More States to Require Electronic UI Reports, Payments in 2018

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By Jazlyn Williams

The increased use of electronic payments and wage reports by states for unemployment insurance is expected to be adopted in 2018.

In Nevada, the Department of Employment, Training and Rehabilitation seeks comments on a proposed amendment to the administrative code that would require all employers to electronically file unemployment insurance contribution and wage reports, effective July 1, 2018.

Electronic filing is not now required for Nevada employers. Unemployment insurance tax payments for amounts greater than $10,000 are processed through the state's automated clearing house.

If the amendment is adopted, Nevada would join 19 states that require electronic filing for unemployment insurance for employers in 2018. The states are Alabama, California, Connecticut, Idaho, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Pennsylvania, Texas, and Vermont.

Expanded Employer Requirements

California and North Dakota are expected to expand electronic filing for unemployment insurance and for making tax payments in 2018.

California requires employers with at least 10 employees to file reports and submit payments electronically. Effective Jan. 1, 2018, employers are to file UI tax reports and pay those taxes electronically.

North Dakota requires electronic filing from employers with at least 25 employees and electronic payments from third parties that pay unemployment taxes on behalf of multiple employers. Effective Jan. 1, 2018, employers are to file electronically, and all third parties are to submit payments electronically.

Thirty-eight states, the District of Columbia, and Puerto Rico require some degree of electronic filing of unemployment contribution records.

Of the jurisdictions that require electronic filing, 21 specify that the requirement applies to employers or third-party administrators with a certain number of employees. For example, in the District, the rule applies to employers with at least five employees; in Arkansas, employers with at least 250 employees are to file electronically.

Neither Nebraska nor Oregon determine electronic filing by company size. Nebraska requires electronic filing from employers with a total gross payroll of at least $100,000 in either of the two most recent years before the current year. Oregon requires electronic filing from employers and third-party administrators that are required to file a federal tax report or a federal wage data report electronically.

Although neither Hawaii nor West Virginia generally requires electronic filing, these states mandate electronic payments under certain filing conditions. Hawaii filers that submit alternative contribution record files online must pay UI taxes through the Automated Clearing House (ACH) network. Similarly, West Virginia employers and third-party administrators that file UI taxes and wage reports online must pay through the ACH.

Fifteen states require electronic filing but not electronic payments.

Most jurisdictions use an online portal for employers to file unemployment taxes and wage reports. Although some states still accept submissions of wage reports using magnetic media or digital discs, these states generally are phasing out such methods in favor of internet-based data submissions.

Some states limit the use of online portals to employers that have no more than a specified number of employees. Texas, for example, requires all employers to report contributions and wages and submit payments electronically.

However, the state portal, Unemployment Tax Services, only may be used by employers with up to 1,000 employees. In other states, employers with a greater number of employees use the Federal/State Employment Taxes program to file reports and submit payments.

Some states enable unemployment taxes and wage reports to be filed through a file transfer protocol server. File-transfer protocol servers electronically connect filers' computer systems to those of state unemployment agencies to facilitate transmission of files through the internet to enhance the security of the files.

Application of Methods

All states provide employers with at least one method for paying UI taxes electronically. Almost every state offers the ability to pay unemployment taxes with ACH debit and most states offer the ability to pay with ACH credit. Some states allow employers to pay unemployment taxes with credit card transactions.

Twenty-eight jurisdictions now require electronic tax payments to some degree. Among these, several specify that the requirements apply to employers with specified amounts of unemployment tax liability, paid unemployment taxes, gross payroll, or unemployment-taxable wages.

In states where employers are not required to file unemployment taxes and wage reports electronically, employers may file reports using paper forms made available by state unemployment insurance agencies. Paper checks may be used to pay unemployment taxes in states where electronic payment is not required.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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