Get a TINS user’s tune up
Eliminate potential knocks and pings to improve your efficiency

Originally Published in Statewise Spring 2009

by Joni Sager

Whether you regularly burn rubber in the Texas Identification Number System (TINS) or have only taken a test drive, these tips will give you a smoother ride and help prevent crashes. Apply them to be more fuel efficient as you track and process your agency’s payee information.

Do your homework AUTOmatically

Stop! Before you set up that new payee in TINS, have you searched to make sure the entity is not already set up? Do you have the proper documentation to verify the payee’s Social Security number (SSN) or federal employer identification number (FEIN)? If the payee is a foreign individual or company, have you contacted the Comptroller’s office to get a valid temporary number?

Doing a quick search is an easy task that can save work in both the short and long run. If the payee already exists under the same number, you won’t have to do the set up only to have it rejected by TINS. If the entity exists under a different number, resolving the discrepancy now will save you from possibly preparing multiple 1099s for the same payee — which are not popular with the Internal Revenue Service (IRS) or the payee. This is a mistake you don’t want to make.

What could lead to a payee being set up under a different number?

• Sometimes a number or two has been transposed.
• A sole owner could be set up under either the owner’s SSN or FEIN.
• The number has the wrong prefix. You should use 1 for FEIN or 2 for SSN.
• A valid Comptroller-issued temporary number for foreign payees wasn’t used. Only Comptroller-issued numbers should have a prefix of 3 .

If you discover something awry in TINS or need a temporary number for a foreign payee, please contact the Payee/Payment Services (PPS) Help Desk.

Also, require payees to do their homework and provide you with documentation before you set them up in TINS. This must be something from the IRS with the FEIN or the Social Security Administration (SSA) with the SSN. Two cautions:

• Do not accept the IRS Request for Taxpayer Identification Number and Certification (W-9) form.
• SSNs do not begin with a nine. These numbers are individual taxpayer identification numbers (ITINs) issued by the SSA to foreign entities.

It’s also a good idea to double-check that the SSN or FEIN provided is valid. The SSA and IRS provide websites for this purpose:

• SSN Verification
• FEIN Verification

Hold more than the spare change in your cup holder

Another good reason to make sure the payee number is correct: It can mean more money for your agency through the warrant hold program. People or businesses due money from the state can have the amount they receive reduced to settle any outstanding state debt. But this program only works to its fullest potential if the information in TINS is correct and up to date.

Some agencies may think reporting debt to the Office of the Attorney General (OAG) is the only way to get their money back. This overlooks the fact that if debtors don’t have the money, your agency won’t get paid. Warrant hold is a sure thing. The debtor may not be a state payee now, but you would be surprised how often state debt catches up with people when they perform work for the state or discover unclaimed property funds.

In fiscal 2008, the state recouped $5.3 million from warrant hold offsets. How much more could this number be if every agency recorded every debt in TINS?

So, remember to report any outstanding debt to the Comptroller’s office as well as the OAG. If your agency isn’t already a hold source agency for at least reasons like salary or travel overpayments, remedy the situation. It’s not just the smart thing to do; it’s the law (Texas Government Code Section 403.055).

For all the details about participating in the warrant hold program, see the Hold Procedures Guide.

Brake now to avoid bailing out of trouble later

The phrase "warrant hold" can have an entirely different meaning: Agencies are required to hold post-dated payroll warrants until the date of issue. Unfortunately, this does not always happen, resulting in bad consequences all around.

To receive payroll warrants before payday, all agencies that process payrolls through Comptroller systems — even higher education reimbursement warrants — must sign a bailment contract with the Comptroller’s office promising not to distribute payroll warrants before payday. The bailment contract is signed by the agency head or chief fiscal officer. Tip: If your agency management changes, make sure an authorized official has completed the bailment contract. The contract is available under Payment Services Forms.

For agencies that abide by this contract, the Comptroller’s office provides post-dated payroll warrants before payday to facilitate distribution to employees. For instance, if some field office employees are still paid by warrant, then headquarters can overnight the payroll warrants to the field office to distribute on payday.

So far, so good. But here’s an example of what happens if an agency doesn’t abide by the rules:

• Say an employee will be on vacation on payday. To be nice, the agency goes ahead and gives the employee the salary warrant in advance.
• The employee deposits the warrant in the bank before payday and heads to Vegas.
• The employee’s bank sends the warrant to the Treasury for payment.
• The Treasury sees the date and sends it back to the bank as an unpaid item.
• Fiscal Management is notified and sends the agency a letter laying out the details of the contract violation.
• The agency has to demonstrate what steps it will take to correct the error and ensure that this doesn’t happen again.
• The employee comes back from vacation to discover all kinds of bad things have been happening in his or her checking account.

Maybe paying the employee in advance wasn’t such a nice thing to do after all. This sad sequence of events happened 43 times in fiscal 2008 and 13 times in the first quarter of fiscal 2009.

If an agency receives three warnings, the Comptroller’s office may cancel the bailment contract and not release the agency’s payroll warrants until payday. Want a way to avoid worry about bailment warnings or warrants? Persuade employees to switch to direct deposit.

Money is green, but direct deposit is greener

You may already know that direct deposit allows payees to get their money faster while saving the state the expense of printing and processing warrants. But did you know 100,000 tons of carbon dioxide could be reduced annually in the U.S. with the elimination of trips to the bank to deposit checks?

According to Scientific American magazine, "Environmentalists are urging consumers to put away their checkbooks and fire up their computers in the name of conservation. The fact that online banking and bill payment saves trees is a no-brainer. Less obvious is the reduction of resources required to make, ship and ultimately discard paper."

Here are some other facts from electronicpayments.org:

• Direct deposit has been around for almost 40 years, and 97 percent of direct deposit payees are satisfied.
• Direct deposit payments never get lost. The rare problems can be quickly resolved.
• Direct deposit is confidential. Money is transferred electronically and passes through fewer hands than a check.
• Almost 85 percent of identity theft starts with someone seeing your personal financial information on paper.

Need more ammunition to convince payees? FMX summarizes the top five reasons to sign up for direct deposit:

• Prompt availability of funds
• Fully traceable payments
• No lost or stolen warrants
• No more waiting in long bank lines
• Advance payment notification to provide one business day advance notice before a payment is made

Every year sees more progress in the reduction of warrants issued by the state, but we are not there yet. For the direct deposit set up forms for employees or vendors, see Direct Deposit Forms.

GPS for your mail

Okay, you can now amaze people with your direct deposit intelligence. But are you ready for the Intelligent Mail barcode requirement? The U.S. Postal Service has announced a May 2011 deadline to use Intelligent Mail or pay the first class rate for letters and flats. The Comptroller’s Texas Procurement and Support Services (TPASS) Division has set a target date of May 2010 to have all state agencies use Intelligent Mail. This will allow enough time to resolve any glitches before the drop-dead date.

According to Uncle Sam, "The Intelligent Mail barcode is a new Postal Service barcode used to sort and track letters and flats. The Postal Service is promoting use of the Intelligent Mail barcode because it expands the ability to track individual mailpieces and provides customers with greater visibility into the mail stream. The Intelligent Mail barcode combines the data of the existing barcodes, as well as other data, into a single barcode."

Intelligent Mail offers tracking for each piece of mail with a full suite of services depending on your needs. Although TINS validates addresses for a mail code setup or change, the system will not provide the required barcodes.

With the advent of this new technology at the agency level, the Comptroller’s office is considering no longer printing the current barcode on the face of the warrant.

If you use a presort vendor, chances are your mail is already intelligent. You may want to investigate what additional barcoding services are available that might benefit your agency.

If you handle mailings in-house, now is the time to explore your options to meet the upcoming requirement. A good way to do that is to look into the mail service available through TPASS. The Council on Competitive Government developed a money-saving contract for mail services, and 80 agencies in Travis County are using the contract for their mail services.

Learn more by talking to Joe Klaus, TPASS state mail office contract administrator.

Keep your engine running smoothly

The Comptroller’s office encourages agencies to review their TINS processes and implement changes that can help reduce security risks.

Here are some tools to help ensure your TINS payee and direct deposit maintenance processes run smoothly:

• Know your customer. When something appears suspicious, trust your instincts and check it out. It may only take a simple phone call to verify the information.
• Obtain all maintenance requests in writing and on approved forms. Never accept maintenance requests over the phone.
• Obtain a voided check from your customer for increased security and verification purposes.
• Have the payee provide missing information before processing the form.
• Do not give information (e.g., bank account, etc.) over the phone. Ask the payee to confirm all sensitive information.
• Obtain phone numbers whenever possible. This information may be useful should you have a need to verify information in the future.

Should the Comptroller’s office receive a request to change existing direct deposit information in TINS, the form will be forwarded to the direct deposit custodial agency for verification and processing.

Test drive our new code

Because the 79th Legislature broadened the base of businesses subject to the state franchise tax and restructured the tax, another TINS ownership type was needed. A new TINS ownership type of "L" is being established to represent Texas limited partnerships.

The Texas limited partnership (L) ownership type should be set up under a federal employer identification number with a Texas charter number. Texas limited partnerships are currently set up in TINS under the ownership type of Other (N) and will automatically be converted to L.

If you haven’t already, make sure your EFT file transmissions are set up for the new code. For more information, see ACR 23479.

For more information

Payee number issues, bailment contracts, direct deposit and other questions:

Payment Services Help Desk at (512) 936-8138
tins.mail@cpa.texas.gov

Warrant hold program:

Franny Villareal at (512) 463-4036
franny.villareal@cpa.texas.gov

Intelligent Mail requirements or TPASS state mail office contract:

Joe Klaus at (512) 463-2221
joe.klaus@cpa.texas.gov

Bar code suggestions or questions on new TINS ownership type:

Joan Hayes at (512) 475-0301
joan.hayes@cpa.texas.gov