Bulletin 09-02 - Payment for Employees Activated to Military Duty
1.0 - SUBJECT: Payments for Employees Activated to Military Duty
2.0 - EFFECTIVE DATE: January 1, 2009
3.0 - DISTRIBUTION: State HR Directors
4.0 - FROM: George Vega, Director DATE: February 5, 2009
5.0 - PURPOSE: This Bulletin is being issued in order to reflect Internal Revenue Service changes regarding the exemption of supplemental wage payments made by employers to employees called to active military service that became effective on January 1, 2009. Pursuant to the Heroes Earning Assistance and Relief Tax Act (Pub. L. No. 110-245), all such payments are no longer exempted from federal income tax and are now considered wages for federal income tax purposes. These payments remain exempt from FICA, but must now be reported as wages on employees’ W-2 forms. With respect to procedure, rather than agencies processing military pay differentials themselves through the STARS system, they should now contact the Division of Accounts and Reports who will instruct the agency personnel in processing the payment through the SHARP system. The provisions of Section 7.1 (c) and 7.3(c)(9) have been updated to reflect these changes. There are no other substantive changes to any provisions regarding payments described in this Bulletin. Bulletin 08-02 is hereby revoked.
6.0 - BACKGROUND:
On February 3, 2005, the Governor issued Executive Directive 05-356 which authorized Military Activation Payments for State employees who were activated to full time military duty, mobilized, and deployed in excess of 30 consecutive days in support of a military operation to defend our nation on or after September 11, 2001 and a Military Pay Differential for State employees meeting the same activation requirements who were called to active duty on and after January 16, 2005. The activation payments authorized under the Executive Directive were established as a one-time $1,000 payment and the amount of a differential received by eligible employees was limited to $500 per pay period. Implementation guidelines were issued to clarify the policies and establish procedures for agencies and employees with respect to these payments.
The Legislature included provisions for both of these types of payments to State employees in L. 2008 Ch. 156 § 3, but increased the amount of the one-time activation payment to $1,500 and the amount of a differential available to eligible employees to $1,000 per pay period. These increases became effective on July 1, 2008. Aside from these increases, the only other change to the program prescribed by the Legislature has to do with the basis for determining the amount of a military pay differential. The legislation is specific that eligible employees are to receive the difference between the amount of the employee’s regular State employee wages and the employee’s military base pay. The additional military allowances that were factored into the determination under the program as authorized by Executive Directive 05-356 are no longer to be considered.
7.0 - PROCEDURES:
7.1 - PAYMENT TYPES
a) Military Activation Payment: A one-time activation gross payment of $1,500 for eligible State of Kansas employees who are activated to full-time duty and mobilized and deployed for more than 30 consecutive days in support of a military operation to defend our nation, on and after July 1, 2008.
1) No employment taxes or employee/employer deductions should be withheld from these non-wage payments. Payments will be reported on Form 1099-MISC, Box 3 as Other Income.
b) Military Pay Differential: A pay differential, limited to $1,000 per pay period for eligible State of Kansas employees who are activated to full-time duty, mobilized and deployed for more than 30 consecutive days in support of a military operation to defend our nation, on and after July 1, 2008.
1) These payments are exempt from FICA, but are to be considered wages for federal income tax purposes. These wages are therefore reportable on the employee’s W-2, in Box 1.
c) Employees will be responsible for reporting any taxable income on their personal income tax return. Employees should consult their tax advisor to determine if estimated tax payments are required or if any other individual tax consequences may result from these payments.
7.2 - ELIGIBILITY
a) In order to be eligible for a Military Activation Payment or a Military Pay Differential, an individual must be:
1) A current benefits eligible employee (including unclassified temporary employees who are eligible for benefits) with the State of Kansas;
2) A member of any of the following military reserve groups in the United States: The military branches and related services of the Army Reserve, Naval Reserve, Marine Corps Reserve, Air Force Reserve, Coast Guard Reserve, Army or Air National Guard, Public Health Commissioned Corps, or other category of person designated by the President in time of war or emergency;
3) Activated to full-time military duty;
4) Mobilized, as indicated on the employee’s military orders; and
5) Deployed as a result of the required active duty. For the purposes of eligibility for a payment pursuant to this Bulletin, “deployed” means that the employee is stationed at a location that prevents him or her from going home overnight.
7.3 - PROCESSES
a) Agencies should notify eligible employees or their legal representative of the employee’s potential eligibility for a Military Activation Payment or Military Pay Differential. A sample letter that can be used for this purpose is included as Attachment data-sf-ec-immutable="" I.
b) For a Military Activation Payment, agencies and employees should follow the following procedures:
1) Employees should present a copy of his or her military orders, a completed W-9 data-sf-ec-immutable="" form, along with a completed Application for Military Activation and Military Pay Differential Payment Form (included below as Attachment data-sf-ec-immutable="" II), to his or her agency.
NOTE – Payments cannot be made prior to the 30 day requirement and location stipulations.
2) Agencies should complete the Military Activation Payment and Pay Differential Eligibility Checklist (included below as Attachment data-sf-ec-immutable="" III) in order to make sure that the employee meets the eligibility requirements for such a payment.
NOTE – Employees who have previously received a Military Activation Payment are not eligible for or entitled to receive additional Military Activation Payments.
3) If an employee does not meet the eligibility requirements for a Military Activation Payment, agencies are to notify the employee of that fact.
4) If an employee does meet the eligibility requirements for a Military Activation Payment, the agency should submit the completed copy of the Application for Military Activation and Military Pay Differential Payment Form to the Office of the Adjutant General of Kansas. Upon approval, the Military Activation Payment will be processed through a STARS payment vouchers. Agency personnel may contact the Division of Accounts and Reports for assistance in processing an approved Military Differential Payment through SHARP.
5) Agencies should submit the completed copies of the Application for Military Activation and Military Pay Differential Payment Form to:
Adjutant General's Department
ATTN: Michael E. Neth
2722 S.W. Topeka Blvd.
Topeka, KS 66611-1287
c) For a Military Pay Differential, agencies and employees should follow the following procedures:
1) Employees should present a copy of his or her military orders, a completed W-9 form, along with a completed Application for Military Activation and Military Pay Differential Payment Form, to his or her agency.
2) In addition, employees must also submit copies of his or her Defense Finance and Accounting Service Military Leave and Earnings Statement (LES) to the employee’s agency each time the employee is paid so the agency can calculate the payment.
a) The employee may submit the LES in the most expeditious way available, but electronic submission is encouraged.
b) Instructions on how to read and understand the LES can be found at https://www.dfas.mil/dam/jcr:a41809fa-81a4-4cc7-890e-0207e58fef1d/Army_reading_your_LES.pdf
3) Employees need to provide the W-9 form along with their application. The W-9 form is required by accounting to send the payment electronically to the employee's bank account.
4) Agencies should complete the Military Activation Payment and Pay Differential Eligibility Checklist in order to make sure that the employee meets the eligibility requirements for such a payment.
5) If an employee does not meet the eligibility requirements for a Military Pay Differential, agencies are to notify the employee of that fact.
6) If an employee does meet the eligibility requirements for a Military Pay Differential, for the purposes of determining the amount of the payment, the employee’s military wages will be the employee’s military base pay as listed on the employee’s LES.
a) If the military base bay is a semi-monthly amount, multiply the semi-monthly amount by 24 and then divide by 26 to determine a bi-monthly amount for the military base pay.
7) State of Kansas employee wages are based on the hourly or bi-weekly wage rate exclusive of any overtime, non-permanent shift differentials, or salary additions such as a wage differential.
a) If the rate provided is the hourly rate, agencies should multiply that rate by 80 in order to determine the bi-monthly State of Kansas employee wages.
8) Agencies should then compare the bi-monthly amount of military base pay and the bi-monthly State of Kansas employee wages.
a) If the bi-monthly amount of military base pay is more than the bi-monthly State of Kansas employee wages, the employee will not receive a Military Pay Differential.
b) If the bi-monthly amount of military base pay is less than the bi-monthly State of Kansas employee wages, the agency should subtract the bi-monthly amount of military base pay from the bi-monthly State of Kansas employee wages. The difference is the amount of the Military Pay Differential for the employee.
9) The agency is responsible for the calculation of any payment due the employee. This calculation should be performed bi-weekly after the employee furnishes the agency with the most current Military Leave and Earnings Statement.
10) Military Pay Differentials will be processed by the Division of Accounts and Reports through the SHARP system. Agencies should refer to Informational Circular 09-P-021 or contact Earl Brynds at (785) 296-5376 or by email at Earl.Brynds@ks.gov for instructions to complete make arrangements for these payments.
d) For additional information on the effect on an employee’s benefits during military leave, please refer to Bulletin 04-02. The Bulletin and applicable regulations can be viewed at the following links: Kansas Administrative Regulations and Personnel Bulletins
8.0 - REFERENCES:
• 2008 Sub. for HB 2923 https://www.kansas.gov/government/legislative/bills/2008/2923.pdf
9.0 - CONTACT PERSONS:
• For program guidelines, please contact Kraig Knowlton at (785) 296-1082 or by email at: Kraig.Knowlton@ks.gov
• For questions concerning Military Activation Payments through STARS, please contact Michael Neth at the Adjutant General’s Office at (785) 646-0571 or by email at Michael.firstname.lastname@example.org
• For questions concerning Military Pay Differential payments, please contact Earl Brynds in the Division of Accounts and Reports at (785) 296-5376 or by email at: Earl.Brynds@ks.gov
• For questions concerning military issues such as military orders, individual military status etc., please contact Beth Visocsky at (785) 646-0566 or by email at email@example.com