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PA 75 Update Jan 2018

Status Update on P.A. 75 Refund

January 30, 2018

I wanted to take a moment to update everyone on the status of the P.A. 75 Refund (a.k.a. ”the 3% refund”).  Kathy Gregory, our payroll specialist, has been working diligently on solving a number of issues to permit the release of these funds this Friday, February 2 as indicated in previous communications.  Please read the following information as we attempt to keep all interested parties updated.

Active Employees – I can happily report that the file has been created and sent to our bank releasing funds to current active Avondale employees.  These refunds should appear in your bank account this Friday as planned.  Please log into Employee Web for the paystub relating to this refund).

Inactive Employees – Our payroll software is not able to process two payrolls on the same calendar day (this is a safe guard to prevent duplication of files).  That being said, we are moving ahead to create and send the appropriate file to the bank to release refunds to former employees in time to meet the deadlines for a Friday, February 2 deposit.  We plan on printing payroll stubs for all inactive employees and mailing these stubs out Friday as well. 

Deceased Employees – We are still awaiting guidelines on the distribution of refunds to deceased former employees.  There are nine individuals owed refunds that have passed.  Information relating to the release of these funds has been inconsistent.  We anticipate some type of formal guidance later this week.  Once we have a process in place, we will contact the decedent’s estate and make preparations for the release of these funds.

Taxation – Like it or not, there are internal Revenue Service (IRS) rules in place that dictate the amount of taxes being withheld.  Please note the two types of withholdings below:

1)    For persons that have received a pay from Avondale in calendar 2017 or 2018 (including former employees who were paid during this time), IRS Publication 1036 requires us to withhold a flat 22% of pay.  (There is another alternative calculation, however, due to the time to program our software, the additional manpower required, and the delay in sending the refund, the alternative was not a viable option).  Add to the federal withholding, the State of Michigan has us withholding 4.25% and another 7.65% for FICA (social security), thus the total withhold for most employees is approximately 34%.

2)    For persons not in the above group (inactive former employees), the Form W4 that we required allows us to withhold based on the new 2018 current tax rates allowing for the number of exemptions claimed.  

Taxation (continued) – We have been advised by our auditors that these refunds are subject to Michigan taxation as wages even though the recipient may no longer be a resident of the state.  I strongly urge all non-residents to seek professional advice when preparing their 2018 tax returns (due April 2019) for guidance on the reporting of these wages.

Interest calculated by the Office of Retirement Services (ORS) is being included within the refund payments being processed.  Avondale is NOT withholding taxes on the interest nor will we be reporting the interest to recipients on IRS Form 1099-INT as the amounts fall below required reporting thresholds by the IRS.  All recipients are reminded that interest IS taxable by the IRS.  Again, please seek professional tax advice when filing your 2018 returns as to the treatment and reporting of this interest amount.

For those inactive former employees who did not receive their refund this Friday, the next processing deadline is Friday, February 23 for release of monies on March 2.  All former employees must submit a new Form W-4, MI-W4 and direct deposit form by this deadline to receive their refund March 2.

As of today, we have processed refunds for almost all active employees (exception being those who have requested additional time to determine tax alternatives) and 133 out of 248 inactive former employees.  We are actively attempting to reach the remaining 115 inactive former employees.

Please help us to reach everyone involved by: 

  • Contacting friends and former colleagues to make sure they know of this refund by referring them to the District’s website or have them call the District’s Human Resources Office at 248-537-6038.
  • Complete and send in the required documents as soon as possible.  Links to each document are provided on this website.
  • Update your account with ORS by logging into
Please help us to reach everyone involved by: This has been a monumental task to process these refunds.  Many hours of work have been added to our schedules to affect an early February payout.  We believe we are among the first districts in the state to accomplish this task.  The next time you speak to Phyllis Fairbairn (Human Resources) or Kathy Gregory (Payroll), please thank them for a job well done.

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