USPS Calendar Year-End Close Manual –
Reconciling Report 3011 and Report 527
Review Report 527
Report 527 will list all records that are out of balance between the HØA (tax master file) and the HØN (employee pay history) databases. The report displays the field, the amount found on each database, and the difference between the two for each out-of-balance condition.
Research Discrepancies on Report 527
Research each discrepancy carefully. Discrepancies can be due to:
- Items not fully processed through USPS. Manual paysets and Warrant/Direct Deposit Reversals update the tax and taxable accumulators on the HØA database the night they are processed, but only update employee pay history after a final payroll has been run.
- If the transactions are still on the pending file, the tax master file (HØA) has been updated, but employee pay history (HØN) has not; submit a final payroll to correct this situation.
- If the transactions were deleted from the pending file, the tax master file (HØA) was updated, but employee pay history (HØN) was not; use the HØATC and HØATB to verify that the employee’s tax related information reflects the adjustment. If not, submit an LOA to correct the tax history file; employee pay history (HØN) cannot be corrected.
- Prior year check reversals completed in the current year. HØN would have been updated in the current year and the HØA would have been updated in the prior year. This will generate a 527. Corrections are not needed.
- An LOA was submitted previously to correct the HØA. Since employee pay history cannot be changed by LOA, any change you made to the tax master file during the year will have affected HØA without affecting HØN.
For example, if an employee had been set up as FIT Exempt (
FIT STATUS 1on HØBUD) in error and has been paid under this status — and an LOA was submitted to correct the FIT taxable wages and FIT non-taxable wages — that LOA would affect the tax master file without affecting pay history; HØN won’t balance with HØA, and a discrepancy will appear on report 527.
Use the HØATB and HØATC screens to verify that the tax master file is correct. If so, no action is required.
W‑2s are generated from the HØA database. If an error is found on the HØA database, an LOA can be submitted to fix the problem. If an error is found on the HØN database and HØA is correct, the employee’s W‑2 will be correct; the discrepancy cannot be corrected.
Keep supporting documentation related to all reconciling items.