* This information replaces PAY 900 Taxable Fringe Benefits & FIS 402-01/02/03/05/06/07/08 Fringe Benefits
901 TAXABLE FRINGE BENEFITS
Some benefits provided to OSU employees are taxable. Taxable fringe benefits include, but are not limited to:
- Tuition reduction (the difference between full tuition and the staff rate)
- Personal use of state vehicle
- Moving Expenses
- Taxes on these benefits are processed by one of the following methods:
901-01 Method 1:
The benefit is paid through payroll system as taxable income. Associated Other Payroll Expenses (OPE) will be charged to the pay index.
901-02 Method 2:
The benefit is paid directly to a vendor or the employee by Accounts Payable, or the benefit is provided to the employee at a reduced rate or no cost. The value of the benefit is then processed as a non-cash earning for the employee. This process reduces the employee's net pay by the amount of the withholding tax relative to the benefit amount. Associated OPE will be charged to the pay index.
Awards given to OSU employees by OSU, or by any entity that is not considered to be an "arms-length" entity, are taxable to the employee. These amounts are subject to income tax, Social Security and Medicare withholding. These awards should be processed through the payroll program using an FAC earn code and the following account codes:
- 10207 - Academic Employee Awards
- 10417 - Classified Employee Awards
- 10507 - Student Awards
If a department needs a check for presentation to an employee, they should contact the Payroll Manager at least one week prior to the event.
For additional information regarding taxable awards, refer to Giving an Employee a Cash Award on the Payroll Office website.
903 TUITION REDUCTION
When educational assistance exceeds $5250.00 per calendar year, the benefit is subject to income tax, Social Security, and Medicare withholding. These benefit amounts are provided to the Payroll Office by Student Accounting and are processed by the Payroll Office using Method 2 (see PAY 901-02: Method 2 in this manual). For additional information about tuition reduction refer to the Benefits Office website.
904 PERSONAL USE OF STATE VEHICLES
Personal use of state vehicles is a taxable benefit and is subject to income tax, Social Security, and Medicare withholding. There are three methods of computing the value of personal use of a state vehicle:
- Cents per mile charge
- Percentage of lease value
- Commuting method
These benefits must be submitted to the Payroll Office by the department on appropriate forms. The Payroll Office will process the benefits using Method 2 (see 901-02: Method 2 in this manual).
904-01 Commuting Method
If all of the following requirements are met, no log of miles driven will be required. Accounting and tax requirements will be satisfied by the addition of $3 per day, net of any reimbursements, to the employee's income:
- The vehicle must be used for University business by one or more employees.
- The University must require the employee to commute in the vehicle for bona fide business reasons.
- The value of the commuting use must be included in the employee's income.
- The University must specifically prohibit personal use of the vehicle by the employee other than de minimus personal use.
- The employee must not be a "control employee". That is, the employee cannot be an elected official.
- University management must reasonably believe that the above requirements are being met.
The following procedures are to be followed in order to control and account for the commuting use of University-provided vehicles:
- Each quarter, Central Payroll will be informed of the number of commuting days in the quarter and will add $3 per commuting day, net of any reimbursement, to the employee's gross income. FICA taxes will be withheld on the additional income. No Federal or State Income Taxes will be withheld.
- A Special Accounting Period provided in the Internal Revenue Code will be used. The rule allows an employer to report the additional income for November and December in the next calendar year. Therefore, the reporting quarters will end on the months of January, April, July and October.
905 MOVING EXPENSE
All moving expenses are submitted to Business Affairs who will notify Central Payroll of any payments that need to be made through the Payroll Office (see PAY 901-01: Method 1 in this manual), and any payments paid by Accounts Payable that are taxable (see PAY 901-02: Method 2 in this manual). The Payroll Office will process these using the appropriate method. This benefit is taxable and subject to income tax, Social Security, and Medicare withholding.
TAXABLE FRINGE BENEFITS
402-01 Other Payroll Expenses (OPE)
Employing departments must pay Other Payroll Expenses (OPE). OPE is the cost to the department of an employee in addition to the gross salary. OPE is charged proportionately to each index from which an employee is paid. When an account redistribution occurs, OPE will follow the transaction, and be redistributed accordingly.
OPE includes employer contributions for PERS, FICA, medical insurance and workers compensation.
The OPE amount paid for each employee is based upon the type of employment, the gross pay amount, retirement system eligibility, and benefits. OPE varies monthly and annually, but a rate is estimated by the Budget Office so that departments can plan for this expense.
402-02 Encumbrances for Payroll and OPE (Fringe Benefits)
Encumbrances are established shortly after the beginning of the fiscal year and adjusted on a monthly basis throughout the remainder of the fiscal year. Encumbrances are calculated separately for salary and OPE. Estimated OPE charges calculated by employee class codes can be seen on Banner form NTRFRNG.
Encumbrances are not liquidated using the actual expense transactions. Encumbrances are adjusted monthly, based on the forecast pay amounts and predetermined OPE percentages of these forecast pay amounts for a given FOAPA distribution.
To find the detail of all OPE posted to an index for a specific period:
- Access NYIDIST in the Banner system
- Define the parameters to the specific index and time period for which you want information
- Page down to the data section
- Query based on account code 10901.
402-03 Redistribution of OPE
OPE charges are redistributed to indexes based on the labor distribution attached to the pay. When pay is redistributed, the OPE is also redistributed. When pay is moved between a federally funded and non-federally funded index, OPE will change by the amount of the SAIF deduction. See FIS 1107-01 for OPE correction instructions.
402-04 Taxable Fringe Benefits/Perquisites
The following benefits may be taxable to the employee:
- Awards (cash and non-cash)
- Tuition reduction (The difference between full tuition and the staff rate.)
- Personal use of state vehicle
- Moving expenses
- Membership dues
- Insurance benefits
- Commuting Miles
For more information see Section 900: Taxable Fringe Benefits in the Payroll (PAY) Manual.
402-05 Early Retirement Liability
Programs that have been instituted at various times by the institution have provided a subsidy or incentive to employees in exchange for tenure relinquishment with resignation or early retirement.
402-06 GRA/GTA Fee Remission
The fee remission is the payment of resident graduate instructional tuition by the University on behalf of the graduate student as part of their appointments. It is shown as a credit on the student’s accounts receivable. See FIS 002 Definitions for further explanation.
402-07 GRA/GTA Recruitment and Retention Differential
The Recruitment and Retention Differential Policy provides that Graduate Assistants (teaching and research) receive a $110 differential payment for each term until a health plan is provided for Graduate Assistants. For further information, see Graduate Employee Contract Information and the OSU Graduate School home page. Questions about how this policy relates to sponsored research should be directed to the Office of Sponsored Research and Award Administration or OSRAA@oregonstate.edu.
402-08 Assessment for PERS Benefit Equalization Fund
The PERS Benefit Equalization Fund was established to make payments to retired employees who were contractually entitled to benefits in excess of the cap placed on 401 (a) benefits payable from regular PERS by Internal Revenue Code 415. OUS is charged the assessment, who passes it along to the appropriate institutions. OSU, in turn, passes any cost on to the appropriate hiring unit.