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The Texas Workforce Commission (TWC) on May 26, 2022, issued a press release with information to indicate certain employers may be eligible to obtain relief on chargeback notices sent in 2020 during the pandemic.

What is a Notice of Maximum Potential Chargeback

A Notice of Maximum Potential Chargeback is sent to employers who paid wages to a claimant sometime during the first four of the last five completed calendar quarters prior to the claim filing. The Notice of Maximum Potential Chargeback asks base-period employers to give the reason for the claimant’s separation to evaluate whether to charge the employer’s tax account for benefits paid to the claimant. This means as an employer, you could be liable for benefits paid to a former employee who hadn’t worked for your organization for over one year. When the pandemic struck, many employers were receiving these notices because their former employees were out of work when their current employer shut down its business. In normal circumstances, an employer must respond within 30 calendar days of the mail date listed on the notice if they disagree with the chargeback amount.

How to claim relief for charges assessed during the pandemic

During the height of the pandemic, employers who received the Notice of Maximum Potential Chargeback were left holding the bag for payout of unemployment benefits and had no recourse. The TWC is now allowing them a second chance to obtain relief from charges for at least a portion of the pandemic period. According to the press release, employers that were assessed during the period of March 2, 2020 and December 31, 2020, will have an opportunity to request relief from charges for those claims. TWC will send out notification to employers who had claim activity during that period to identify them as having the potential to receive relief from charges. It is unclear from the publication if that notice will be in the form of a Notice of Maximum Potential Chargeback or some other document.

How to respond to Chargebacks

If an employer should be successful in protesting and obtaining removal of some of the charges assessed to its account, a tax rate revision could occur for the years 2021 and/or 2022. This will be uncertain until chargebacks are credited to employers’ accounts. Since each document from the TWC has certain statutory deadlines for protest, it could take months before employers see potential rate revisions as a result.

To respond to a chargeback notice, the TWC encourages employers to respond through the Other Services feature on the Employer Benefits Services (EBS) portal. This allows employers to view, respond to, and submit notices electronically. Responding to the notice protects the employer’s tax rate and ensures that benefits were properly paid to claimants.

You can also respond to a chargeback notice by completing the back of the form and faxing or mailing it to TWC. The back of the notice allows you to provide the reason the claimant is no longer working for you.

When the TWC makes a decision on an employer’s chargeback response, they will mail a Charge Liability Decision, showing whether the claimant’s benefits are chargeable to your account.

Managing Unemployment Tax Costs

Requesting relief from these charges is part of managing your overall unemployment benefits, which can be complex and time-consuming. However, proper unemployment claims software enables employers to streamline unemployment benefits handling, making sure all claims are contested as appropriate in a timely manner, and experts keep you informed of updates such as this recent announcement from TWC, and news from other states across the country that may impact your unemployment liability.


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