The 2008 Diocesan Payroll Program -- Forms and Instructions

ALL DOWNLOADABLE PAYROLL FORMS

I-9 and W-4 WITHHOLDING FORMS AND INSTRUCTIONS
PAYROLL RUN DATES - pdf

Click here to email Tom Sumner about the Diocesan Payroll Program

Introduction to the Diocesan Payroll Program

Enclosed are the enrollment forms and instructions for the Diocesan Central Payroll Program. The diocesan office currently processes payroll for more than 50 Maine congregations and several other Diocesan entities. We have many happy “customers” - treasurers and administrators across the diocese who enjoy the benefit of being “out of the payroll business”.

The Diocesan Central Payroll Program was created several years ago to serve our congregations by providing an economical payroll service process. The benefits to your congregation of having all of your employees on the Diocesan Central Payroll Program are many. For the fee of $78 annually per employee, we prepare all paychecks or direct deposits, file quarterly 941 reports, deposit payroll taxes and prepare W-2s at year-end. Basically, if all of your employees are on this program, you simply send a check to the diocese every two weeks and you have no other payroll responsibilities. We also offer and encourage direct deposit for your employees (please see section 4 of the instructions) and direct debit of your payment to the diocese.

In addition, employees participating in Central Payroll have the ability to take advantage of the Diocese of Maine Flexible Benefit Plan which includes - pre-tax medical/dental insurance premium deductions and medical and dependant care pre-tax deductions (Section 125 Cafeteria Plan). There are additional costs to participate in the cafeteria plan – please see section 1 of the instructions.

Instructions

CENTRAL PAYROLL SERVICE AGREEMENT

The Central Payroll Program is operated by the Diocese as a payroll service to the congregations with the understanding that:

Each participating church reimburses the Diocesan office for all clergy and lay salaries and the employer's share of lay FICA (Social Security and Medicare) tax (7.65%) disbursed on its behalf, such reimbursement being received before any payroll will be issued.

Each participating church will pay the Diocesan office $3.00 per payroll check or direct deposit.

The cost of participating in our cafeteria plan is an additional $2.42 per pay period per employee per account. In other words, if your employee wants a medical reimbursement account, the annual cost to the congregation is $63.00. This fee is not kept at the diocesan office, but paid directly to Group Dynamic, the third party administrator of the reimbursement accounts.

NOTICE OF CHANGE

Written notice of all changes is required (email is fine). It is necessary that the payroll department (Tom Sumner - tsumner@episcopalmaine.org) be informed of all payroll changes: salary increases, new employees, terminations, changes in status, etc. All such notices should be received at the diocesan office not sooner than 30 days or later than 7 days before the effective date. The Diocesan office assumes no responsibility for overpayment to any person unless written notice has been received 7 days in advance of the day the pay period ends. A notice of change received after a payroll is issued will not be processed until the next payroll is issued. Payroll adjustments can be retroactive. Please note that notification to the Bishop's office is not the same as notifying the payroll department.

I-9 and W-4 WITHHOLDING FORMS AND INSTRUCTIONS

Federal and state withholding forms (W-4 and W-4ME) are required for all new employees or employees wishing to change their withholding status. All new employees, including clergy, must complete the W-4 forms. If a clergyperson does not want federal taxes withheld, he/she should write “no withholding requested” on Line 7 (of the federal W-4), sign and date the form. Please make a similar notation on the state W-4ME form.

Federal and state withholdings will be calculated on the basis of an individual's withholding status (single, married), the number of exemptions listed on the Form W-4, and the salary paid by the church without regard to other income. Persons requiring additional withholding are advised to include the additional amount on the W-4

As clergy will be issued W-2s at year-end, they are considered employees of their congregations for Federal Tax purposes. As employees, they may elect to have federal and state income taxes withheld by filing a W-4 form - this is considered as voluntary withholding but can eliminate the need for quarterly filing if the correct amount of withholding is requested.

Employment Eligibility Verification (Form I-9) must be completed for each new employee. This packet does not include the 2 pages of instructions, simply the I-9 form that must be filled out. If you need the 2 pages of I-9 instructions, please click on the Forms link above.

DIRECT DEPOSIT and DIRECT DEBIT

Direct deposit has been in place since the beginning of 2001. It is the most convenient and safest way to receive paychecks. We strongly encourage direct deposit for all employees. Delays by the postal service are beyond our control and can be avoided by using direct deposit. If direct deposit is not chosen and the check is lost in the mail, we require a 7 day (from mail date) waiting period before a payroll check will be reissued. For example, if the check was mailed on a Wednesday it will not be reissued until the following Wednesday. Payroll funds can be deposited into either a checking or savings account and will be credited to each employee's bank account on the designated day – no waiting on the Postal Service. To enroll, please complete and return the Payroll Direct Deposit Authorization form found in the packet. A voided check MUST be attached to the authorization form.

We also offer direct debit – a program where congregations can authorize the diocesan office to debit their checking account for the exact amount of their payroll on the same day that payroll is processed. This avoids the worry of making sure the check is mailed in enough time to arrive here before the deadline. We have many satisfied congregations using this service and would be happy to provide references should you wish to talk to another congregation about this process. A Payroll Direct Debit form is included in this packet. A voided check MUST be attached to the authorization form.

FICA TAXES (Social Security and Medicare)

a. LAY FICA

It is the responsibility of every employer to withhold social security taxes from the wages paid to each (lay) employee in excess of $100.00 per calendar year. The rate for social security tax will be 7.65% for lay employees. This tax consists of 6.2% for Social Security and 1.45% for Medicare coverage.

b. CLERGY FICA - (FICA is part of the minimum total compensation amount set by resolution at Convention)

For purposes of FICA taxes, clergy are considered to be self-employed and, therefore, subject to a 15.30% rate. According to Canon, clergy must be reimbursed for 1/2 of the self employment tax (7.65% - which is comparable to the employer's portion of lay FICA tax). Calculate the FICA reimbursement as follows:

WITH Rectory:
(Salary + fair rental value* of Rectory + utilities) X .0765 = FICA reimbursement

* = Fair Rental Value = what it would cost someone in your area to rent the Rectory. The IRS may check this rental value, so be sure to estimate the fair rental value. It is recommended that you obtain a professional opinion of this value from a realtor or other qualified individual.

WITHOUT Rectory:
(Salary + Housing) X .0765 = FICA reimbursement

This amount should be recorded on Line b of the Payroll Enrollment/Change Form.

PAY PERIODS

We will be remitting payroll bi-weekly. Pay periods will end every other Sunday. Payroll will be processed the following Tuesday and mailed on Wednesday. Direct deposit employees will receive their pay on Thursday of EVERY other week. In the event that the week following the end of a pay period has a holiday on Thursday, the payroll processing schedule will move back one day so that paychecks will be mailed and direct deposits processed one day sooner.

PAYROLL RUN DATES - pdf

In order for paychecks to be remitted promptly to the employee, funds MUST be received in the diocesan office by every other Tuesday (see below).

EMPLOYEE CONTRIBUTION OF INSURANCE PREMIUMS

If your employee has medical/dental insurance premiums withheld from their paycheck, a check in the amount of the total withheld will be sent from the diocesan office to the church on a monthly basis. Insurance premiums will continue to be paid by the congregation.

EMPLOYEE CONTRIBUTION TO PENSION FUNDS

Employees may contribute to many qualified 403(b) pension programs provided the plan has a provision to accept contributions from the Diocese of Maine. These contributions will be deposited into the employee's account bi-weekly.

DEPENDENT CARE AND MEDICAL REIMBURSEMENT ACCOUNT WITHHOLDING

These amounts will be sent to Group Dynamic, Inc. by the Diocesan office after each payroll for credit to the employee's account. These amounts may not be changed during the plan year (1/1-12/31/08) unless you have a qualified family status change. It is also important to note that monies set aside in Section 125 Cafeteria plans must be used for qualified expenses or the money is non-refundable.

PAYROLL SUMMARY

After all enrollment forms are received in the diocesan office, each church treasurer will receive a summary listing of their payroll for 2008. This invoice will arrive early in January and will show the name of each person on the payroll, the gross salary to be paid, a "due per pay period" breakdown, and for laity only, the employer's share of social security tax.

This summary will serve as verification and billing for each period's payroll due to the diocesan office. No other notification will be sent.

HOURLY EMPLOYEE NOTIFICATION

Since each payroll period ends on a Sunday, hourly employee payroll information is due to the diocesan office no later than Monday at noon. This will allow the diocesan staff time to prepare payroll and transmit the data file to the bank on Wednesday. The best form of communication is e-mail but we are happy to communicate via phone whenever necessary.

Payment for payroll including hourly employees is a little more complicated. The most convenient and accurate way for it to be handled is using the direct debit program where the Diocese of Maine debits your checking account for the exact amount of your payroll at the same time that we process direct deposits. Please give us a call to talk about the "hourly" employee process if you would like to join the program and have hourly employees.

Please send all 2008 Payroll Enrollment Forms to the diocesan office for each employee that you wish to enroll in the Central Payroll Program by December 15, 2007.

QUESTIONS?

If you have any questions, please don't hesitate to be in touch with Tom Sumner at 1-800-244-6062,ext 38 or tsumner@episcopalmaine.org

If your congregation is interested in participating, please feel free to print off as many of these forms for as many employees as you have.