4.1.1      Audit Validity of Wage Adjustment Reports

[ 4.1.1.1 - Procedure ] [ 4.1.1.2 - Successor Liability Check List ]

Conduct audit to determine validity of resulting credits, and authorize release of Adjustment Reports posted to the electronic tax file by data entry processing;

4.1.1.1     Procedure

The primary objective of this function is quality assurance and control of credits produced by adjustment report Forms C-5, overpayments, processing of changes to tax rates, and other accounting transactions which may have been initiated by another department.

The tasks performed to achieve the stated objective involves review and verification that the adjustment report processed correctly. This requires review of the Employer Master File (EMF) to ensure that any related factors such as Surplus Credit computation, late payment penalties, or remittance allocations have worked correctly. In addition, the revised data of total, taxable, tax computation, report and remittance dates should be in agreement with the adjustment report which brought about the changes to the calendar quarter.

All adjustment report Forms C-5 are routed through the Employer Accounting and Review Unit for review and disposition. Additional action is required for Forms C-5 that cause a decrease to the taxable wage figures and produce credits.

The procedures for processing Adjustment Reports (Forms C-5) are as follows:

• The TWC Controller Department reviews adjustment report(s) and initiates the processing of adjustment report(s), sending to Data Entry before releasing the documents to the Tax Department ;
  
  
• Adjustment Reports are not generally processed against quarters more than three years old. Each case is analyzed on its own merit to determine the facts of the case.
  
  
• System stop "81 Wage Adjustment Processing - C5" is automatically placed on an account when adjustment reports are decreasing in taxable wages.  Additionally, if the adjustment has not passed system edits, the system stop remains in effect until the reviewing accounts examiner releases the stop.
  
  
• Adjustment Report (Form C-5) is delivered to the Tax Department with the tax run after microfilming, entry onto Transaction Log Screen (TDO), and keying by Data Entry.

If an adjustment is for quarters that are in "pending" or "final assessment", these C-5s are placed on the Transaction Log but are not processed by the system. An edit directs the C-5s to the Collection Section for review. After review, the Collection Section will advise the reviewing examiner whether or not to process the adjustments. The accounts examiner will place a comment on the comment screen reflecting the instructions received from Collections. A copy will be sent to Micrographics for filming and Accounts will notify the employer if the adjustment reports cannot be processed.

On rare occasions, the Controller Department may formulate an Adjustment Report (Form C-5) from a "revised" Form C-3, as sent from an employer. The standard procedure is for the Controller Department to pull the copy marked "amended" or "corrected" and send it directly over to the Tax Department for review and action when a  "revised" report Form C-3 is received. The examiner in Accounts will either make the necessary correction using the AAW screen, prepare and process a C-5 and/or C-7 for adjustment purposes, or return the amended C-3 to the employer with C-5 and/or C-7 Forms.

The accounts examiner reviews the account for:

• indication of proper tax rate computation;
• proper monetary application;
• proper assessment of any penalty amounts;
• indication of predecessor, or successor tax liability;

The examiner's responsibility will be to monitor accounts with credit balances to determine if there is predecessor liability. If appropriate, the credit will be transferred to the predecessor to satisfy the underpayment. A successor liability checklist with exceptions is used as a guide to determine if the credit should be transferred. Further questions can be addressed to the Collections Section. 

4.1.1.2    Successor Liability Check List

From time to time it is necessary to perform further adjustments upon an account.  Other reasons exist where the adjustment report requires further action, such as when the beginning balances do not match at the point of data entry.

If during the use of the input action screens erroneous data is attempted, several on-screen warnings will be displayed, depending on the adjustment attempted.  Samples of subject on-screen messages include:

• "REMITTANCE NOT FOUND"
• "HIGHLIGHTED AREAS IN ERROR"

With the display of an on-screen message, the screen is disabled, preventing further input of data.  Some corrective action is then taken, depending upon the error condition noted, and another on-screen/on-line input attempted.

For example, if Column 'A' of the Adjustment Report does not match wages keyed into the system, the Transaction Log (TDO screen) will show record of the C-5, but it will not come up on the Detail Quarter (ADT screen).  When the C-5 is sent, the accounts examiner must review both the C-5 and the account to determine necessary adjustments to be performed.

Action to be taken will be to either adjust the C-5 and reprocess to the Controller Department, or correct the calendar quarter with the Adjust Quarterly Charges (AAW screen).  In either case, a comment should be placed on Field Tax Comment ( FTC screen).

In those cases where a communication with the employer is necessary to resolve an adjustment issue, the accounts examiner may initiate a telephone call, letter, or Field Tax Office contact.

An example of the system stop which posts can be identified with access to the Stop Information (TSI screen) which will then display:

STOP DATE:                       date after stop was entered

RELEASE DATE:                date stop was released

STOP REASON:                  81 WAGE ADJ. PROCESSING C5

DAYS:                                  9999 number of days since stop was put on the EMF

ACCOUNTS EXAMINER: SYSTEM       

Also, note that, from the Tax System User's Manual, certain output and transactions are halted by individual classes of Stops.  In the example given, a coded "81 Stop" has the effect of halting the following transactions in an account:

• Application of Money (other than a report)
• Statement (daily and monthly)
• Default Notice
• Tax Lien
• Bank Claim Notice
• Rate Change
• Archive Quarterly Detail
• Assessment     

An accounts examiner will release the stop once the account has been reviewed and any necessary action has been performed. The release of the stop will allow the transactions that were halted to resume.

---