With the passage of the Trade Adjustment Assistance Extension Act of 2011 (PL 112-40), the states have passed legislation to penalize employers and third-party vendors for providing wrongful or late information regarding a claim.
If a pattern exists of submitting wrong or late information, the right to protest the claim may be lost, and in some cases, a penalty is issued for the late claim.  What does this do to your unemployment tax rate?

The loss of a claim results in a benefit charge to your unemployment account which can increase next year’s tax rate.    For most benefit ratio states, the benefit charges can affect a rate for three years depending on the computation dates.     For a reserve ratio state, the benefit charge must be repaid through contributions.   Listed below is a chart showing the benefit charge computation dates for the 2015 rate year.
Benefit Charge Chart-April
Another aspect of tax cost are employees who are misfiled or not reported to any state agency.   This sometimes happens when an employee moves from state to state, they are miscoded when hired, or an employer is new in the state, and the payroll vendor does not have an account number in which to report the individual.    Many states are issuing non-reporting penalties such as New York who is assessing an employer $25.00 per employee.    The contributions are then due for that employee, plus interest.   In some cases, the rate can then be revised causing the employer to owe additional taxes with interest on the new rate across the total taxable payroll.   A voluntary contribution can also be denied due to a penalty being owed for misreported employees.   Listed below is the computation and number of years a misreported employee could affect the 2015 tax rate.  The dates remain the same for each rate year.   For example, the 2014 computation end date for taxable payroll and contributions for Alabama would be 6/30/2013.

Taxable Payroll-April

Another area of scrutiny for UI Integrity is the registration of a new entity in a state.   If one employee moves from one federal identification to another to start a new business, a transfer of experience may be required.   Although the effects are minimal with a low number of employees, we have seen employers penalized for larger groups that had an adverse effect on future rates years.    Some states have performed audits resulting in the consolidation of all accounts in their jurisdiction with a higher rate as a result.    If a new entity is formed or a new state is added, full disclosure whether employees or assets were moved to the new federal identification number is highly recommended.    A state can revise rates for prior years as long as the statute of limitation is not exceeded.

If you have any questions, please contact your CCC Tax Analyst.


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