has been deducted from Box 1.

Commuter Program

The amount contributed for the commuter program (Box 41) is considered pre-tax for 2006 up to the IRS $105 monthly limit for public transportation or the IRS $205 monthly limit for parking and has been deducted from Box 1.

Effective January 1, 2007, the parking pre-tax spending limit will increase from $205 to $215 and the public transportation limit will increase from $105 to $110. This increase can affect the deductions for November 2006, which are for the January 2007 benefit month. Any commuting expenses that are elected above the IRS limits will be considered post-tax.

State/Terr. Gross Wages

The amount in Box 16, State wages, tips, etc., will equal Box 1 with the following exceptions:

1. Mississippi does not allow income deferral for pre-tax commuter program public transportation and parking.

2. New Jersey and Puerto Rico do not allow income deferral. Therefore, the employee TSP, FSA, and health benefits pre-tax contributions are not deducted from their state gross.

3. Pennsylvania is the only state that does not require the imputed income life Insurance to be added into the state gross. Also, Pennsylvania does not allow income deferral for TSP, FSA dependent care, and commuter program pre-tax contributions.

Annuity Protection Program

Form W-2s are issued to former employees who receive payments from the Postal Service under the Annuity Protection Program (APP). Any questions regarding these Form W-2s should be directed to:

PAYROLL BENEFITS BRANCH
EAGAN ACCOUNTING SERVICE CENTER
2825 LONE OAK PKWY
EAGAN MN 55121-9621

Relocation Payments

Relocation wages are reported in Box 39, Relocation gross, on the Form W-2.

Relocation gross is reduced by the excludable reportable amount reported in Box 12a or 12b before it is added to Box 1.

Excludable reportable wages are reported in Box 12a or 12b with a code "P". Letter code "P" is explained on the reverse side of Form W-2.

Obtaining Duplicate Forms

PostalEASE

Employees may use PostalEASE "W-2 Reprint" for information viewing and/or printing. You may request any of the prior 15 years including current year to be reprinted on an official document and mailed.

The W-2 reprint process is performed weekly. During the months of March and April, the W-2 reprint process is scheduled to execute daily. During pay periods 01-03 (approximately mid-December through end of January), the W-2 request for mailing process will not be available. However, viewing of current information is available online.

Eagan Accounting Service Center Help Desk

To obtain duplicate forms, employees may also call the Accounting Help Desk (866-974-2733). All requests must include:

1. Employee's name.

2. Current mailing address.

3. SSN.

4. Name of office where employed (or where previously employed if not a current Postal Service employee).

5. Year(s) requested.

If you are unsuccessful requesting duplicate W-2s from the Accounting Help Desk or Employee Self Service, send your request in writing to the following address:

FINANCIAL REPORTING SECTION W-2S
EAGAN ACCOUNTING SERVICE CENTER
2825 LONE OAK PKWY
EAGAN MN 55121-9617

Requests must include the employee's signature.

Form W-2c, Corrected Wage and Tax Statement

General W-2c Information

Form W-2c is used by the Postal Service to correct errors previously filed on a Form W-2. The Form W-2c will only report the corrections and should be used in conjunction with the original Form W-2 issued when filing taxes and/or other related information.

Requesting a W-2c

All requests for a corrected W-2c must be submitted in writing. The requests must include the following:

1. Employee's name.

2. Current mailing address.

3. SSN.

4. Name of office where employed (or where previously employed if not a current Postal Service employee).

5. Year(s) requested.

6. Reason for request.

7. Employee's signature.

Obtaining Duplicate W-2c Forms

All requests for a duplicate W-2c must be submitted in writing. The requests must include the following:

1. Employee's name.

2. Current mailing address.

3. SSN.

4. Name of office where employed (or where previously employed if not a current Postal Service employee).

5. Year(s) request.

6. Employee's signature.

Submit your questions or requests for duplicate copies of Form W-2c (1992 to the present) in writing to the following address:

FINANCIAL REPORTING SECTION W-2C
EAGAN ACCOUNTING SERVICE CENTER
2825 LONE OAK PKWY
EAGAN MN 55121-9617

IRS Form 1099

Depending on your specific circumstances, up to three different IRS Form 1099s may be issued to you:

1. IRS Form 1099MISC, Statement for Recipients of Miscellaneous Income.

2. IRS Form 1099R, Distributions from Pensions, Annuities, Retirement, or Profit Sharing Plans, IRAs, Insurance Contracts, etc.

3. IRS Form 1099INT, Interest Income.

All three accounting service centers (ASCs) mail out IRS Form 1099. Please determine the nature of the payments and contact the appropriate ASC.

Form 1099R

This year, both the Office of Personnel Management (OPM) and the Eagan Accounting Service Center are sending out Form 1099Rs. The Eagan ASC will mail annuity protection checks, and OPM will mail monthly annuity checks. The originating agency will be listed on Form 1099R. Try to determine which agency made the payments before you inquire about your form.

Form 1099INT

The use of this form is to report interest payments that were the result of employment-related back-pay awards. Submit your questions or requests for duplicate copies of Form 1099INT in writing to the following address:

FINANCIAL PROCESSING SECTION
EAGAN ACCOUNTING SERVICE CENTER
2825 LONE OAK PKWY
EAGAN MN 55121-9616

Provide your name, SSN, and, if known, the date of the payment.

— Payroll,
Finance, 1-18-07