Reviewed 10/1/2014, Scope, This guideline addresses social security tax and related withholding issues related to student payroll. Specifically, it explains which employees are eligible to be on the student payroll. University of Massachusetts employees who are ineligible for the student payroll must either be moved to a non student payroll or must be coded in such a way as to generally require that Alternate Retirement…, Background, Like other educational institutions, the University of Massachusetts must distinguish between employees on the regular payroll and employees on the student payroll. Student employees at the University are generally exempt from Mandatory Alternate Retirement Plan (OBRA) withholding and from Medicare tax withholding. These exemptions are contingent upon the employee qualifying as a student under…, Definition of Student-Employee, The Internal Revenue Code defines a student employee as one “who is enrolled and regularly attending classes” at the University (IRC section 3121(b)(10)). The IRS has provided guidance for schools to aid in determining whether an employee qualifies as a student. The Notice generally provides that an individual who is either a half-time undergraduate or half-time graduate student at the University…
Type: Guidelines
Reviewed June 1, 2016, Summary, An independent contractor is generally an individual who is in an independent trade, business, or profession in which he or she offers services to the general public. Independent contractors are not employees, not paid through the payroll system, not covered by the University’s workers’ compensation program, and not eligible for unemployment benefits following the contract performance period.…, Note: An individual who performs a service for an employer (the University) is presumed to be an employee, unless all the factors (described below) are present to establish an independent contractor relationship., The University deems individuals performing services for the University to be employees unless all of the legal criteria for classification as an Independent Contractor are present., Procedure to Evaluate Individual as Employee or Independent Contractor, A. Legal Criteria, The Massachusetts Independent Contractor Law, M.G.L. c.149 §148B, is generally considered more rigid than the Federal law [1] and requires three factors to be present. The factors are sometimes referred to as the ABC test (referring to the sub-paragraphs in the Law). The burden of proof is on the employer to establish that all three of the factors are present., Factor 1:, The individual must be free from control and direction in connection with the performance of the service, both under his/her contract for the performance of the service and in fact. This factor focuses on the relationship between the individual and the employer, and specifically, the degree to which the employer controls the individual in the performance of the service. Although the individual…, Factor 2:, The service performed must be outside the usual course of the business of the University. (Services provided at all campuses must be considered) This factor focuses on the ordinary services that the employer provides. Generally, an employer cannot hire independent contractors to perform services within its normal business operation. Two examples are illustrative:, Example #1., An accounting firm brings in a painter to repaint their offices. Assuming the individual meets the tests in Factors 1 and 3, the individual can be classified as an independent contractor., Example #2, ., An accounting firm brings in an accountant to assist during the busy season. Even if the individual meets the tests in Factors 1 and 3, the individual cannot be classified as an independent contractor. In Athol Daily News v. Division of Employment and Training , 439 Mass. 171 (2003), the court held that newspaper carriers were performing the “usual course of business” of the newspaper because…, Note: This question covers the entire University, not a particular department or location. Departments may seek information and guidance on this issue from the appropriate Campus or University Human Resources Department, Factor 3:, The individual must be customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. This factor focuses on the individual and his/her business. Generally, an individual who has a relationship with an employer such that the future of the individual’s business depends on the continuation of that…, B. Special Circumstances, Former employees will generally be regarded as employees, regardless of retirement status. For current employees receiving either royalties, prizes, awards, cash gifts or honoraria these payments are generally considered compensation and reportable on the W-2. The following fees paid to non-employees are not for services rendered on behalf of the University; individuals receiving such fees are…, C. Procedure, Hiring managers who wish to engage an individual as an independent contractor must complete a Determination of Independent Contractor Status form for review and approval by the chief human resources official at the applicable location prior to any services being performed by the individual. Approved Determination of Independent Contractor Status forms are filed with the competed Contract for…
Type: Guidelines
Reviewed 10/1/2014 Gifts, awards, and prizes provided to employees are generally taxable income to the employee since they are presented in return for the employee’s performance or services. Cash awards and the fair market value of non-cash awards are subject to income tax withholding and FICA and should be reported on an employee’s W2, unless a statutory exclusion clearly applies., Internal Revenue Code (I.R.C.) limitations that often apply to gifts, prizes, and awards include the following:, Gifts (I.R.C. § 274(b)), Gifts made directly or indirectly to any individual in excess of $25 per year should be considered employee income unless certain terms and conditions apply (such as being inscribed with the recipients name and not being transferable)., Service and Safety Awards (I.R.C. § 274(j)), Awards of tangible personal property given to employees for length-of-service or safety achievement are not considered employee income if the value of the award does not exceed specified limits – $400 per employee per year for all awards presented under a nonqualified plan; $1,600 per employee per year under a qualified written plan that does not favor highly compensated employees and that has an…, De Minimis Fringe Benefits (I.R.C. § 132(e)), A de minimis fringe benefit is any property or service infrequently provided to an employee that has so little value that accounting for it would be unreasonable or administratively impracticable. Cash, no matter how little, is never excludible as a de minimis fringe, except for occasional meal money or transportation fare. Similarly, a cash equivalent (such as a gift coupon or certificate) is…, Working Condition Fringe Benefits (I.R.C. § 132(d))5a), A working condition fringe benefit is any property or service provided to an employee to the extent that, if the employee paid for the property or service, such payment could be claimed as a business deduction. In general, cash payments do not qualify as working condition fringe benefits. There are three requirements for a working condition fringe: the employee’s use of the property or service…, Scholarships (I.R.C. § 117), When the University provides property to a student who is also an employee of the University, the issue of whether the award is compensation awarded to an employee or a scholarship awarded to a student should be considered. If the property was provided as a reward for services rendered, it should be treated as compensation. If the property was provided as an award for academic excellence, it…
Type: Guidelines
Updated August 10, 2006 In general, the value of employer-provided educational assistance is excludible from an employee’s gross income if it is provided under a Section 127 employer-provided educational assistance plan, qualifies as a Section 132 working condition fringe benefit, or qualifies as a Section 117(d) qualified tuition reduction. For more information, please review Payroll Tax…, §127 Employer-Provided Educational Assistance Programs (EAP’s)., Section 127 EAP’s are separate written plans of employers that provide educational assistance for the exclusive benefit of their employees. The programs must meet certain non-discrimination requirements, and cannot be part of §125 (cafeteria) plans. Reasonable notification of the availability and terms of the program must be provided to eligible employees. Form 5500, Annual Return/Report of…, §117 (d) Qualified Tuition Reductions., Qualified Tuition Reductions are tuition waivers or reimbursements provided to employees of educational organizations, their spouses, or their dependent children for courses taken at an educational organization with a regular faculty, curriculum, and enrolled student body. Section 117 (d) only applies to employees of educational organizations – not to all employees of the Commonwealth. Section…, §132 Educational expenses that qualify as working condition fringe benefits., §132: Gross income does not include any fringe benefit that qualifies as a working condition fringe. A “working condition fringe” means any property or services provided to an employee to the extent that, if the employee paid for the property or services, the payment would be allowable as a business expense deduction. Educational expenses that would be allowable as business expense deductions.…
Type: Guidelines
Scope, This guideline is designed to answer questions about the University’s tax status., Tax-Exempt Status, The University is tax-exempt under the doctrine of intergovernmental tax immunity. Governmental Tax Status Memo, Contributions to the University, For income tax purposes, section 170 provides that donations made for exclusively public purposes, to or for the use of a state or political subdivision, are deductible against the taxable income of individuals, corporations, and other taxpayers, subject to various limitations. For estate tax purposes, section 2055(a) provides that bequests, legacies, devises, or transfers made by an estate for…, Federal Tax Identification Numbers, The University’s federal tax identification number is 04-3167352. The Commonwealth of Massachusetts’ tax identification number is 04-6002284. The Commonwealth’s number is used for payroll tax purposes.
Type: Guidelines
Type: Guidelines
Gifts, Gifts of tangible personal property, such as flowers, may be presented as an expression of sympathy in the event of the death or major illness of an employee or a member of the employee's immediate family. For purposes of this policy, immediate family is defined as: spouse; children; parents; and siblings. The cost of such gifts is limited to $150. All such gifts must be requested through the…, Charitable Contributions, In lieu of flowers, a cash contribution of a comparable amount may be made to a charitable organization in memory of the deceased. All such contributions must be requested through the Human Resources Office and approved by the Senior Vice President for Administration and Finance. If approved, the Human Resources Office will be responsible for sending the contribution on behalf of the University…
Type: Guidelines
Type: Guidelines
Type: Guidelines
Type: Guidelines
