Wednesday, August 11, 2010

UNEMPLOYMENT INSURANCE - WHAT HAPPENS IF EMPLOYER DOES NOT PAY TAXES

Of course the DOL has some answers on what happens. As their website explains (note that the links do not work but the page, containing the links is as follows (http://www.labor.ny.gov/ui/dande/penalties2.shtm)):

"Failure to file or late filing of the NYS-45, including the NYS-45-ATT

When an employer fails to file all required parts of the Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return, form NYS-45 (including NYS-45-ATT, when applicable), or files the return late, penalties authorized under the Tax Law and the Unemployment Insurance Law are assessed. The amount of the penalty depends on how late the return was filed and the employer’s past reporting history.

If all required parts of the Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return are not received by the due date, the return is considered delinquent. Approximately 50 days after the due date, a certified notice of failure to file is sent to notify employers of the delinquency and of the estimated penalty assessment. This notice also provides information about the employer’s right to file a protest.

When all required parts of the return are filed, the employer is notified of the actual penalty assessment and given information about filing a protest.

FAILURE TO FILE PENALTY

If the return is not received by the due date the penalty is the GREATER of:

•$1,000, OR
•$50 times the number of employees shown on the last quarterly return filed by the employer (estimated if no reports were filed). The maximum penalty for any calendar quarter is $10,000.

Penalty cancelled: This penalty will automatically be abated if all parts of the return are filed prior to or within 30 days of the certified notice of failure to file AND there were no late filings in the prior four quarters.

Penalty adjusted: This penalty will be recalculated based on actual figures and a penalty will be assessed for late filing when all required parts of the NYS-45 (and NYS-45-ATT, when applicable) are received.

To protest a penalty imposed against your account for failure to timely file your Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return, Form NYS-45, click here.

PENALTIES FOR LATE FILING

1. Returns received prior to or within 30 days of the certified notice and employer has prior delinquency. When all parts of the return are received prior to the mailing of the certified notice of failure to file, or within 30 days of that notice, AND the employer was delinquent in one or more of the prior four quarters, the penalty will be the LESSER of:

•$50 times the number of employees shown on the late return, but not less than $1,000 or more than $10,000, OR
•the sum of 5% of the withholding tax shown on the return, if the return is not more than one month late and 5% for each additional month the return is late up to 25% (if the return is more than 60 days late, this amount cannot be less than the lesser of $100 or 100% of the tax required to be shown but not paid by the due date) AND
•5% of the UI contributions shown on the return, if the return is not more than one month late, and an additional 5% for each additional month the return is late up to 25%, but not less than $100.

2. Returns received more than 30 days after notification. When all required parts of the return are received more than 30 days after the mailing of the certified notice, the penalty is adjusted to the GREATER of:

•$50 times the number of employees shown on the late return, but not less than $1,000 or more than $10,000, OR
•the sum of 5% of the withholding tax shown on the return, if the return is not more than one month late and 5% for each additional month the return is late up to 25% (if the return is more than 60 days late, this amount cannot be less than the lesser of $100 or 100% of the tax required to be shown but not paid by the due date) AND
•5% of the UI contributions shown on the return, if the return is not more than one month late, and an additional 5% for each additional month the return is late up to 25%, but not less than $100.
3. Returns obtained by audit. If the employer does not file all required parts of the return and either the Tax Department or the Department of Labor, or both, review the employer’s records and obtain the required reports, a maximum penalty may be assessed. It is calculated as follows:

•$50 times the number of employees shown on the return, but not less than $1,000 or more than $10,000 AND
•the sum of 5% of the withholding tax shown on the return, if the return is not more than one month late and 5% for each additional month the return is late up to 25% (if the return is more than 60 days late, this amount cannot be less than the lesser of $100 or 100% of the tax required to be shown but not paid by the due date) AND
•5% of the UI contributions shown on the return, if the return is not more than one month late, and an additional 5% for each additional month the return is late up to 25%, but not less than $100.

CANCELLATION OF PENALTIES

A penalty may be cancelled if the employer has since filed all required parts of the return AND can show reasonable cause for not filing a return by the due date. Penalty assessment notices explain how to file a protest."

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