Understand your unemployment tax rate computation
Your overall tax rate is calculated as follows:
Benefit Costs
___________________
Total Taxable Wages |
X |
Reserve
Factor |
+ |
Social
Tax |
= |
Overall
Tax Rate |
TIP: Make
every effort to keep Benefit Costs to a minimum.
REVIEW YOUR PERSONNEL PRACTICES
-
Screen applicants to be sure they are properly suited for the work.
-
Have clear written statements of policy and rules concerning
employee conduct at work.
-
Monitor new employees' progress carefully.
-
Keep accurate records of attendance, tardiness, and all warnings
given.
-
Do not condone violations of rules. Be consistent in disciplinary
actions.
- Conduct exit interviews and document the reason for separation.
MONITOR BENEFIT NOTICES AND CHARGES
-
Be specific in providing separation explanations to this
Department.
-
Carefully read and reply timely to all notices concerning benefit claims
and requests for information.
-
Report vacation, separation, retirement, or pension payments.
-
Mail all appeals within the period provided by law.
-
Attend all appeal hearings and present factual information and
evidence.
- Offer job openings to laid-off employees or contact other employers
to help find work for them.
FILE REPORTS TIMELY
Employer's Unemployment Tax Reports which are not filed timely are
subject to a late filing penalty:
Late 0 - 15 days 5% of the tax due
16 - 30 days 10%
31 - 45 days 15%
46 - 60 days 20%
Over 60 days 25%
There is a minimum penalty of $25.00
TIP: Make every effort to
pay the taxes when they are due. If you do not have the money, file the report timely
without payment and include a proposed payment schedule. You will not be assessed the
filing penalty if the report is received timely.
PAY TAXES TIMELY
Unemployment taxes which are not paid timely are assessed interest
at the rate of 1% per month. If payment or satisfactory payment
arrangements are not made after the first billing notice is received, an additional
payment penalty of 5% is assessed. There is also a 1% surcharge
added to your unemployment tax rate if any taxes are owing for the past fiscal
year, July 1 through June 30.
TIP: Make every effort to
pay your unemployment taxes when they are due. If you cannot do so, promptly contact our
Department and make payment arrangements. You will still be charged interest on the unpaid
balance, but you will not be charged the payment penalty and we generally will not file a
lien if payment arrangements are current.
FILE PROPER WAGE LISTS
Your quarterly employee wage lists must be filed online. Failure to do so may result in
the assessment of a $50.00 wage list penalty.
ANOTHER REASON TO PAY TAXES TIMELY
You receive a 5.4% credit against your Federal
unemployment tax of 6.2% if you pay all your state taxes by January 31.
Payments made after that date only receive 90% of the credit. We are required by law to
provide the IRS with a tape of all employer payments. They compare your Federal 940
Unemployment Tax Report against that tape. If payments are not shown as timely, the IRS
generates an additional assessment, plus interest and penalty.
TIP: Review your state
reports before preparing your Federal 940 report to make certain all state taxes were paid
by January 31.
DON'T MISCLASSIFY WORKERS
Individuals may be classified as independent contractors and
excluded from unemployment tax coverage if they meet two criteria:
1. The individual is customarily engaged in an independently
established trade, occupation, profession, or business of the same nature as that involved
in the contract of hire for services.
AND
2. The individual has been and will continue to be free from your
control or direction.
TIP: Make
certain that workers not on your payroll are independently established in their own
business. A simple test is to ask one question: "what will their status be when they
are finished working for you?" If the answer is unemployed, that's a
good indication that they are not independently established.