Unemployment-insurance tax news
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Use these quick links to find more informationWhy does an employer need to report the correct hours for employees?
Changes to unemployment-insurance tax rates for 2010
Amended Rule for Delinquent Tax RateContractor’s Information and Public Works Contracts – Impacts of New Law for Doing Business in Washington
Requests for Release of Retained Funds (after the contract is completed)
Certified tax report forms no longer accepted
Relief of benefits charges
Include covered corporate officers on quarterly unemployment insurance reports
Report tax cheaters (unregistered businesses)
Reporting requirements
Local workshops and educationBusiness Update - unemployment-insurance tax quarterly newsletter
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Why does an employer need to report the correct hours for employees?
A person who is unemployed has to have worked not less than 680 hoursin his or her base year working a job that paid wages and is covered by unemployment insurance (base year is the first four of the last five completed calendar quarters before the week in which a person files a claim for unemployment.) This requirement is established in state law (RCW 50.04.030).
It is critical that employers include employees’ hours when filling out their quarterly unemployment-insurance wage report paper form (EMS 5208B) or electronically.
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.
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.Contractor’s Information and Public Works Contracts – Impacts of New Law for Doing Business in Washington
The 2009 Washington Legislature passed Substitute House Bill 1555 (SHB 1555) which takes effect July 26, 2009. This new law adds two key provisions that affect contractors who bid on Public Works Contracts – Requests for Release of Retained Funds and Record Keeping Requirements and Penalties.Requests for Release of Retained Funds (after the contract is completed)
After you finish the job, the awarding agencies must verify that you have paid your taxes before releasing any remaining funds. The awarding agency files a Notice of Completion of Public Works Contract with the Department of Revenue (DOR). Once DOR receives the form, they forward a copy to the Employment Security Department (ESD).If you have paid taxes to ESD, we will send a Certificate of Payment of Contributions, Penalties, and Interest to the awarding agency. Our certificate authorizes the release of funds for Employment Security only. The Departments of Revenue and Labor and Industries must issue their own certificates.
If you have not paid taxes to ESD, we will send a Notice to Contact ESD for Payment of Contributions, Penalties, and Interest Due on Public Works Contract. To resolve your account, you must contact us as follows:
Email: ESDGPCompliance@esd.wa.gov
Phone:360-902-9780
Fax:360-902-9287
Local District Tax Office
Record-Keeping Requirements and Penalties
If you fail to keep unemployment insurance records required by RCW 50.12.070 we may fine you the higher of $250 or 200 percent of your quarterly tax for each offense.In addition, the 2007 Washington Legislature added the provision about the Pre-bid Compliance Letter. You must receive a letter showing you have an account with ESD before being awarded a bid to work on a public works job. It is possible that you may not need to have an account with ESD in order to qualify.
In either case, please contact us as follows:
Email: ESDGPCompliance@esd.wa.gov
Phone: 360-902-9780
Fax: 360-902-9287
Certified tax report forms no longer accepted
Employment Security has determined that the Quarterly Tax Report (EMS 5208A) and the Quarterly Wage Detail Report (EMS 5208B) forms printed by employers often fail to process correctly through our scanners. The information must then be hand keyed, a time consuming and costly process that can lead to data entry errors. These errors may result in a business being assessed a wrong form penalty.Because Employment Security cannot control the quality of forms printed by vendors outside of the State Department of Printing, we will no longer consider these forms to be certified. We will continue to attempt to process the forms you send us. Those forms that scan successfully, regardless of source, will be accepted. Forms failing to scan successfully, regardless of source, will result in a ‘wrong form’ warning letter being sent to the business. Subsequent forms failures will result in a wrong form penalty being assessed against the business.
Filing your tax reports electronically can save you form errors and related penalties. If you are ready to begin filing electronically, click on File and pay taxes. Our free tax software makes it easy to file your taxes electronically, and it keeps you from making most mistakes that lead to penalties.
If you choose to continue using paper forms, we can provide you forms printed by the State Department of Printing. When these forms are filled out correctly, businesses should never receive a wrong form penalty. You can request forms by calling 360-902-0916 or e-mail taxforms@esd.wa.gov.
If you have any questions, please contact your local District Tax Office.
Relief of benefits charges
A recent change in law allows employers to request relief of benefits charges when an employee was hired to temporarily replace a military reservist or National Guard member who returns to work from active military service. For a summary of the process to make this request, please visit our relief of benefit charges page.Include covered corporate officers on quarterly unemployment insurance reports
Beginning January 1, 2009, officers of for-profit corporations who provide services in Washington are covered for unemployment insurance unless their employer requested to exempt them and Employment Security Department approved the request.Corporations must include any corporate officers who are now covered on their quarterly tax and wage reports. They must report them as employees and pay state unemployment insurance taxes on their wages each quarter. However, corporations should not report individual corporate officers who have been approved for exemption. The deadline for already registered corporations to request exemption for 2009 was January 15, 2009. New corporations may request exemption when they register with Employment Security.
If your corporation requested exemption and you are unsure if the exemption was approved, contact the Status Unit via e-mail or call at 360-902-9360.
Additional resources
- Frequently asked questions (FAQs - revised) about exempting or reporting corporate officers. See Question 14 for additional information on how to report covered corporate officers.
- Process and forms for exempting corporate officers (not effective until 2010 for corporations already registered with Employment Security).
- We are not able to process a request for exemption of corporate officers unless we have correct registration information about them. In order to provide or update registration information, submit the Update Ownership form.
- Question and answers about registration requirements.
- Eligibility for benefits for corporate officers
Report tax cheaters (unregistered businesses)
Businesses that do not register with the state and pay their fair share of taxes are committing a form of consumer fraud and gain an unfair competitive advantage over other businesses because their operating costs are lower. Not only is this unfair to honest businesses, it is unfair to workers who are denied the safety net of unemployment benefits if they lose their jobs.You can help level the playing field for business and workers by reporting businesses that you suspect have not registered with the state. Complete our online suspected fraud report form, call your local district tax office, or send us an e-mail.
For additional information please see, http://www.suspectfraud.com/, which has been set up by the Department of Revenue, in cooperation with the Department of Labor & Industries and other state agencies to provide links to consumer fraud services.
Reporting requirements
Did you know that when you hire an individual to work or perform a job for you, no matter how small the job is, you need to report that individual to the Employment Security Department (ESD)? There is no minimum dollar/hour threshold that needs to be met before an individual is considered reportable as an employee.Often businesses consider individuals who perform incidental work, or a one-time job, as casual labor or temporary help, and do not report these individuals to ESD as employees. Contrary to Internal Revenue Service (IRS) with their W-2 (Wage and Tax Statement) form or Form 1099 (MISC- for miscellaneous income) compensation thresholds, unemployment insurance tax is due from the first dollar that is paid to an individual who is working for and being compensated by you. Even if you have someone come and perform a job that takes one or two hours, you need to report that individual as an employee and pay the required quarterly unemployment insurance taxes on their gross wages.
To assist you in reporting these types of workers, make sure you always get an individual’s Social Security number and name so you can accurately reflect their gross earnings on the unemployment insurance quarterly tax report. Keep track of the hours worked and the gross payment made to them during the quarter so you are ready to complete your quarterly ESD tax and wage report when due.
References:
RCW 50.12.070 Employing unit records, reports and registration
WAC 192-310-010 What reports are required from an employer?
WAC 192-310-050 Employer records
Local workshops and education
Attend a local workshop to learn more about unemployment taxes and state services, such as tax requirements for various types of businesses, how to report and pay state taxes properly, requirements for reporting new employees, and learn more about WorkSource business services.Local workshops calendar of events
