North Carolina has long been the leader in consolidating state account numbers with common ownership into one single account regardless of the separate federal identification numbers.   The key factor in the agencies consolidations is the common ownership and control between the separate state account numbers.   Prior to the Great Recession, we had seen this in practice with several employers, but the lack of personnel seemed to slow down the process.    The auditor division has once again been ramped up in North Carolina, and we expect to see more audits completed, resulting in the collapse of commonly owned entities.

According to North Carolina, once an entity is registered with their agency, no other correspondence needs to be sent as additional businesses enter the state.   However, an employer can register for a new account number, and the state will assign a new account number without notifying the employer of the legislation.    Auditors then later find there is more than one account for employers that are commonly owned.   All accounts are consolidated back to the date of inception, which usually results in a higher overall rate and monies due to the agency.   In some instances, the consolidation of accounts could result in a lower overall rate for the combined employers.  We have not seen a credit memo or a reduced rate from North Carolina based on any consolidation they have implemented.

The actions of the North Carolina account consolidations are based on NCGS 96-11.7 (C ).   The following is an extraction of the legislation:

“(c) Continuity of Control. – Any new employer that has continuity of control with an existing business enterprise shall continue to be the same employer as the existing business enterprise for this Chapter as before the existence of the new employer. The Division shall assign any new employer with continuity of control to the account of the existing business enterprise. Any new employer with continuity of control shall not request or maintain an account with the Division other than the account of the existing business enterprise. If a new employer receives a new account and the Division subsequently finds that such new employer has continuity of control with an existing business enterprise, the Division shall recalculate the annual tax rates based on the combined annual account balances of the new employer and the existing business enterprise.

Continuity of control exists if one or more persons, entities, or other organizations controlling the business enterprise remain in control of the new employer. Control may occur by means of ownership of the organization conducting the business enterprise, ownership of assets necessary to conduct the business enterprise, security arrangements or lease arrangements covering assets necessary to conduct the business enterprise, or a contract when the ownership, stated arrangements or contract provide for or allow direction of the internal affairs or conduct of the business enterprise. Control is not affected changes in the form of a business enterprise, reorganization of a business enterprise, or expansion of a business enterprise.”

North Carolina is not the only state that consolidates employers with common ownership.   California has performed consolidations over the past thirty years, which is referred to as a Unity of Enterprise.   Common ownership is a factor, but the state also reviews how the employees are paid and the business type of each employer.    If California enforces a Unity of Enterprise, the year of the audit is the implementation of a combined experience rating.   Just like North Carolina, all new business is reported under the Unity of Enterprise as additional business become active in the state.   California has not been as aggressive in the current years with this action.   Delaware and Connecticut also have a permanent joint account where all commonly owned employers are consolidated into one account.   Both states usually revise no more than two years of rates unless they suspect fraud.   Indiana has also consolidated commonly owned employers but is more like California and has been less aggressive in the past ten years.

This practice of consolidating accounts by state agencies has also reached into the status level of employers.   Michigan, Ohio, South Carolina, and Texas have been known to collapse accounts when they see the excess movement of employee groups within the commonly owned entities.    The type of business performed, and accounting records play a key role in the determination to consolidate accounts in these states.


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

Featured Videos

View All Videos

Latest News

Close

Sales

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Check the boxes below if you wish to receive information on any of the following:

Unemployment Cost ControlTax Credits & Incentives (WOTC)Employment / Wage Verification

Your Message:

Employment & Income Verfication

Your Name:*

Title:

Company Name:*

Company Address:

Company City:

Company State:

Company Zip:

Number of Employees:

Your Email:*

Phone Number:*

Fax Number:

Your Message: