The AC 230 form is used to return salary checks for partial or full refund for employees who have not earned their full salary due to termination, resignation, death or other causes. In most cases an AC 230 is required whenever a Direct Deposit Reversal is requested.
The form can be found on the OSC website as an Excel spreadsheet and a fillable PDF. When completing an AC 230 form, all requested information must be included on the form.
When submitting an AC 230, the following deductions are not recoverable:
- CUNY Transit Program
- Garnishments (All types)
- Credit Union Deduction Code 757 Bronx St. & Child FCU (rare)
The following deductions are recoverable:
- Fingerprint Fees (431)
- Deferred Compensation (416)
- Strike/Fines (406)
- Union Dues
- Retirement
When completing the AC 230, all requested information must be completed for Blocks 1 – 17, as detailed below:
- Block 1 - Dept ID and Dept Name
- Block 2 - Agency AC230 Number This number is assigned in sequential order by the agency, beginning with #1 again in January each year.
- Block 3 - Original Check Number Should be the check number of the actual check in Paycheck Data even if a certified check or money order is provided as payment.
- Block 4 - Employee's Name
- Block 5 - NYS EMPLID Should be completed using the employee’s NYS Empl ID, not their SSN.
- Block 6 - Check the Admin. or Inst. box as it applies to your agency pay cycle. Paycheck Issue Date should be completed with the actual date of the paycheck when the employee was paid for time being returned.
- Block 7 - Returned Time Enter the number of days of returned time.
- Block 8 - From Date (MM/DD/YY) Enter the beginning date of returned time.
- Block 9 - To Date (MM/DD/YY) Enter the end date of returned time.
- Block 10 - Other Earnings/PayServ Review Paycheck Completing this block is only necessary when returning partial payments of special earning codes (ex: Loc Pay, Inc Pay, CON, OVP, etc.)
- Blocks 11 - Company, 12- Pay Group, 15- Page # and 16- Line # can be found on the top of Paycheck Earnings in PayServ.
- Blocks 13 - Position # and 14- Job Code # are found in Additional Data on the Paycheck Earnings page of Review Paycheck.
- Block 17 - Empl Record # is found in Paycheck Earnings.
- When completing the Agency Justification/Remarks section the agency should explain in as much detail as possible why employee is overpaid and when the overpayment was incurred.
AC 230 Scenarios for Review
The following are three scenarios requiring the completion of the AC 230 form. Each example details how the rest of the form should be completed in these instances. Scroll to the bottom of this section for supporting materials, including screenshots and completed AC 230 forms for each scenario.
Scenario One: A returned check for an employee who is not entitled to any of the paycheck.
Jane Q. Employee was terminated 4/03/14. Because the payroll office was not notified in a timely manner a paycheck was created for the 04/03/14 – 04/16/14 pay period.
The employee is inactive, a direct deposit reversal was requested and the funds recovered. The agency completed an AC 230 to return the funds to the state because the employee never received the funds from the paycheck and was not entitled to any of the pay.
When an employee is not entitled to any of the pay, and all of the pay is recoverable, the Refund Amount is equal to the Gross Pay of the check.
Original check figures for Blocks 19 - 24 will be found in the Paycheck Taxes panel of Review Paycheck. On the Paycheck Deductions page we see that Jane Q. Employee had a Retirement contribution (code 606), Union Dues (code 292) and Health Insurance (code HIBTRG) deducted from her paycheck.
- Block 18 - Returned Amount When an entire paycheck is being returned, the Gross Amount of the paycheck is entered in Block 18. In the case of Jane Q. Employee, the entire Gross Amount is being returned; therefore, the Refund Amount for Block 18 is 1,415.60.
- Block 19 - Social Security Tax (OASDI) 83.21
- Block 20a & 20b - Medicare Tax 19.46
- Block 21 - Federal Withholding Tax 141.72
- Block 22 - State Withholding Tax 53.41
- Block 23 - NYC Withholding Tax 35.65
- Block 24 - Yonkers Withholding Tax 0.00
- Block 25 - Retirement - Normal Contribution 42.47
- Block 28 - Health Ins – Code HIBTRG 73.55
- Block 30 - Union Dues – Code 201 21.64
- Block 36 - Total of Deductions Refunded 471.11 In the case of Jane Q. Employee, all deductions can be recovered from the deduction vendors.
- Block 37 - Refund Amount Less Deductions Refunded This figure is the amount of Block 36 subtracted from Block 18 Refund Amount.
- Block 38 - Net Amount of Check Being Returned This is the actual net amount printed on the paycheck.
- Block 39 - Balance Due to Employee If the employee were entitled to any of the paycheck in question, this amount would be entered in Block 39 by subtracting the amount of Block 37 from the amount of Block 38. Since Jane Q. Employee is not entitled to any of the paycheck being returned, this amount should equal 0.
- Block 40 - Name of Payee Verify this name matches the employee name in Block 4.
Scenario 2 - A returned check for an employee not entitled to any of the paycheck who has an unrecoverable deduction.
Susan Doe is not entitled to any of the check being returned, and has one unrecoverable garnishment deduction.
When the employee is not entitled to any of the pay and there are unrecoverable deductions, i.e. garnishments, returning the entire check will not be enough for the State to recover all of the money. The Refund Amount will be less than the Gross Pay on the check.
- Block 18 - Returned Amount 1784.16
The Gross Amount of the overpayment is 1990.98. But because Social Security and Medicare Tax cannot be recovered on the amount of the unrecoverable garnishment deduction the agency must complete the following calculation to ensure that the correct amount is reported to the IRS as taxable wages:
- Divide the unrecoverable amount by the unrecoverable factor for SS/Med: 191.00 / .9235 = 206.82
- Subtract the resulting amount from the original gross amount for the total Returned Amount: 1990.98 – 206.82 = 1784.16
Original check figures for Blocks 21 - 24 will be found in the Paycheck Taxes panel of Review Paycheck. Because Susan had an unrecoverable garnishment deduction and Before Tax health insurance deducted from her paycheck, the Social Security Tax and Medicare Tax must be recalculated.
Note: Both Social Security and Medicare tax must be accurately calculated to within $.01 to be accepted. OSC will make a correction if the amounts shown on the AC 230 form are off by more than $.01.
- Block 19 - Social Security Tax 107.81
When there is an unrecoverable deduction, Social Security tax must be calculated on the adjusted gross amount being returned in Block 18 minus any Before Tax deductions. To calculate the accurate Social Security tax to be returned:
- Subtract any Before Tax Deductions from the amount in Block 18: 1784.16 – 45.32 = 1738.84
- Multiply that amount by the Social Security factor of .062: 1738.84 X .062 = 107.81
- Block 20a & 20b - Medicare Tax 25.21
When there is an unrecoverable deduction, Medicare tax must be calculated on the adjusted gross amount being returned in Block 18 minus any Before Tax deductions. To calculate the accurate Medicare tax to be returned:
- Subtract any Before Tax Deductions from the amount in Block 18: 1784.16 – 45.32 = 1738.84
- Multiply that amount by the Medicare factor of .0145: 1738.84 X .0145 = 25.21
All deductions other than the garnishment should be returned since the employee was not entitled to any of the earnings.
- Block 21 - Federal Withholding Tax 269.35
- Block 22 - State Withholding Tax 99.63
- Block 23 - NYS Withholding Tax 54.69
- Block 24 - Yonkers Withholding Tax 0.00
- Block 25 - Retirement - Normal Contribution 0.00
- Block 26 - Retirement - Loan 174.00
- Block 28 - Health Ins – Code HIBTRG 45.32
- Block 30 - CSEA Dues – Code 201 25.19
- Block 31 - CSEA ACC/HTH – Code 307 62.14
- Block 32 - CSEA PREM LIFE – Code 358 21.28
- Block 33 - CSEA PERS LINE – Code 390 90.23
- Block 36 - Total of Deductions Refunded - 974.85
- Block 37 - Refund Amount Less Deductions Refunded 809.31
To calculate, subtract Block 36 from Block 18: 1784.16 - 974.85 = 809.31
- Block 38 - Net Amount of Check Being Returned 809.31
- Block 39 - Balance Due to Employee 0.00
To calculate, subtract Block 37 from Block 38: 809.31 - 809.31 = 0.00
Note: The employee still owes the unrecoverable garnishment amount of 206.82 to New York State.
For AC 230s with unrecoverable deductions, double check your work by doing the following calculation:
- Add Block 36 (Total of Deductions Refunded) to Block 37(Refund amount less deductions refunded). Total should equal Box 18 (Returned Amount): 974.85 + 809.31 = 1784.16
- Add that amount to the Unrecoverable Deduction Factor (Total should equal original gross amount on paycheck): 1784.16 + 206.82 = 1990.98
Scenario 3 – A returned check for an employee who is entitled to a portion of the paycheck.
Samuel Adams was paid for 10 days but was actually overpaid one full day.
- Block 18 - Returned Amount 82.83
Because he is entitled to 9 days’ pay the gross amount of the overpayment will be equal to one day paid at Samuel’s daily rate. To calculate the daily rate divide the bi-weekly rate by 10 days: 828.34 / 10 = 82.83
To accurately calculate the withholding amounts for a partial return, you must next determine how much the employee should have been paid. To calculate this, subtract the amount the employee is not entitled to from the gross amount paid: 828.34 - 82.83 = 745.51.
Next, use a web based paycheck calculator such as PaycheckCity.com or a similar tool to accurately calculate the withholding amounts needed to complete Blocks 19-35. Using an online tool ensures that the appropriate year’s tax tables are used to calculate the withholdings.
To complete these calculations, OSC has developed the AC 230 worksheet to assist agencies. Enter the check amounts from Review Paycheck in the ORIGINAL CHECK column and the withholding amounts calculated at Paycheckcity.com in the SHOULD RECEIVE column.
The worksheet will calculate the RETURN amounts, which should be used to complete the AC 230.
Note: These figures should not be calculated on the Refund Amount, or by dividing the original deduction amount by 10 and multiplying by the number of days lost. These shortcuts will result in inaccurate withholding amounts and incorrect figures being reported to the IRS.
- Block 21 - Federal Withholding Tax 11.48
- Block 22 - State Withholding Tax 4.74
- Block 23 - NYC Withholding Tax 2.91
- Block 24 - Yonkers Withholding Tax 0.00
- Block 25 - Retirement - Normal Contribution 0.00
- Block 26 - Retirement - Loan 1.00
- Block 28 - Health Ins - Code HIBTCU 6.32
- Block 30 - PSC Dues - Code 470.45
- Block 36 - Total of Deductions Refunded - 19.58
- Block 37 - Refund Amount Less Deductions Refunded 63.25
To calculate, subtract Block 36 from Block 18: 82.83 - 19.58 = 63.25
- Block 38 - Net Amount of Check Being Returned 692.41
- Block 39 - Balance Due to Employee 629.16
To calculate, subtract Block 37 from Block 38: 692.41 – 63.25 = 629.16
- Block 40 - Name of Payee Samuel Adams
A copy of the AC 230 worksheet must be attached to the completed AC 230 form.
Other things to keep in mind when completing the AC 230:
- When requesting a direct deposit reversal, an AC 230 should be submitted immediately.
- When returning checks for contract employees, CON on the Additional Pay panel should be end dated whenever possible.
- The Net amount, not the Gross, should be recovered from the employee when collecting overpayments.
- Unrecoverable deductions are owed to New York State by the employee.
- Money orders, certified checks or teller’s checks are the preferred method of payment; personal checks may delay AC 230 processing.
Resources and Other Material
Supporting Materials for Scenarios Screen shots and completed AC 230 forms for the scenarios discussed in this section.
Payroll Bulletin 165 Issued June 23, 2000 Changes in the Salary Refund Process (AC-230's)
The Salary Refund & Exchange Process On-demand training presentation, 2014 Fall Conference