Partial Day Meal Reimbursement

On Tuesday, February 13, 2001 the State Board of Examiners adopted a resolution which requires all partial day meal reimbursements be subject to tax. This resolution goes into effect on July 1, 2001. This change came about because of a letter the State received from the IRS. Such reimbursements should now be considered taxable fringe benefits. A partial day meal reimbursement happens when someone gets reimbursed for a meal but doesn't spend the night away from their home. Meals included in conference registration fees are not considered partial day meal reimbursements because you generally don't know what portion of conference fees are related to the meal. Should you have any immediate questions please call the Division of Statewide Payroll at 208-334-3100, option 2.
 
This was effective July 1, 2001. Meaning any payments recorded after July 1 in STARS.
 
STARS
Three new subobject codes
 
5353 In-state meals taxable
5356 Out-of-state meals taxable
5357 Out-of-USA meals taxable
 
If the Fiscal/Accounting people in your agency record anything with these subobject codes, then they have to notify the payroll staff who they paid it to and the amount.
 
PAYROLL
 
EARNINGS
Use TFB earnings code. This code will be processed along with the employee's regular payroll. It will increase the gross used to calculate:
 
FICA (Both SSDI & SSHI)
Unemployment
Federal Taxes
State Taxes
 
After these employee/employer deductions have been calculated, the TFB amount is subtracted from the gross and then the rest of the employee deductions are taken to arrive at the net pay.
 
ASSOCIATED EMPLOYER COSTS
There are employer costs associated with taxable fringe. Be aware that personnel costs will come out in the form of the employer matching payment for FICA, Retirement and also Unemployment.
 
The payroll system will not allow grant and project overrides to process together on the same transaction. As a result, if the original STARS transaction to reimburse the employee for meals was entered with both a project and grant , the payroll system will only pick up the project when calculating the accompanying payroll costs. If the grant needs to be included as well on the payroll costs, then the agency will have to do 268 & 269 transactions in STARS to correct them. This only applies to projects and grants actually entered on the transaction.
 
AUTOMATION
STARS and DSP have developed a method so that the payments recorded in STARS with the above mentioned subobject codes will be automatically reported to DSP for taxing purposes through payroll.
 
New Reports
For your information we are providing agencies with two new reports:
 
A-443330 Generated TFB Earnings for Taxable Meals
B-443330 Taxable Meal Error List
 
The Generated TFB Earnings for Taxable Meals report (A-443330) is the list of employees who will be processed on payroll, or your copy of the batch detail.
 
Note: If the employee is NOT being paid wages on the same payroll the TFB is processing, DSP will delete the TFB earnings and notify the agency.  The agency will then need to resubmit the TFB earnings as an Other Earnings in IPOPS on a payroll when the employee is being paid wages.   The TFB will also not process if the employee is only being paid a generated leave payoff (ZCP, ZEP, ZVP) and/or any non-working hours such as FML, HOS, HOA, LWA, LWO, LWS, LWU, MDS, MOV, OCE, RHH, TFB and TXL.
 
The Taxable Meals Error List (B-443330) is the notice to the agency that there was something about the payment made in STARS that payroll could not process. If the agency receives this report the problem should be researched and corrected.
 
The following two Memos describe the latest Partial Day Meal Reimbursement info:
Taxable Partial Meal Reimbursement (July 5, 2001)
New Reports for Automatic Taxable Meal Reimbursements (July 11, 2001)