[ 2.1.1 - Acquisitions Documentation - Minimum Requirements ] [ 2.1.2 - Acquisitions w/o Form C-38 ] [ 2.1.3 - Acquisitions w/ Form C-38 ] [ 2.1.4 - Requests Confirming Acquisitions ] [ 2.1.5 - Acquisitions on Predecessor Account ] [ 2.1.6 - Acquisitions on the Successor Account ] [ 2.1.7 - Acquisitions  Staff Leasing Company ] [ 2.1.8 - Acquisition with Accounts in Bankruptcy ]

This section discusses acquisitions involving established state unemployment tax accounts.

When recording either total or partial acquisitions between established accounts it is important to have confirmation of the acquisition from the successor. Confirmation can include a FL-163 response, letter from the Employer, Status Report, C-1AM or a confirmation can include FTC comments based on a phone call to a knowledgeable party. An acquisition between established accounts should not be recorded until the successor has confirmed the acquisition.

State Law requires the transfer of the predecessor employer’s compensation experience to the successor employer if the predecessor transfers through any means all or part of the organization, trade, or business, to the successor employer and there is substantially common management or substantially common ownership.

For common ownership to be established, the relationship has to exist on the date of the acquisition. However, it states common management or control exists if, after the acquisition of the organization, trade, or business of an employing unit, the predecessor employing unit continues to:

1. Own or manage the organization that conducts the organization, trade, or business;
2. Own or manage the assets necessary to conduct the organization, trade, or business;
3. Control through security or lease arrangements the assets necessary to conduct the organization, trade, or business; or
4. Direct the internal affairs or conduct of the organization, trade, or business.  

There does not need to be common management or control and common ownership, either one of them is enough. But, if we are relying on common ownership, it must exist on the date of acquisition.

We will not record acquisitions, rate transfer or no rate transfer if:

The number of employees transferred divided by the total number of employees with the predecessor is 5% or less, and we conclude that the transfer was not done to circumvent the experience rating system. The exception to this would be if it was a separate location that was acquired. The 5% does not matter in this case. You will need to document the FTC accordingly with your findings. Refer to your supervisor any cases that are questionable.

1. If information is received from an Employer showing they acquired another account you will need to:

• Verify the information received against the Status Master File (STS). Check the account numbers, acquisition date, last wages date and number of employees to determine if the information supplied by the Employer is correct.
  
  
• If the information is correct record the acquisition on the STA screen.
  
  
• If the information on the documents appears incorrect or incomplete, a phone call to a knowledgeable person can be made to resolve any questions.
  
  
• If all questions are resolved then record the acquisition on the STA.
  
  
• FTC comments need to be thorough and complete including name, title of contact person and exactly what was said acknowledging whether there was an acquisition or not and if 204.083 does or does not apply.

2. If information received is not resolved by telephone call.

• For In-State Employer:
  Send assignment to field by e-mail.
  Close predecessor account reason “7”.
  Update the FTC screen to document actions on both predecessor and successor accounts.
  
  
• For Out-of-State Employer:
  Close the predecessor account reason “7”.
  Send FL-163 to the successor.
  Trace the successor account for 3 months.
  Update the FTC screen to document actions on both the predecessor and successor accounts.

3. If information received is from the predecessor, i.e. form C-13, Status Change Form, employer correspondence or Tax Area 13 (STA assignment).

• For both in-state and out-of-state employers:
  Close the predecessor account reason “7”.
  Send FL-163 to the successor.
  Trace the account for three months.
  Update FTC screen to document actions on both the predecessor and successor accounts.
  

4. If no response to FL-163 sent to in-state employer:

• E-mail assignment to field tax under the successor account number and update the FTC screen to document actions on both the predecessor and successor accounts.

5. If no response to FL-163 sent to out-of-state employer:

• Attempt to call the employer to confirm the acquisition. If resolved, record the acquisition if appropriate and document FTC.
  
  
• If unable to resolve by phone the following sources are available to the examiner to further the investigate an acquisition:

• If still unable to resolve acquisition, review the account for SUTA dumping issues (see Chapter 16 - “SUTA Dumping Detection”).
  
  Note: If SUTA dumping detection software is not working or you receive an error, check the WRIE screens on both accounts to verify if 201.022 applies.
  
  
• If common ownership or common management or control is found, process rate transfer accordingly. Update the FTC screen to document your findings and the action taken. E-mail the Assistant Section Manager of your findings.
  
  
• If no common ownership or common management or control is found but all employees transferred process the acquisition. Update FTC screen to document your finding and actions taken. E-mail the Assistant Section Manager of your findings.
  
  
• If employer does not appear to be SUTA dumping and no transfer of employment:
  
  Amend the predecessor account from reason “7” to reason “1”.
  Update the FTC screen to document actions on both the predecessor and successor accounts.

Note: We rarely use this form by itself. The same acquisition questions are now included on Forms C-1, C-1AM and C-1FR.

1. If proper documentation is received or confirmed by telephone call to a knowledgeable party supporting the transfer/no transfer of experience, record the acquisition and place FTC comments regarding your findings.
   
   
2. If the information on the file shows common ownership, record the acquisition with a transfer of experience. Place FTC comments indicating Section 204.083 applies and what information on file supports the transfer.
   
   
3. If information in the file does not show common ownership, place a telephone call to verify that common ownership does not exist and place FTC comments. If employer cannot be reached or transfer of experience has not been verified, record the acquisition without a transfer of experience based on information available. Update FTC screen to show your findings.

Note: We rarely use this form by itself. The same acquisition questions are now included on Forms C-1, C-1AM and C-1FR.

If confirmation of an acquisition is received with a Form C-38, verify the Form C-38 against Commission records.

1. If Form C-38 is verified by Commission records, record the acquisition according to the Form C-38.
   
   
2. If Form C-38 indicates Section 204.083 applies but Commission records do not substantiate information on Form C-38, determine if it is reasonable to assume Form C-38 is more current than Commission records. Commission Records may contain only old information. A search on SOS records can also help find more current officers.
   
   If Form C-38 is reasonably more current than Commission records, record the acquisition with a transfer of experience.
   
   If Form C-38 is not reasonably more current than Commission records, telephone the Employer for additional information.
   
   Record the acquisition with or without a transfer of experience based on information received from the Employer by telephone. Update the FTC screen to document the telephone call.
   
   
3. If Form C-38 indicates Section 204.083 does not apply but Commission records show common ownership, telephone the Employer for additional information.
   
   If the telephone call confirms common ownership, record the acquisition with a transfer of experience. Update the FTC screen to document the telephone conversation.
   
   If the telephone call indicates no common ownership and Form C-38 is reasonably more current than Commission records, record the acquisition without a transfer of experience. Update the FTC screen to document the telephone conversation.
   
   If the telephone call to a responsible party indicates no common ownership and Form C-38 is not reasonably more current than Commission records. Record acquisition without rate transfer and update FTC screen.

Status does not normally send a letter to an Employer to confirm that an acquisition has been recorded unless the Employer specifically requests confirmation.

If an Employer requests confirmation of an acquisition, record the acquisition on the STA and contact the Experience Rating Unit to ascertain whether or not they will be sending a letter. If the Experience Rating Unit will not be sending a letter, write the Employer a letter, approved by your supervisor, to confirm the acquisition.

Letters are sent to Employers by the Experience Rating Unit whenever an Employer's tax rate changes as the result of an acquisition. These letters can be either system generated or dictated.

If an acquisition is recorded with a transfer of experience and the Employer's tax rate does not change the Experience Rating Unit mails only a Tax Rate notice to the successor Employer.

If an acquisition is recorded with a transfer of experience and the Employer's tax rate changes the Experience Rating Unit mails the successor Employer a letter explaining the rate change.

If an acquisition is recorded with no transfer of experience the Experience Rating Unit does not notify the Employer unless some other change to the account causes a rate change.

Acquisitions by established accounts should be recorded using the STA screen whenever possible. A Form C-10 should be prepared only when a transaction cannot be performed on the STA screen due to screen edits. This change to the predecessor requires a change to its successor on the same day (see Chapter 2 - “Acquisitions on the Successor Account”) to have matching transactions without kick out.

Access the STA Screen. If partial acquisition skip to #7 (do not key #3-6).

1. Key	ACCT
2. Press	<Enter>
3. Key	REG SUSPD	DT (Suspend date should match the acquisition date)
	DOM SUSPD	DT
	AGR SUSPD	DT        AGR 1, 2 OR 3
4. Key	NORPTDUE	(Final wages date)
5. Key	REAS => 5	("5" - acquired by an established account)
	REAS => 4	("4" - acquisition by a new account – if acquisition is changing liability on successor 201.022)
6. Key	A	("A" adds a successor)
7. Key	SUCC	(Successor account number)
	DT	(Acquisition date should match the suspend date)
	T/P	(Key appropriate code, see Chapter 1 - "STA Screen Descriptions")
	A/N	(Key appropriate code, see Chapter 1 - "STA Screen Descriptions")
8. Press <PF5> to add the record.

Acquisitions by established accounts should be recorded using the STA screen whenever possible. A Form C-10 should be prepared only when a transaction cannot be performed on the STA screen due to screen edits. This change to the successor requires a change to its predecessor on the same day (see Chapter 2 - "Acquisitions on Predecessor Account") to have matching transaction without kick out.

Access the STA Screen

1. Key	ACCT
2. Press	<Enter>
3. Key	SECT (if acquisition is changing liability to 201.022).
4. Key	1ST CHG (If appropriate key First Chargeable Quarter change). For information on first chargeable quarters see Chapter 1 - "First Chargeable Quarter Calculation"
5. Key	A	("A" adds a successor)
6. Key	PRED	(Predecessor account number)
	DT	(Acquisition date)
	T/P	(Key appropriate code, see Chapter 1 - "STA Screen Descriptions")
	A/N	(Key appropriate code, see Chapter 1 - "STA Screen Descriptions")
7. Press <PF5> to add the record.
8. Document FTC.

A staff leasing company should not be treated as the successor (total or partial) to one of their clients. It is permissible, however, for one staff leasing company to acquire another staff leasing company. In this situation, the successor staff leasing company can be considered the successor.

A successor (that is not an individual and is not an employing unit) acquires an ongoing business of another liable employer and immediately goes to a staff leasing company, an acquisition would not be recorded. Successor account would be made not liable and if liability is met at a later date it can then be established as 201.021. Document FTC.

A predecessor using a staff leasing company, is acquired by an established successor account, an acquisition would be recorded as 201.022. Document FTC.

When requesting information from the Special Actions Unit (SAU) on an account involved in an acquisition and there exists a bankruptcy STOP on either account:

Provide on your e-mail to RID Tax Bankruptcy:

• Predecessor account
• Successor account
• Acquisition date
• Also, any other information (send copies if necessary) that is not readily available on the EMF screen.

SAU will respond with:

• Proceed with acquisition/transfer experience if applicable.
• Do not record acquisition, or
• No information found, proceed according to Status procedures.

When requested to follow normal Status procedures, work the acquisition just like any other acquisition. The response from SAU should be indicated in your FTC comments.

When it is an acquisition through the bankruptcy court and the successor acquired the business “free and clear of all encumbrances”, we do not record the acquisition. Section 204.086 allows the agency to pursue debt owed by the predecessor from the successor employer. That is considered an encumbrance, therefore the acquisition cannot be recorded.

Document FTC that an “acquisition not recorded since the acquisition is through the bankruptcy court and the court records show the successor acquired free and clear of all encumbrances” or words to that effect.