FAST TRACK TAX FACTS UNEMPLOYMENT INSURANCE TAX AND COMBINED REPORTING

Transcription

1 FAST TRACK TAX FACTS UNEMPLOYMENT INSURANCE TAX AND COMBINED REPORTING Next Back Main Menu

2 Coverage Requirements Combined Registration Change in Status Exclusions from Coverage Reporting Requirements & Methods Order Forms Payment s & Options Tax Rate Information Failure to File & Pay Timely Audits & Hearings How to Get Help Exit Exit Next Exit

3 COVERAGE MENU Covered Employers Covered Wages Combined Registration Change in Status

4 COVERED EMPLOYERS Employing Unit Definition - ORS Any individual or type of organization that employs one or more individuals within this state. For specific rules on the types of employers click below. For Profit (regular) Agricultural Non-Profit Domestic COVERAGE MENU

5 COVERED EMPLOYERS For Profit Employer - ORS Any employing unit that employs one or more individuals in one of the following: Employment subject to Oregon Unemployment Insurance Law with payroll of at least $225, or Each of 18 weeks in a calendar year. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Employer, Employee, & Wages Back Next COVERAGE MENU

6 COVERED EMPLOYERS Agricultural Employers - ORS An Agricultural employer is subject to unemployment taxes when, in the current or preceding year, one of the following is true: There are 10 or more employees in each of 20 days, each day being in a separate week, or Cash payroll is $20,000 or more in a calendar quarter. Agricultural employers do not report or pay tax on non-cash remuneration, such as room and board. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Agricultural Employers COVERAGE MENU

7 COVERED EMPLOYERS Nonprofit Employers - ORS Nonprofit employers must register and file quarterly tax reports like other employers. Nonprofit employers recognized under Section 501 (c)(3) of the Internal Revenue Code (IRC) can choose either to: Reimburse the State Unemployment Trust Fund for Unemployment Insurance benefits paid to former employees, or Pay Unemployment Insurance taxes like other employers. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Non-Profit Employers COVERAGE MENU

8 COVERED EMPLOYERS Nonprofit Employers continued Nonprofit employers will be set up as tax paying unless they make the election to reimburse. A written notice of the election must be filed within 30 days of the close of the calendar quarter in which the employer becomes subject for unemployment taxes. Tax paying nonprofit employers may elect the reimbursing option if they have been tax paying for at least two years. The election must be made by January 31 of the year the elective is to become effective. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Non-Profit Employers Next COVERAGE MENU

9 COVERED EMPLOYERS Domestic Employers - ORS Domestic employers may file annually using Form OA and Wage Detail Report (due January 31 each calendar year). Or they may file quarterly using Form OQ and the Wage Detail Report (due at the end of April, July, October, and January). A domestic employer is subject to Unemployment Insurance Tax once it has paid cash wages of $1,000 or more during a calendar quarter in the current or preceding calendar year. Domestic employers do not report or pay tax on non-cash remuneration, such as room and board. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Domestic Employers Next COVERAGE MENU

10 COVERED WAGES Definition of Wages - ORS Wages consist of all cash and non-cash remuneration paid for employment. Casual Labor Individuals hired on a temporary basis are employees; and their compensation is taxable. Trial Periods Individuals hired on a probationary basis are employees; and their compensation is taxable regardless of their employment status and length of time on the job. For more information go to: Employment Department UI Tax Click on Informational Flyers in the left menu then select Employer, Employee, & Wages Main Menu Next COVERAGE MENU Return to Coverage Menu

11 COMBINED REGISTRATION Combined Employers Registration Before issuing an Oregon paycheck, employers are required to file a Combined Employer s Registration Report. Employers will then receive a Business Identification Number (BIN) for filing Oregon payroll reports and paying taxes. Please, remember to include: FEIN - Enter your federal identification number. Nature of business - Describe the nature of the business and principle product. Acquired business - Enter date acquired, former owner(s), and Business ID number (if known). The Combined Employers Registration Report form may be found on line at View and can be faxed to Form Next COVERAGE MENU Return to Coverage Menu

12 COVERAGE MENU

13 CHANGE IN STATUS Change in Status Report is used to: Report changes in address Report changes in owners or ownership type Close the account when there are no employees. To View Form This form may be found on line at and can be faxed to Last Slide Viewed MAIN Next MENU COVERAGE MENU

14 Next COVERAGE MENU Return Subject Menu

15 EXCLUSIONS MENU (Only the most common exclusions have been mentioned) Excluded Employment Excluded Wages Next

16 COMMON EXCLUDED EMPLOYMENT MENU Corporate Officers Independent Contractors Bar & Restaurant Workers Musicians LLC/LLP Members Salespersons Family Members Fishing Industry Sales of Home Improvements Next Exclusions Menu

17 EXCLUDED EMPLOYMENT Corporate Officers ORS Corporate officers who are directors, stockholders, and family members may elect not to be covered. Each officer must: Be a director Have substantial ownership Be member of same family A single member corporate officer/director is not eligible for this exclusion. The election must be in writing and shall be effective on the first day of the calendar quarter in which the request was submitted. MAIN Next MENU Excluded Employment Menu

18 INDEPENDENT CONTRACTOR Individuals who are hired and compensated for services are employees, and their compensation for services is taxable unless they are specifically excluded by law. Individuals who meet the statutory definition of an independent contractor are not employees, and their compensation for services is not taxable wages. The Oregon Revised Statute (ORS) defining an independent contractor, shown on the next slide, lists four standards that must be met. Individuals who do not meet ALL FOUR of the standards are employees, and their compensation for services is taxable wages. Excluded Employment Menu Continued on Next Slide

19 INDEPENDENT CONTRACTOR ORS & ( 4 point test) 1. Is the worker free from direction and control over the means and manner of providing services? 2. Is the worker customarily engaged in an independently established business as demonstrated by meeting at least three of the following requirements: A. Maintains a business location separate from the work location or in a reserved portion of the person s residence, B. Bears the risk of loss related to the business, C. Contracts with two or more people within a 12-month period or advertises to attract new contracts, D. Makes a significant financial investment in the business, E. Has the authority to hire and fire others to complete the contract? If the worker files federal Schedule F and also performs agricultural work reportable on Schedule C on the federal income tax return, he or she will not need to meet the provisions of Number 2 above. 3. If required, does the worker have a valid construction, landscape, or architecture license? 4. Is the worker responsible for obtaining all required licenses or certificates necessary to provide the services? MAIN Next MENU Excluded Employment Menu

20 EXCLUDED EMPLOYMENT LLC/LLP Member Exclusion - ORS Employment does not include services performed by a member of a Limited Liability Company (LLC), including members who are managers as defined in ORS , or by a partner in a Limited Liability Partnership (LLP). Family Service - ORS In a sole proprietorship, employment does not include services performed by spouse, father or mother, or by a child under 18 years of age. The family service exclusion does not apply to corporations, partnerships or LLC/LLP s. Excluded Employment Menu

21 BAR & RESTAURANT MENU More Info Casual Labor & Trial Periods Entertainers & Dancers Food Servers & Musicians Meals & Tips Next Excluded Employment Menu

22 BAR & RESTAURANT Casual Labor Individuals hired and compensated on a temporary basis are employees, and their compensation is taxable. Trial Periods Individuals hired on a probationary basis are employees, and their compensation is taxable regardless of their employment status and length of time on the job. Main Menu Bar & Restaurant Menu

23 BAR & RESTAURANT Food Servers Individuals hired for food service jobs are employees, and the compensation for their services is taxable. Musicians Musicians are employees of the person or organization engaging their services, and compensation to them is taxable unless the musicians are hired under a proper written contract. The contract must expressly designate one or more of the musicians as responsible for filing the wage reports and paying the taxes. For more information on musician contracts CLICK HERE. Bar & Restaurant Menu

24 BAR & RESTAURANT Entertainers Disc Jockeys, comedians, musicians, and other entertainers who do not qualify as independent contractors are employees of the person or organization engaging their services, and their compensation is taxable wages. Dancers Dancers are employees of the person or organization engaging their services, and their compensation is taxable wages. Rarely do dancers qualify as independent contractors. Bar & Restaurant Menu

25 BAR & RESTAURANT Meals The actual cash value of meals provided to employees as part of their pay is taxable wages, even if these benefits are provided for the convenience of the employer. The Employment Department s established minimum value for meals is 30% of minimum CONUS meal allowance. See for Per Diem rates. Tips Tips (gratuities) reported by employees to their employers are taxable wages. Tips included in the price of the meal are taxable wages. Main Menu Bar & Restaurant Menu

26 EXCLUDED EMPLOYMENT Musicians Under Contract - ORS An organization engaging the services of a musician or musicians is the employer except when a written contract exists between the purchaser of the music and the musician(s). The contract must expressly designate one or more of the musicians as responsible for filing the reports and paying the taxes. The musician or musicians signing the contract will be considered the employer of any musicians who do not sign the contract. The provisions of ORS do not apply to services performed for a nonprofit organization as described in Internal Revenue Code Section 501(C)(3). Return to Bar & Restaurant Excluded Employment Menu

27 EXCLUDED EMPLOYMENT Service by Salespersons - ORS Commissions paid to salespersons are reportable and taxable unless paid for services performed as a: Newspaper advertising sales person Real estate sales person Insurance agent Securities sales person Next Excluded Employment Menu

28 FISHING INDUSTRY Deckhands Fish Unloading Labor Boat & Equipment Repair Labor Last Slide Viewed Return Exclusion Menu Excluded Employment Menu

29 FISHING INDUSTRY Deckhands Employment does not include service performed by an individual on a boat engaged in catching fish under an arrangement with the owner or operator of the boat when, under the arrangement,: A. The individual does not receive any cash remuneration other than is provided in paragraph (c) of this subsection. B. Any cash remuneration does not exceed $100. C. The individual receives a share of the boat s catch of fish or share of the proceeds from the sale of the catch; and D. The amount of the individual s share depends on the amount of the boat s catch of fish, but only if the operating crew of the boat or of each boat from which the individual receives a share, in the case of a fishing operation involving more than one boat, is normally made up of fewer than 10 individuals. Fishing Menu

30 FISHING INDUSTRY Labor for Unloading Fish Some boat owners require the deckhands to unload the fish. Occasionally, deckhands will hire others to unload the fish for them. If the boat owner pays the fish unloaders directly and deducts the amount from the deckhand s crewshare, the fish unloaders should be reported by the boat owner separately from the deckhands. Fishing Menu

31 FISHING INDUSTRY Boat & Equipment Repair Labor If deckhands are required, as a condition of their employment, to work on repairs of the boat and equipment when they are in port, employers must report these hours of work on the quarterly reports. Main Menu Last Slide Viewed Fishing Menu

32 EXCLUDED EMPLOYMENT Home Improvements and Consumer Goods Sales Employment, to the extent compensated by commission or share of profit, does not include: Soliciting contracts for sale of home improvements Sale of consumer goods in the home Exit Main Menu Next Excluded Employment Menu

33 WAGES - EXCLUSIONS (Only the most common exclusions have been listed.) Fringe Benefits IRC Section 125 Cafeteria Plan For more information go to: Employment Department UI Tax Click on Informational Flyers in the left menu then select Cafeteria and 401(k) Plans Exit Next Exclusions Menu

34 EXCLUDED WAGES Fringe Benefits ORS Retirement, medical, death (life), child care - Provided by the employer under an established and qualified plan ORS Sick pay under a workers compensation law Exit Next Excluded Wages Menu

35 EXCLUDED WAGES Cafeteria Plans (IRC Section 125) Provide multiple fringe benefits to an employee, one of which must be cash. The employee may choose one or more of the available options. The benefits are excluded from wages if it is listed as an exclusion in ORS through Example: Plan = $300 per month health insurance (ORS ) dependent care (ORS ) 50 - cash $250 - excluded from Wages (no exclusion) Main Menu Excluded Wages Menu

36 REPORTING REQUIREMENTS Required Reporting Forms Use: Form OQ - to report State Unemployment Insurance Tax information, State Withholding Tax, Workers' Benefit Fund assessment, and Tri-Met and LTD taxes. Schedule B - if state income tax withholding deposits are required to be submitted semi-weekly or on a one-day banking basis. File Oregon Schedule B with Form OQ. Form Employee Detail Report - to report social security numbers, names, hours, and total wages for each employee who is subject to Unemployment Insurance Tax. Et Continued on Next Slide

37 REPORTING METHODS OTTER (Oregon Tax Employer Reporting System software) SETRON (Internet) Zero Payroll Telephone Reports Paper Forms (OQ, 132, Schedule B) Plain White Paper Magnetic and Electronic Media (for large wage reports) Main Menu

38 REPORTING METHODS OTTER For more information go to Employment Department UI Tax. findit.emp.state.or.us/tax/otter.cfm If you want to order a CD Disk call Next Exit Reporting Methods Menu

39 REPORTING METHODS SETRON Web Based Reporting Click to access quarterly combined payroll tax reporting on the Internet! You can complete your quarterly report on this Web site and send it to us electronically. Report forms available on this site include the Oregon Quarterly Tax Report (OQ), Wage Detail Report (132), and Schedule B. This easy to use format will lead you step by step through filing the reports. When you are finished, you will be able to print paper copies for your records. For more information go to: Employment Department UI Tax. Exit Reporting Methods Menu

40 REPORTING METHODS Zero Payroll Telephone Report Payroll reports must be filed as long as the account is active, even if there was no payroll in the quarter. Failure to file a report could result in penalties. Paper Reports: Only the OQ needs to be filed. Place a "0" (zero) in the Subject Wages" boxes for each subject program and the Number of Hours Worked" box for the Workers Compensation Assessment. Leave the boxes blank for non-subject programs. Telephone: Any time of the day or night employers may file zero payroll reports by telephone. Simply dial (503) and follow the prompts. Closed or Inactive Accounts: Employers, who are out of business or operating without employees and do not expect to hire in the foreseeable future, should close their accounts by using the Change in Status form found in the "Oregon Combined Payroll Tax Report" booklet or the Internet at Exit Reporting Methods Menu

41 REPORTING METHODS Paper Forms To View Form OQ To order forms from our web site go to Employment Department UI Tax. To View Form 132 To View Form Schedule B Exit Main Menu Reporting Methods Menu

42 REPORTING METHODS Paper Forms To order forms from our web site go to Employment Department UI Tax. Sample Exit Reporting Methods Menu Main Menu Next Reporting Options Menu

43 REPORTING METHODS Paper Forms To order forms from our web site go to Employment Department UI Tax. Sample Last Slide Viewed Next Reporting Methods Menu

44 REPORTING METHODS Paper Forms To order forms from our web site go to Employment Department UI Tax. Sample Exit Main Menu Reporting Methods Menu

45 REPORTING METHODS Plain White Paper Employers can use plain 20# bond paper for making reports. The data must be printed in the exact locations as found on the report forms printed by the state. This includes the Oregon Quarterly Tax Report (Form OQ), Wage Detail Report (Form 132), and Oregon Schedule B. Printer Specifications for paper reports are available from the Employment Department. Call (503) , opt. 3, or go to Employment Department UI Tax. Click on More Options and Plain Paper Reporting or Order Forms and Specifications. Mail all paper reports (forms or plain paper) to: Oregon Department of Revenue, PO Box 14800, Salem OR Reporting Methods Menu

46 REPORTING METHODS Magnetic and Electronic Media for Large Payroll Reports Employers may report large payroll wage detail (Form 132 only) in federal format (MMREF-1) using the following methods: Online secure site CDs Floppy diskettes For more information and Specifications go to: Employment Department UI Tax. Click on More Options and Magnetic Media. Or call (503) , opt. 3. Reporting Methods Menu

47 Order Forms from our Web Site Go to Employment Department UI Tax. Click on Order Forms. Continued on Next Slide

48 Order Forms from our Web Site Order Forms continued Main Menu Last Slide Viewed

49 Payments - PAYMENTS Form OTC (Oregon Tax Coupon), shown here, is mailed with payment. EFT (Electronic Funds Transfer) is completed online. To order OTCs or for EFT information go to Employment Department UI Tax. Click on Order Forms for OTC and More Options for EFT.

50 PAYMENT OPTIONS Three types of employers & payment options for each: Taxpaying - All for-profit employers are taxpaying and have no other options. Reimbursing - Non-profit 501(C)(3) employers have two options: taxpaying or reimbursing. If a non-profit employer makes no election, the employer is set up as a taxpaying employer. Local Government - A political subdivision is a government entity other than the state or federal government. These employers have three reporting options: direct reimbursing, LGEBTF reimbursing, or taxpaying. If no option is elected, they are set up as a direct reimbursing. Main Menu Next

51 TAX RATE INFORMATION Base Tax Rate By law a base tax rate is assigned to employers who do not have enough payroll history to have a tax rate set by experience. Experience Tax Rate After an employer has enough history (minimum of two calendar years) the rate varies according to the amount of unemployment benefits charged against the employer s account and the employer s taxable payroll. Experience tax rates can vary from below 1 percent up to 5.4 percent depending on the trust fund requirements for a given year. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select How UI Tax Rates Are Determined Exit Continued on Next Slide

52 TAX RATE INFORMATION Successorship If an employing unit sells, or otherwise transfers, its entire employing enterprise to another legal entity, the acquiring entity is a successor, and the experience tax rate is transferred to the acquiring entity. Partial Transfer A new or existing employing unit that acquires a portion of an employer shall be deemed a partial successor. The Employment Department will accordingly assign a tax rate for the succeeding entity. For more information go to: Employment Department UI Tax. Click on Informational Flyers in the left menu then select Partial Transfer of Experience Rating Exit Back

53 TAX RATE INFORMATION Tax Rate Manipulation Employers who engage in this scheme and their advisors may be subject to severe penalties. SUTA tax rate manipulation is a tax evasion scheme to fraudulently lower an employer s unemployment insurance (UI) tax rate. More information is available at this site: egov.oregon.gov/employ/tax/ratemanipulation.shtml#ques1 Exit

54 FAILURE TO FILE & PAY TIMELY Combined Failure to File Notice Notice of Tax Assessments Estimated Tax Assessments Penalties & Interest Exit Main Menu

55 FAILURE TO FILE & PAY TIMELY Combined Failure to File Notice A report is late if it is not filed by the tenth day following the due date of the report. A notice is mailed to employers when we have not received the reports. (Please note that interest will be assessed on tax paid after due date of the report.) The notice identifies which agencies have not received the reports and lists the missing quarters and specific reports. The notice may be used to: file a no-payroll report, notify us that the reports have been sent in, or close the account when it is returned to us with the appropriate information. Exit Failure to File Menu

56 PENALTIES & INTEREST Notice of Tax Assessment When an employer files a quarterly tax report but fails to pay the entire amount of tax due, a Notice of Tax Assessment is generated. This assessment sets forth the amount of tax and interest due based on the information submitted. It is mailed to the employer at the last known address of record. Main Menu Failure to File Menu

57 FAILURE TO FILE & PAY TIMELY Notice of Estimated Tax Assessment When an employer fails to file a timely report and does not respond to the Failure to File notice, the Employment Department may estimate the employer s payroll and issue a Notice of Estimated Tax Assessment. Exit Failure to File Menu

58 PENALTIES & INTEREST LATE FILING PENALTY: You may be assessed a late filing penalty if you file the reports after the due date. For 2006 the late filing penalty is $6 for each employee, with a $70 minimum and $1,400 maximum. TEN PERCENT PENALTY: If you fail to pay delinquent taxes within 20 days of the tax assessment, you may be assessed a penalty equal to10% of the total tax owed. ONE PERCENT PENALTY: If all money owed or reports required are not received by the Employment Department by September 1 of any year, an additional penalty of one percent of the previous year s taxable payroll may be assessed. INTEREST ON UNPAID TAX: Interest is assessed at the rate of 1.5% per month on the unpaid tax. Exit Main Menu Failure to File Menu

59 AUDITS & HEARINGS Audits Appealable Notices Hearing Facts Court of Appeals Appeals Board Main Menu Last Slide Viewed

60 AUDITS Purpose: To promote compliance with Employment Department Law and verify that employers are reporting correctly. Objectives: To verify that employers are maintaining true and accurate records. To verify the existence of a business to prevent fraud. To verify that individuals have been properly classified as employees or non-employees. To verify that wages and taxes are reported correctly to ensure that unemployment benefits based on these wages are accurate. To verify that tax rates are computed correctly. To educate employers about Employment Department Laws. For more information go to Employment Department UI Tax. Click on Informational Flyers in the left menu then select Q & A About Tax Audits Exit Main Menu Next Audits & Hearings Menu

61 APPEALABLE NOTICES A hearing request must be based upon an appealable document. Appealable documents include: Notice of Determination Tax Assessments under ORS Notice of Tax Rate Tax rate notice requires a request for review before request for a hearing. Late Filing Penalty Late filing requires a request for abatement before a request for a hearing. One Percent Penalty One Percent requires a request for waiver before a request for hearing. A hearing request must be in writing, submitted within the allowed time frame, and state why you disagree with the appealable notice. Exit Main Menu Next Return to the Audits Audit & Menu Hearings Menu

62 HEARING FACTS In a hearing, the people involved in the issue give information about the case to an Administrative Law Judge (ALJ). Most hearings are held by telephone. If you have written evidence you want to use in the hearing, you must provide it to the other parties prior to the hearing. For more information go to: Exit Audits & Hearings Menu Continued on Next Slide Return to the Audit Menu

63 HEARING FACTS continued If you request a hearing and later decide you do not want to pursue it, you may withdraw your request by notifying the Tax Section or the Office of Administrative Hearings. A notice will be sent to you with the date and time of the hearing. If you do not call in as instructed by the notice, the hearing will be dismissed. After the hearing you will receive a decision in the mail. If you disagree with the hearing decision, you have the right to file an appeal within a specified time. For more information go to: Exit Audits & Hearings Menu

64 COURT OF APPEALS Appeals of administrative hearing decisions go to the Court of Appeals and, subsequently, the Oregon Supreme Court. If the court chooses to hear the case, it will affirm, modify, or set aside the Administrative Law Judge's decision. The court will base its decision on the facts in the original record; its interpretation of law and administrative rules; precedents; the validity of the ALJ s determination of credibility; and agency policy. To appeal an administrative decision to the Court of Appeals, contact your attorney or the Office of Administrative Hearings. Audits & Hearings Menu

65 APPEALS BOARD The Employment Appeals Board is a three-person panel appointed by the Governor to provide an independent review of unemployment insurance claims hearing decisions. You must submit your application for review in writing; state. that you are making an application for review; and state whether you intend to file a written argument. After reviewing the case, the Employment Appeals Board will issue a decision to affirm, set aside, or modify the hearing decision. The Appeals Board may also send your case back to the Administrative Law Judge if there is insufficient evidence to make a decision. Exit Main Menu Audits & Hearings Menu

66 HOW TO GET HELP Online Directory of Tax Office Locations: Web Sites: Unemployment Insurance Tax Oregon Employment Department Contact Us Tax Address: Continued on Next Slide

67 HELP AVAILABLE Corporation Division Web Site: For general business assistance download: How to Start a Business in Oregon Employer s Guide for Doing Business in Oregon. (Click on picture and scroll to Publications.) These two Guides are designed to provide basic information on starting and operating a business in Oregon. For online help try the Business Wizard.