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Amended Rule for Delinquent Tax Rate
ESD adopted an emergency rule to implement HB 1338 in determining when the delinquent tax rate would be inequitable. This rule, effective July 26, 2009, amends WAC 192-320-035. The rule-making process will also consider a permanent rule to replace the emergency rule. For more information, go to Delinquent tax waivers.Changes to unemployment-insurance tax rates for 2010
For most employers, unemployment-insurance tax rates are relatively stable and do not change much from year to year. Next year will be different.The enormous increase in unemployment in 2009 will affect 2010 tax rates for many employers. If employees received benefits that were chargeable to specific employers, it will affect the individual employers’ experience rating and, ultimately, increase their rates. The effect is averaged over a four-year period through June 2009.
In addition, the Legislature enacted SSB 5963 this year to fix a problem with state law not being in “conformity” with federal unemployment-insurance law. This law has three changes that could affect rates.
First, SSB 5963 ends the practice in which benefits were based on the two highest quarters in a year, while each employer’s “experience” (the basis for your rate) was based on all four quarters. Under the old law, the difference in these calculations had been shared (socialized) among all employers. Under the new law, we will assign experience based on two quarters. Experience for the four years prior to this change will be reflected in the 2010 tax rate.
Second, SSB 5963 reduces the tax rate for all but two rate classes and reduces the total combined tax rate that could be assessed. For many employers, the increase in your experience tax rate that is based on the change to two-quarter averaging will be offset by the reduction in most tax rates. However, your own tax rate will depend on your particular circumstances.
Third, SSB 5963 reduces the minimum tax rates for socialized costs of unemployment insurance and lowers the cap on total rates. However, the amount you pay will depend on the experience of other employers, the size of the unemployment-insurance trust fund and on your own experience.
Although it is difficult to predict the combined effect of these changes on individual employers, we know 2010 will bring changes to a large number of Washington’s businesses.
Protect your tax rate for 2010
To avoid being assigned the highest possible tax rate in 2010, your account must be current by September 30, 2009. If your account is delinquent on October 1, you may receive the highest tax rate for the entire following year.The delinquent-tax rate for 2009 is 6.23 percent. We will notify you of your 2010 tax rate in December 2009. Assigned tax rates are in effect for the entire year.
If you cannot make full payment now, you may request a payment plan by calling your district tax office. You will receive your earned tax rate for 2010, rather than the delinquent-tax rate, if we approve your payment plan before September 30, 2009.
Tax rates 2008
We will be mailing Tax Rate Notices to most employers on December 8. For those employers in rate class 1 (approximately 50 percent of all employers), this might be good news. Everyone reaps the benefit of one piece of good news. For the third year in a row, the social cost remains the same, even though the number of claims has increased. Obviously, not everyone will see a decrease in their total tax.Qualified employers are taxed based on their experience with unemployment, as well as their employees’ taxable wages. For 2009, the taxable wage base, which is the amount of wages you pay taxes on, is $35,700. Lower rates are assigned to employers whose unemployment experience costs are low, and higher rates to those whose unemployment experience costs are high. Simply stated, the fewer employees who collect unemployment benefits against an employer’s account, the lower the tax rate. Employers that are delinquent and new employers are not qualified, so their rates are assigned differently.
If you disagree with the assigned tax rate, send a request for a review and redetermination. The request must be submitted in writing, and must be postmarked no later than 30 days from the mailing date of the initial tax rate notice. If we find that the rate is correct as calculated, you can file an appeal. The appeal should include the tax rate year that you are protesting, as well as the reason(s) for the appeal. If a request is postmarked later than 30 days after the date of the official mailing of the tax rate notice, an explanation as to why the request is late should also be submitted. Please refer to RCW 50.29.070 or page 10 of the Tax Handbook for additional information.
Employer Accounts Management Services (EAMS)
We listened to you about what would make Employer Accounts Management Services (EAMS) easier to use. So, these upgrades are now available for your quarterly tax filing this month.New login procedures:
- User SSN is no longer required for initial login to access unsecured features
- New printable form has been added to get owner/officer authorization for secured services
- New field names for easier understanding and navigation
- New links to other reporting services (DSHS New Hire, Revenue, L&I, SSA and IRS)
- Users can receive immediate authorization – formerly available only to business owners and officers
- New 3rd party preparer’s role with a printable authorization form for additional access to secured services is available
- New tool for amendments by 3rd party preparers
New procedures for OASI administration and divided referendums for employees to elect Medicare-only coverage
Effective July 1, 2009, the state Social Security administrator role for the federal Old Age and Survivors Insurance (OASI) program and the divided referendum process has shifted to the Department of Retirement Systems (DRS).The OASI program provides monthly benefits to retired or disabled workers, their spouses and children, and to the survivors of insured workers.
The divided referendum process allows local governments to request a vote for employees to determine their participation in Medicare.
For more information, please see http://www.drs.wa.gov/employer/communications/oasiprogram.htm
Combined wage claims
Federal law has changed the way the paying state is defined in a Combined Wage Claim (CWC). A CWC is defined as the process by which an unemployed worker with covered employment or wages in more than one state may combine all employment and wages to qualify for benefits.Currently, federal rules allow claimants to establish a Washington unemployment Combined Wage Claim if they have base year wages in two or more states. It is not required that any of these wages be Washington wages, however the claimant must be physically present in Washington state when they file. A base year is defined as the first four of the last five completed calendar quarters before the benefit year of the claim. The wages earned during this time determine the claimant’s weekly and maximum benefit amount.
In October 2008, the U.S. Department of Labor (USDOL) outlined the final rule revising the Combined Wage Claim program. This final rule amends the definition of "paying state" so that claimants will only be able to establish a Combined Wage Claim if they have base-year wages in the state against which they are filing. Also, it is no longer required that the claimant be physically present in the state against which they are filing. The law is effective on January 11, 2009 for Washington state.
If a state denies a Combined Wage Claim, it must inform the claimant of the option to file in another state in which the claimant has wages and employment during that state’s base period(s).
IRS 940 certification or recertification
Each year, the department certifies to the Internal Revenue Service (IRS) the tax rate, amount of taxable wages and the amount of tax paid by each employer for two years prior. For example, ESD (Employment Security Department) sends 2007 data to the IRS in 2009. We compare the wages reported to the IRS on Form 940 or on 1040 Schedule H to wages reported to Washington for unemployment-insurance purposes.If the certification shows a discrepancy between the state records and the federal records, the IRS either contacts ESD for a recertification or contacts the employer directly. In providing information to the IRS, the employer may request a recertification from the state.
Most problems occur when employers fail to notify ESD of a change in business structure (entity) or a change in Federal Employer Identification Number (FEIN). The FEIN needs to match what ESD has in its tax and wage files. If there is no match, then the employer is charged the maximum Federal Unemployment Tax Act (FUTA) rate of 6.2 percent instead of the standard 0.8 percent.
Request for FUTA Certification or Recertification in Washington may be made by contacting:
Employment Security Department
UI Tax and Wage Administration/Employer Accounts Program
FUTA Certification or Recertification Unit
P.O. Box 9046
Olympia, WA 98507-9046
360-902-9597
Corporate officer registration
The 2007 State Legislature passed a law that requires corporations to register their officers with the Employment Security Department.Questions and answers about registration requirements
Regulations governing corporate officers - See especially WAC 192-140-220, 192-300-170 (effective 01/01/09), 192-310-010, 192-310-150 to 170 (effective 01/01/09), and 192-310-180 to 190.
Eligibility for benefits
Apprentices
Beginning June 12, 2008, individuals who quit work to enter classroom training as part of an apprenticeship program, may be eligible for unemployment benefits. An apprenticeship is a combination of on-the-job training and classroom instruction that trains an individual for a highly skilled occupation. To qualify for benefits, the program must be approved by the Washington State Apprenticeship Training Council. Eligibility for benefits starts the week before the classroom training begins.Benefits paid to these individuals will not be charged to their former employer’s experience-rating account.
Professional employer organizations
Professional employer organizations (PEO) are required to register client companies and must report separately for each client company beginning with the first quarter of 2008. Learn more.Increase in penalties
Beginning October 1, 2007, the minimum penalty for employers that repeatedly submit incomplete quarterly tax reports or use the wrong forms increased. Learn more.Independent contractors
Are your independent contractors really employees? You can use the tests to determine whether their wages should be reported.Independent contractor exception test
Public-works contracts
The 2007 Legislature amended RCW 39.04.010.Effective July 22, 2007, before being awarded a public-works contract, a bidder must meet certain criteria. To be considered responsible and qualified, the bidder must have all of the following.
- A certificate of registration provided by the Washington State Department of Labor & Industries (L&I) at the time of bid submittal. To obtain such a certificate, the bidder must inform L&I if they have employees.
- A current state unified business identifier (UBI) number.
- Industrial insurance coverage for the bidder's employees working in Washington, if applicable.
- An Employment Security (ES) account number.
- A state excise tax registration number.
- In addition, the bidder must not be disqualified from bidding on any public works contracts.
- To obtain this certificate, the bidder must provide L&I with an ES account number issued by the Employment Security Department, if they have employees.
- If a public entity (state, county, cities, or other public agencies) wants more information about an employer’s account status, they must request that the employer ask for written verification from the Employment Security Department.
Due to confidentiality requirements, letters need to be sent directly to the employer or its authorized representative and not to any third parties.
Send any requests or inquiries to:
Employment Security Department
Tax and Wage Administration
Specialized Collections Unit
P.O. Box 9046
Olympia, WA 98507-9046
Phone: 360-902-9780
Fax: 360-902-9287
E-mail: esdgpcompliance@esd.wa.gov
