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This page contains information for Commonwealth of Massachusetts departments’ payroll teams on all aspects of state payroll, tax information, and labor cost management.

Recent Payroll Memos

Approved Fiscal Year 2022 Fringe Benefit and Payroll Tax Rates

The approved fringe benefit and payroll tax rates for Fiscal Year 2022 is 37.46% with a payroll tax rate of 1.97%.

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Tax and Payroll Updates for 2021

HR/CMS must be updated to comply with a number of IRS and Department of Revenue requirements regarding employer responsibilities for Tax Year 2021.

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Massachusetts Emergency Paid Sick Leave (MEPSL) Memo

This memo explains the MEPSL program and provides payroll instructions for how Commonwealth payroll staff are to enter pay for eligible employees.

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HR/CMS Core User Access

Core User Access to the Human Resources / Compensation Management System (HR/CMS)

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Payroll News and Updates

The HR/CMS Wordmark.
Events September 8, 2021

HR/CMS User Group Meeting

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Guidance for Departments August 6, 2021

Fringe Benefit, Payroll Tax, Indirect Cost Charges for Accounting Period 1

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CTR News and Initiatives July 14, 2021

Comptroller Issues New Policy on Digital Record Keeping

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Payroll Key Resources

Resource documents and links for departments to manage and process payroll

PowerDMS

Job aids and training materials for many payroll processes. [Login required.]

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Payroll Flow Chart

Diagram explaining the payroll cycle.

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Labor Cost Management

Labor Cost Management (LCM) is the Commonwealth's labor distribution and cost allocation system and acts as the accounting source of all payroll related MMARS financial information.

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Payroll Requirements

403(b) Tax Shelter Annuities

The Commonwealth of Massachusetts 403(b) Elective Savings Plan operates under section 403(b) of the Internal Revenue Code. Participation is voluntary.

Only departments with an educational mission may offer Plan participation to employees. These include:

  1. The Secretariat of Education
  2. Department of Higher Education
  3. Department of Elementary and Secondary Education
  4. Department of Early Education and Care
  5. State Universities
  6. Community Colleges

All employees of these departments are eligible to participate in the Plan, except that student employees whose employment is incidental to their education are not eligible.

Chargeback processing

The method of assessing Unemployment Insurance, Universal Health Insurance and the employer’s share of the Medicare tax will be through the fringe benefit rate. The rate used to determine the employer’s share of these benefits is estimated at 1.34% (check for updates). The rate is applied to the salaries expended under AA and CC object codes. There is no change in the method used to calculate the employee’s share of Medicare tax withholding.

​All fringe benefit assessments determined by these rates will be charged to object code D09.

​NOTE: Tax Chargebacks will be assessed to the account incurring the salary.

Mass update of compensation

Departments have a periodic need to update compensation for groups of employees. CTR will facilitate requests to provide mass update of compensation.

View the instructions.

Medicare

Departments are responsible for determining and/or verifying the Medicare tax status of each of their employees, and entering that status correctly into HR/CMS. This requires confirming whether an employee has a concurrent job and ensuring that both jobs have the same/correct Medicare status in HR/CMS. Because HR/CMS security does not allow for cross department view, errors sometimes occur.

In order to assist departments in ensuring compliance, report HMTAX010 allows departmemts to view any inconsistent Medicare tax status for any concurrent job from any department.

Military Pay

Implementation instructions and related documents regarding pay and other benefits for state employees called up for active military duty, and tax information for members of the United States Armed Forces, are available at the following links:

Receipt Vouchers

Receipt Vouchers are recoupments or payments back to the Payroll System to correct employee earnings, tax and other balances. The completion of the Employee Balances (Form W-2 purposes) occurs when HR/CMS shows the confirmed Off Cycle activity in Paycheck Data. The completion of the MMARS (cash) Balances occurs when the valid MMARS PRRFC (Current Fiscal Year) or PRRFP (Prior Fiscal Year) documents are automatically created by the Off Cycle activity.

If there are no accounting/distribution problems the PRRFC/PRRFP will be submitted. The Office of the Comptroller will then finalize the corresponding PRRVs.

See the Check Reversal Flowchart and the Payroll Refund Receipt Voucher (PRRV) Job Aid for additional information. (MAGNet or VPN access required).

New Hires

New hires must:

Departments are reminded to:

  • Verify the Social Security Number to Name. (This does not verify eligibility to work). Contact the Social Security Adminitsration at 1-800-772-6270. If a mismatch is identified, a corrected Form W-4 must be completed.
  • Use the Form I-9 when verifying identity and Proof of Work eligibility.
  • Validate both Name and Social Security Number when an existing HR/CMS Employee ID (EMPLID) is available
  • Verify Unemployment Insurance and Universal Health Insurance and set up. See below section “Unemployment Insurance /Universal Health Insurance”
  • Verify Medicare eligibility and set up. See “Medicare” section above.

Reporting Excessive Exemptions

For Employees that are claiming exempt status, the IRS requires employees to refile a new Form W-4 every year. The deadline is February 15. If claiming both federal and state exempt status, the IRS Form W-4 will suffice. It will not need to be filed to the IRS or Department of Revenue (DOR). DOR requires certificate “M-4” to be filed when claiming exempt from state taxes only.

Report HTAX103 titled “RESET W-4 EXEMPT EMPLOYEES – REPORT/UPDATE REPORT” has been created to identify employees in your department that do not have an new Exemption entry for the current tax year. This report is currently accessible through Document Direct.

All forms should be kept on file at the department.

The IRS Form W-4 has two conditions from which an employee can claim “exempt” from federal Withholdings (W-4 2021). Both conditions must be met:

  1. “​Last Year I had a right to a refund of all federal income tax withheld because I have no tax liability.” and
  2. “This Year I expect a refund of all federal income tax withheld because I expect to have no tax liability.”

Mass DOR Circular M (2019) states any employee with an annual salary less than $8,000.00 should not have taxes withheld.

To set-up as “Exempt” in HR/CMS, use the “Maintain Taxable Gross” radial button and enter $0 for Additional Withholdings.

Job Aid: Maintain Employee Tax Data

Retirement 2000

The Massachusetts Department of Revenue allows employees to receive the first $2,000.00 in combined Retirement Deductions and Medicare Tax to be excluded from Massachusetts Taxable Gross Wages.

From the start of the new calendar year (January) up until the $2,000.00 threshold is met, employees will have less Massachusetts Taxable Gross to deduct taxes from, thus less state taxes taken.

Employees will see a gradual increase in their Massachusetts tax withholding (sometimes up to two pay periods) as they approach the $2,000.00 threshold.

Transportation benefits

Non-cash car benefit

Employees who receive non-cash car benefits or commute in vehicles provided by the Commonwealth may be required to add that value in their reportable wages.

Non-cash parking benefit

Employers who provide employees with free parking valued in excess of the federal and state exclusion amounts are required to add any excess value as part of the employees’ gross income for tax reporting and withholding purposes.

Qualified Transportation Benefit Program

Employees who have enrolled in the Commonwealth’s Qualified Transportation Benefit Program may receive parking benefits via pretax payroll deductions up to any applicable federal and state exclusion amounts.

Unemployment Insurance / Universal Health Insurance

Unemployment Insurance (UI) and Universal Health Insurance (UHI) are employer related taxes created as an umbrella for those without health care coverage, or who are jobless.

The Commonwealth of Massachusetts, as the employer, pays these taxes, not the employee. Not all Commonwealth positions are eligible. The following job categories are exempt from UI and UHI taxes:

  • Any elected official
  • Judges
  • Board members
  • Military / National Guard
  • Work study students
  • Inmates working at an institution in which they reside
  • Patients / clients working at the institution in which they reside.

Because the exempt status is maintained at the employee level, an employee with multiple jobs will be exempt for all jobs.

Departments are required to maintain the exempt from UI / UHI tax fields in HR/CMS.

Other Pages

HR/CMS Information

Information on the HR/CMS application for core users.

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HR/CMS User Group

Periodic meetings of the HR/CMS User Group.

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HR/CMS Knowledge Center

Job aid repository for core users. [Login required.]

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