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Tax Department Tip of the Month

Tax Tip for January, 2012

Annual Domestic Reporting

The annual report and contribution for domestic accounts that have requested annual filing is due on or before January 31, 2012.

The online version of the annual report is available now for those domestic employers who elected to file and pay their state unemployment tax annually. TWC encourages Annual Domestic Filers to file their annual report and pay their tax due online by using Unemployment Tax Services, a free online service. During the quick and simple registration process, new users create a User ID and password that will be used each time they access the online system. To register for access and to learn about other online services, visit our Unemployment Tax Services web site.

Tax Rates

Tax Rate notices have been mailed. When you receive your notice, please forward a copy to your Service Agent, CPA, or bookkeeper so they can update their files. If you use "QuickFile or Intuit" you will need to update your software to show the correct Tax Rate.

Tax Tip for December, 2011

Texas Workforce Commission
Unemployment Insurance Tax Rates for 2012

Dear Employer:

Although the economy continues to challenge every aspect of business, including the cost of unemployment taxes, we are beginning to see signs of improvement on the horizon. At the Texas Workforce Commission (TWC) we were unwilling to wait on that brighter future and have taken steps to minimize increases in the overall unemployment tax bill to Texas employers and to avoid the large fluctuations in tax assessments that we have seen in prior economic downturns.

The 78th Texas Legislature granted TWC the authority to find alternative methods of financing shortfalls in the Unemployment Compensation Trust Fund. At the end of 2010, the Texas Workforce Commission sold bonds through the Texas Public Finance Authority in order to avoid interest that would have become due on federal advances. Because TWC took this option to address the deficit in the trust fund, projections indicate that the trust fund balance will be back to, or above, the level needed by October of next year. For the second consecutive year, the need for a deficit tax has been eliminated.

Although employers will see an obligation assessment added to the unemployment tax bills to repay the bonds, by spreading this over a period of several years at a significantly lower interest rate, we are keeping employers' taxes as low as possible while replenishing the unemployment trust fund. The components of your 2012 tax rate are:

• The obligation assessment - to collect the amount needed to repay the bond obligation due next year. It is experience-rated, based on your 2011 tax rate.
• The general tax - based on claims against your account. If TWC has paid benefits to former employees who were laid off or separated through no fault of their own in the past three years, you will pay the general tax.
• The replenishment tax - charged to all employers to cover unemployment claims not charged to a specific employer. This tax tends to rise following economic downturns when claims increase and businesses close.
• The employment and training investment assessment - a flat tax of 0.1 percent, paid by all employers, and is used to fund the skills training program.

You may be able to reduce your taxes for 2012. If TWC paid benefits to your employees who were laid off or separated through no fault of their own, you may find it beneficial to "buy down" the tax rate. Please visit our web site at www.texasworkforce.org and click on the Businesses and Employers menu link for more information or access the voluntary contribution analysis through Unemployment Tax Service.

At TWC, we work hard to minimize your unemployment insurance costs. In addition to lowering the tax burden, TWC is taking an aggressive approach to eliminate fraud, waste, and abuse of all kinds in the programs the agency administers. By reporting new hires immediately to the state Attorney General's office, responding promptly to notices when a former employee applies for unemployment benefits and responding to earnings information requests on claimants, you can help us avoid overpayments and fraud which costs all employers.

TWC works closely with local workforce development boards across Texas to fill job openings with qualified unemployed workers, and we fund training to upgrade the skills of workers to better match area employers' needs. TWC also works closely with economic development organizations to support existing Texas companies and to bring new business to the state. We pledge our continued efforts in helping to keep taxes as low as possible and mitigating the effects on your business.

Texas Workforce Commission
Austin, Texas 78778

Tax Tip for November, 2011

Those employers who employ only domestic employees may file and pay their Texas Unemployment Tax annually instead of quarterly. An employer who elects to report wages and pay contributions on an annual basis must complete and return the Annual Domestic Election Form by December 31 to enable them to begin filing annually for the next year.

Only those employers who have only domestic employment qualify for annual filing. Employers are not eligible for annual filing if they have more than one type of employment.

The election form must be postmarked no later than December 31, 2011 to be effective for calendar year 2012. If you have questions about electing to report annually, please contact any TWC Tax Office or contact the TWC Tax Department Status Section at (512) 463-2731 or e-mail us at tax@twc.state.tx.us.

Tax Tip for October, 2011

The Texas Workforce Commission web site has a new look! The agency's enhanced web site features easier navigation and easier to understand content.

Some of the pages employers are used to seeing have a new look and/or a new URL. The current URLs will continue to navigate employers to the new web pages for a short time while they become accustomed to the new URLs. Employers who bookmarked frequently used pages should update their bookmarks.

A new, updated site map page will help employers locate specific programs and forms pages more easily. That page can be found at the following link: http://www.twc.state.tx.us/twcinfo/sitemap.html

Tax Tip for September, 2011

Exceptions to Employment

The Texas Workforce Commission Tax Department conducts audits of employer accounts to insure compliance with the Texas Unemployment Compensation Act (TUCA). Routinely these audits result in the employer having over-reported their wages to the TWC. Many employers are not aware that tax is only paid on the first $9000.00 of each employee's wages (wage base) and that the TUCA provides for a number of exceptions to employment.

Some of the most common exceptions:

• Service as an elected official of a political subdivision
• Service of a minor child (under 21), spouse or parent of a sole proprietor
• Service in the employ of a Church.

The TUCA also provides for certain exceptions from employment for a variety of training or rehabilitative work associated with work relief or work training programs. If you have any questions regarding the status of your workers, please contact the nearest Texas Workforce Commission Tax office.

Tax Tip for August, 2011

They Never Worked for Me - Work Separation Information

Occasionally you may receive a Texas Workforce Commission form letter requesting work separation information for an individual that never worked for you. The letter may reference a business name that is very close to your business name (e.g. Iced Coffee vs. Iced Café) and your business address. The referenced TWC account number may or may not be your TWC number. This can happen when similarly named businesses are inadvertently associated with a claimant.

If this happens, there is no need to panic, but you must respond to the request. Simply fill out the notice with your correct account number and (if applicable) select that the person 'Never Worked Here' from the options available. Promptly return the form or choose an alternate method of responding from the options listed on the notice.

If you have specific questions regarding a claim, you may:

• Speak with a Customer Service Representative by calling a TWC Tele-Center toll-free at (800) 939-6631 on any business day or
• E-mail TWC by going to Unemployment Benefit Services and completing the form.

Tax Tip for July, 2011

QuickFile Has been upgraded and Version 5.5.0 is now available.

QuickFile is a wage-reporting program that allows employers and authorized payroll providers to file Employer's Quarterly Reports over the Internet. The program can be used by employers of any number of employees and payroll providers with any number of accounts/clients. QuickFile is designed to transfer wage data that is organized in either the ICESA, the Comma Delimited, Fixed Length or MMREF-1 formats.

Note for current QuickFile users:
Version 5.5.0 requires that you uninstall all prior versions. Temporary files should also be deleted.

For more information about QuickFile registration, hardware/software requirements, and download and installation instructions, visit the QuickFile web page.

For information regarding other filing options, visit the Employer's Quarterly Wage Report Filing Options web page.

Tax Tip for June, 2011

The Myth of Contract Labor

One of the most frustrating problems a business can face is competition from rivals who have unfairly reduced their costs by misclassifying their workers as contract labor. By failing to pay the required taxes on these workers' wages, these companies not only gain a competitive advantage; they also raise the unemployment tax rates for all other employers.

Texas law presumes that workers are employees unless the business can demonstrate otherwise. Independent contractors provide services, but in doing so they are free from the direction and control of the business. View the list of factors (pdf) used by the Texas Workforce Commission in making a determination.

Please contact the Tax Department at tax@twc.state.tx.us if you have information about other employers who are misclassifying their workers or questions about employee/contractor classifications.

Tax Tip for May, 2011

Limited Liability Companies - Reporting Requirements

Limited Liability Companies are treated just as corporations for state unemployment tax reporting purposes.

All remuneration paid to an individual, including members, managers and officers, for services rendered, will be considered wages and must be reported on your employers quarterly report.

Distributions of profits based on formulas established in the Limited Liability Company's articles of organization are exempt from reporting to TWC.

If you need assistance or have questions concerning reporting requirements, please contact Tax Status at tax.statussection@twc.state.tx.us.

Tax Tip for April, 2011

Business Changes

It is important that TWC be notified of any change in your business. By doing so you can:

• avoid penalties for failure to maintain or submit required reports,
• enable TWC to make a prompt ruling on the unemployment tax rate in the event of a merger, acquisition or other change in ownership,
• minimize the risks of unusual problems with your account.

Any change to the makeup of your business or a change in address can be reported to TWC by:

• completing the Status Change Form, Word or PDF
• e-mailing us at tax@twc.state.tx.us or
• contacting your local TWC Tax Office

Employers who are out of state can notify the TWC Tax Department at 512-463-2731.

If you need assistance or have questions concerning acquisitions, please contact Tax Status at tax.statussection@twc.state.tx.us.

Tax Tip for March, 2011

Unemployment Tax Registration - Acquisition Question

If you have acquired all or part of another TWC account, please enter the information in the acquisitions section of your registration. Texas law requires that we record an acquisition when you have acquired all or part, by any means, of the organization, trade, business, or workforce of another liable employer.

An acquisition includes:

• Sole proprietor incorporating.
• Conversions
• Mergers
• Re-organizations resulting in new legal entity
• Transfer of employees to another entity

If you need assistance or have questions concerning acquisitions, please contact Tax Status at tax.statussection@twc.state.tx.us.