Summary: NRA Payments and Form 1042 Information Returns

IRS requirements for recording tax liabilities and payments:

A tax liability is created at the time a payment of income, not related to a payroll transaction, is made to a Nonresident Alien (NRA) or a foreign person. The State of Kansas is one entity which means NRA payments for all Regent institutions are combined to determine the tax liability. If at the end of any quarter-monthly period a total tax liability of $2,000 or more exists, a tax deposit must be made within 3 business days of the quarter-monthly period. A quarter-monthly period is the 7^th, 15^th, 22^nd and last day of the month for any given month. Late tax payments are subject to penalties and interest which range from 1-10% depending on the number of days the payment is late.

State of Kansas accumulation of payment information and payments:

The Office of Accounts and Reports (OAR) accumulates payment information as submitted via ManageEngine Service Desk from each Regent institution. OAR currently tracks this data in an Access database. To be compliant with the IRS, payment information should be submitted to OAR by the Regent institution weekly in conjunction with the quarter-monthly periods. However, we realize this timeline has not previously been communicated. Therefore, at a minimum the payment information must be submitted to OAR by the Regent institution monthly, no later than the last day of the month. OAR will pay to the IRS the tax due for the month within 3 business days of the end of the month.

Regent institution NRA reportable payment information requirements:

• Excel template titled ‘NRA WORKBOOK’ – see attached.
• Beginning with line 3 on the NRA WORKBOOK, one line shall be entered for each payment
• When submitting to OAR via ManageEngine Service Desk, use a Subject of NRA payments MM/YY

To ensure a timely payment to the IRS based on the tax due as submitted on the NRA reportable payment information, OAR will enter a GL journal within 3 days of receiving the NRA WORKBOOK to transfer the withholding taxes from the Regent institution funding provided in the NRA WORKBOOK to the Department of Administration.

Annual 2021 filing:

In preparation for calendar year 2021 reporting, OAR will send to each Regent institution a spreadsheet of transactions accumulated for 2021 payments January through November. The spreadsheet of transactions will be sent by December 15, 2021 and shall be verified and returned to OAR by December 31, 2021.

NRA reportable payment information for December shall be submitted to OAR via ManageEngine Service Desk no later than December 31, 2021.

Attachment: NRA WORKBOOK

Summary: K.A.R. 1-18-1a – Mileage Regulation Changes

In recent years, the Department of Administration has received various forms of input from agencies expressing concern over the cost comparison provisions found within K.A.R. 1-18-1a.

Effective November 5, 2021:

• K.A.R. 1-18-1a was amended giving agency heads or the agency designee(s) greater flexibility in determining reimbursement allowances for use of private vehicles and removes the cost comparison calculation.
• The associated DA-127 Mileage vs. Rental Comparison form is discontinued.
• Agencies retain the authority to reimburse at the lower cost rate for available transportation upon notice to the employee prior to the travel.

Under the new provisions of K.A.R. 1-18-1a, the Department of Administration anticipates that any increase in direct mileage reimbursement costs as a result of avoiding other related indirect costs (such as travel mode cost comparisons, the time involved in securing rental vehicle reservations, and travel time to obtain the rental vehicle) will be absorbed into the agency’s existing approved budget.

Under the new provisions of K.A.R. 1-18-1a, agencies are responsible for documenting adequate procedures and controls for audit purposes and are encouraged to consider the following:

• Establish internal procedures and guidelines for agency approval of private vehicle mileage reimbursement under the updated regulation including identification of the circumstances for which approval at the higher published private vehicle rate is authorized for the agency,
• Identify the agency designee(s) authorized to make travel reimbursement determinations and any additional internal agency approvals required for reimbursement at the higher published rate

Aside from the change to K.A.R. 1-18-1a, while serving as a general reminder for any employee travel reimbursements:

• proper audit trail documentation should be maintained as travel transactions will still be subject to review by the Statewide Agency Audit Services team
• the minimum information to be provided in the approval document includes the traveler’s name, destination, mode of travel, purpose of travel, and dates of travel. Complete itemization of estimated travel expenses is required.

The Employee Travel Expense Reimbursement Handbook (Policy Manual Filing 3.903) and other associated resources will be updated to reflect the changes within K.A.R. 1-18-1a.

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Summary:ARPA Processing, Tracking, and Reporting

This document includes guidance for transaction processing for American Rescue Plan Act (ARPA) funds received by your agency that were approved for distribution from the discretionary money received by the Governor’s Office.  This funding is referred to as the State Fiscal Recovery Funds (SFRF).  Adherence with these guidelines will facilitate consistency of data for internal state reporting as well as compliance with the U.S. Department of the Treasury’s Office of Inspector General’s reporting requirements relative to ARPA expenditures.

Fund 3756 has been established in SMART as the American Rescue Plan State Relief Fund and will be used for all discretionary funds distributed from the Governor’s Office to state agencies. The CFDA (Catalog of Federal Domestic Assistance) number associated with this fund is 21.027.  Budget unit 3536 has been established to record state agency spending for each business unit receiving funds.

New Program Code Usage for ARPA

The program code usage is different for ARPA spending than it was under the Coronavirus Relief Fund (CRF) spending.  A different program code will be assigned to each state program approved to receive money. This will enhance the ability to track and report on the spending of each different state program, especially for agencies who have multiple programs or when money is transferred to other state agencies as subrecipients.

After the state program is approved by the State Finance Council and the program code is assigned by the Recovery Office, the program code will be included in the agency’s Memorandum of Agreement (MOA).  The SMART Team will establish the program code for the recipient agency.  Every transaction associated with that particular state program must use the assigned program code.  If the program funds are transferred to another state agency, the subrecipient state agency must use the assigned program code on all transactions as well. 

Subrecipient State Agencies

For some programs, the recipient (or prime) state agency may distribute funds to a subrecipient state agency.  In order for SMART to be set-up correctly, the subrecipient agency needs to request that the fund, budget unit, and program code be added to their SMART business unit prior to receiving the funds.  The subrecipient agency needs to submit the request via a Kansas Service Desk ticket.

Encumbrance Requirement

As directed by Office of Accounts and Reports (OAR) Policy Manual, Filing Number 10,300, unless specifically exempted by statute, all state agencies must follow the requirements for recording encumbrances in the accounting system.  Payments to program recipients are not required to be encumbered.  Payments for goods and services are required to be encumbered regardless of the funding source.  Creating a purchase order for payment of goods and services meets the encumbrance requirement and links the contract to the voucher, which will assist with federal reporting requirements.

Best Practice for Any Funding of Payments and Funding Changes

It is best practice to use the correct funding chartfields from the beginning of any transaction.  A requisition for the purchase of goods and services for ARPA programs should be created with the correct ARPA funding chartfields which will then source to a purchase order (PO) with the correct ARPA funding chartfields, and ultimately to the voucher.

When corrections are needed, it is recommended those transactions be entered in the originating module:

• A requisition that has not been sourced to a PO, should be canceled. A new requisition should then be created with the correct funding chartfields.
• If a PO has been created and has had no vouchers processed, the PO should be canceled, and a new requisition should be created with the correct funding chartfields.
•  If a PO has been created and has had a voucher(s) processed, a change order should be processed to correct the funding chartfields for any remaining vouchers to be processed.
• For vouchers that have processed, an accounts payable journal should be processed (in the AP module) to correct the funding chartfields.

Details from the expenditure transactions become more difficult to accumulate in federal reports when GL journals are entered to change funding because the original details contained in voucher transactions do not carry to the general ledger.

Best Practice for Funding of Payroll

If payroll transactions will be funded by ARPA programs, it is best practice to establish the correct ARPA funding chartfields in SHARP. Details from the payroll transactions become more difficult to accumulate in federal reports when GL journals are entered to change funding because the original details contained in SHARP transactions do not carry to the general ledger.

Reporting

Federal reporting guidance has been released and includes 66 different reporting categories.  The appropriate category(s) to be used for a particular program, based on the approved allowable spending, will be included in the agency’s MOA and will be established by the SMART Team for your agency in the SMART Chartfield 2 field.  New queries will be added in SMART to assist agencies with completing the required reports. The reporting cadence will be monthly. 

Guidance for Each Scenario of Award Receipt and Payment

Use the chart in Attachment A to assist your agency with determining the correct chartfield usage and reporting requirements.   Your agency will need to determine whether a payment is being made to a subrecipient vs. a beneficiary vs. a contractor in order to code it correctly.  Here are the short descriptions that can be used in your determination regarding ARPA SFRF:

• Subrecipient—A subrecipient is an entity that receives a subaward to carry out part of a federal award or program.  Some of the program compliance and reporting requirements become the responsibility of the subrecipient.
• Beneficiary—Individuals and organizations that receive State & Local Fiscal Relief Funds (SLFRF) funds as end users to respond to the negative impacts of COVID-19 on these organizations. 
  • Beneficiaries are not subject to the Single Audit Act and 2 CFR Part 200, Subpart F.
  • Document beneficiary determination in the same manner as subrecipient vs. contractor determinations. Note that additional guidance will be included in both the Subrecipient vs. Contractor Checklist and the Grant Compliance Checklist and Guide ARPA SLFRF.
  • Receiving entity should be notified that it is a beneficiary, and not subject to the audit requirements.
• Contractor—When a payment is being made for goods and services, the payee is a contractor.

Attachment A