<html xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:st1="urn:schemas-microsoft-com:office:smarttags" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv=Content-Type content="text/html; charset=us-ascii">
<meta name=Generator content="Microsoft Word 11 (filtered medium)">
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PostalCode"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="Street"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="City"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PlaceType"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PlaceName"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="address"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="State"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="place"/>
<!--[if !mso]>
<style>
st1\:*{behavior:url(#default#ieooui) }
</style>
<![endif]-->
<style>
<!--
/* Font Definitions */
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:11.0pt;
font-family:Calibri;}
a:link, span.MsoHyperlink
{color:blue;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{color:purple;
text-decoration:underline;}
pre
{margin:0in;
margin-bottom:.0001pt;
font-size:10.0pt;
font-family:"Courier New";}
span.EmailStyle17
{mso-style-type:personal-compose;
font-family:Calibri;
color:black;
font-weight:normal;
font-style:normal;
text-decoration:none none;}
@page Section1
{size:8.5in 11.0in;
margin:1.0in 1.25in 1.0in 1.25in;}
div.Section1
{page:Section1;}
-->
</style>
</head>
<body lang=EN-US link=blue vlink=purple>
<div class=Section1>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'>Earlier this week, we communicated about
the imputed value of health insurance coverage for children over age 19. That
message is pasted in below. We have now received updated instructions
from the Department of Revenue about how to report these amounts on Form
W-2. We will post the imputed value amount in <st1:address w:st="on"><st1:Street
w:st="on">Box</st1:Street> 14</st1:address> with a label “ACA Child”.
At the time W-2s are issued, we will provide you with an informational
message to give to affected employees. PEBB is sending a report to
each affected agency with a listing of all employees for whom an imputed value
will be reported. This topic is on the agenda for this afternoon’s
OSPS Payroll Forum. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'><o:p> </o:p></span></font></p>
<p class=MsoNormal><u><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'>Message From DOR – Dated 12/16/2010<o:p></o:p></span></font></u></p>
<p class=MsoNormal><b><font size=2 face=Calibri><span style='font-size:11.0pt;
font-weight:bold'>Affordable Care Act:<o:p></o:p></span></font></b></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>As
a result of changes made by the recently enacted Affordable Care Act, health
coverage provided for an employee's child under 27 years of age is now
generally tax-free to the employee <b><i><span style='font-weight:bold;
font-style:italic'>for federal purposes</span></i></b>, effective March 30,
2010. Previous law allowed such treatment for dependents under 19 years
of age, or under 24 if the dependent was a student,.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><st1:place w:st="on"><st1:State w:st="on"><font size=2
face=Calibri><span style='font-size:11.0pt'>Oregon</span></font></st1:State></st1:place>
<b><i><span style='font-weight:bold;font-style:italic'>has not adopted these
changes</span></i></b>. As a result, any expanded coverage provided for
adult children under the Affordable Care Act is taxable income to the employee
receiving the benefit for <st1:place w:st="on"><st1:State w:st="on">Oregon</st1:State></st1:place>
purposes. The legislature <b><i><span style='font-weight:bold;font-style:
italic'>may </span></i></b>act to adopt this exclusion in the 2011 session, but
at this time it cannot be predicted with any certainty that such action will
occur. <o:p></o:p></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'>The
department recommends that employers take the necessary steps to include these
amounts on the affected employee’s W-2 statement for tax year 2010.
Please report this amount in <st1:address w:st="on"><st1:Street w:st="on">Box</st1:Street>
14</st1:address> and l<font color=black><span style='color:black'>abel this
amount “<b><i><span style='font-weight:bold;font-style:italic'>ACA Child</span></i></b>.”
</span></font><b><span style='font-weight:bold'>Do not</span></b> modify the
state wages in <st1:address w:st="on"><st1:Street w:st="on">Box</st1:Street> 16</st1:address>. This
will allow taxpayers to easily identify the appropriate amount of income to
report if the legislature does eventually decide to exclude these amounts from <st1:place
w:st="on"><st1:State w:st="on">Oregon</st1:State></st1:place> taxable income.
We will post further updates and instructions to taxpayers on our website
in January.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><span style='font-size:11.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'><o:p> </o:p></span></font></p>
<p class=MsoNormal><u><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'>Message Sent by OSPS 12/15/2010<o:p></o:p></span></font></u></p>
<pre><font size=2 face="Courier New"><span style='font-size:10.0pt'>PEBB sent e-mail communication last night to employees who have a child<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>aged 19 or over enrolled in PEBB benefits. See attached.<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>PEBB states, "Your payroll will add the value of this coverage...".<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>OSPS will add the amounts given to us by PEBB to the affected employee's<o:p></o:p></span></font></pre><pre><st1:State
w:st="on"><st1:place w:st="on"><font size=2 face="Courier New"><span
style='font-size:10.0pt'>Oregon</span></font></st1:place></st1:State> taxable income. This will be on the employee's W-2. Agency<o:p></o:p></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>payroll does not need to do anything for this to happen. At the moment<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>we do not have a finalized listing from PEBB sorted by agency. A list<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>will be provided to agency payroll whether that comes to you through the<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>PEBB.Benefits system or from OSPS. <o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>Please be aware that the Department of Revenue has a "reconnect bill"<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>for Legislative action during the 2011 session that, if passed, would<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>eliminate the taxability of the insurance coverage retroactive to 2010<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>and going forward. Should the Legislature reconnect the <st1:State
w:st="on"><st1:place w:st="on">Oregon</st1:place></st1:State> tax law<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>to the federal law, OSPS will issue corrected W-2s to reduce the <st1:State
w:st="on"><st1:place w:st="on">Oregon</st1:place></st1:State><o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>taxable income previously reported. <o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>Affected employees may wish to delay filing their 2010 <st1:State
w:st="on"><st1:place w:st="on">Oregon</st1:place></st1:State> income tax<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>return until this has been resolved. We will prepare communication<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>about this to be distributed to affected employees with their 2010 W-2.<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>This topic is on the agenda for the OSPS Payroll Forum scheduled for<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>Friday 12/17/2010. OSPS will provide an update on this project and<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>answer questions to the degree that we can. <o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>As always, we recommend that employees consult with their tax<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'>professional for answers to their individual tax questions.<o:p></o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre><pre><font
size=2 face="Courier New"><span style='font-size:10.0pt'><o:p> </o:p></span></font></pre>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'><o:p> </o:p></span></font></p>
<p class=MsoNormal><strong><b><font size=2 color=gray face=Calibri><span
style='font-size:11.0pt;font-family:Calibri;color:gray'>Sharon McKeehan,
Manager<o:p></o:p></span></font></b></strong></p>
<p class=MsoNormal><st1:State w:st="on"><st1:place w:st="on"><strong><b><font
size=2 color=gray face=Calibri><span style='font-size:11.0pt;font-family:
Calibri;color:gray'>Oregon</span></font></b></strong></st1:place></st1:State><strong><b><font
color=gray face=Calibri><span style='font-family:Calibri;color:gray'> Statewide
Payroll Services<o:p></o:p></span></font></b></strong></p>
<p class=MsoNormal><font size=2 color=gray face=Calibri><span style='font-size:
11.0pt;color:gray'>DAS/State Controller's Division</span></font><font
color=black face="Times New Roman"><span style='font-family:"Times New Roman";
color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><st1:Street w:st="on"><st1:address w:st="on"><font size=2
color=gray face=Calibri><span style='font-size:11.0pt;color:gray'>155 Cottage
Street NE</span></font></st1:address></st1:Street><font color=gray><span
style='color:gray'>, U-50<o:p></o:p></span></font></p>
<p class=MsoNormal><st1:place w:st="on"><st1:City w:st="on"><font size=2
color=gray face=Calibri><span style='font-size:11.0pt;color:gray'>Salem</span></font></st1:City><font
color=gray><span style='color:gray'>, <st1:State w:st="on">OR</st1:State>
<st1:PostalCode w:st="on">97301-3969</st1:PostalCode></span></font></st1:place><font
color=gray><span style='color:gray'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=gray face=Calibri><span style='font-size:
11.0pt;color:gray'>(503) 378-6777 ext. 230</span></font><font color=black
face="Times New Roman"><span style='font-family:"Times New Roman";color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'>Visit our <st1:place w:st="on"><st1:PlaceName
w:st="on">Online</st1:PlaceName> <st1:PlaceName w:st="on">Resource</st1:PlaceName>
<st1:PlaceType w:st="on">Center</st1:PlaceType></st1:place>: </span></font><font
color=gray><span style='color:gray'><a
href="http://www.oregon.gov/DAS/SCD/OSPS/">http://www.oregon.gov/DAS/SCD/OSPS/</a></span></font><font
color=black><span style='color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'> <o:p></o:p></span></font></p>
<p class=MsoNormal><strong><b><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'>How are we doing?</span></font></b></strong><font
color=black><span style='color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><strong><b><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'>Please complete our
customer service survey:</span></font></b></strong><font color=black><span
style='color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=black face=Calibri><span
style='font-size:11.0pt;color:black'><a
href="http://www.surveymonkey.com/s/SCD_Feedback"
title="http://www.surveymonkey.com/s/SCD_Feedback"><em><i><font color=maroon
face=Calibri title="http://www.surveymonkey.com/s/SCD_Feedback"><span
title="http://www.surveymonkey.com/s/SCD_Feedback"><span style='font-family:
Calibri;color:maroon'>http://www.surveymonkey.com/s/SCD_Feedback</span></span></font></i></em></a></span><o:p></o:p></font></p>
<p class=MsoNormal><strong><b><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'>Your opinion matters</span></font></b></strong><font
color=black><span style='color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><strong><b><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'>Thank You!</span></font></b></strong><font
color=black><span style='color:black'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Calibri><o:p> </o:p></font></p>
</div>
</body>
</html>