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Tax Department Tip of the Month

Tax Tip for July, 2010

Keep your records current

Texas Workforce Commission (TWC) mails tax forms, notices and important documents to employers on a regular basis. These documents contain information about your company tax rate and other factors that may affect the amount of money you pay to the Commission. To ensure that your company receives this information in a timely manner, please notify TWC when basic company information changes. Updating your TWC account information insures that you won't miss an important filing deadline, under pay or over pay your taxes.

The Unemployment Tax Services system allows you to update information about your company via the Internet. For more information, visit the Unemployment Tax Services website. You may also contact the Tax office located nearest you by phone, letter or mail. The field examiner who works with your company account is identified on correspondence mailed to the company.

Tax Tip for June, 2010

Unemployment Tax Services - Remove Association

Any user of Unemployment Tax Services may now remove their access to tax account(s) without intervention by TWC staff.

Bookkeepers who were no longer providing a service for certain employers were required to contact either TWC or an account administrator of the account to have access to the account removed. In many of these cases, the users were forced to contact TWC because the account administrator had left employment or could not be reached. Pending users and users other than account administrators were then rendered unable to either gain access or manage the account. This new feature greatly benefits bookkeepers who are constantly changing their clientele base and tend to be the sole user with access to the employer unemployment tax account.

The following steps should be taken by users to remove their association from an employer tax account:

1. Logon to Unemployment Tax Services.
2. Select the My Employers link from the Home page.
3. Select the Remove link located next to the employer account you wish to remove.
4. Select the Yes button on the Confirmation page. Users receive the following message on the Confirmation page: "Removing this employer will permanently take away your access to the employer's unemployment tax account. Are you sure you want to continue?"
5. Confirmation message "Employer removed" will display.

Tax Tip for May, 2010

Required Workplace Posters

TWC Poster

Employers subject to state unemployment tax are required to display a printed poster at each worksite. This FREE poster is provided by TWC and contains general information about filing a claim for unemployment benefits, Texas Payday Law requirements, and a schedule of the employer's paydays. You can request posters using Unemployment Tax Services.

Additional posters are available, free of charge, by faxing your request to (512) 936-3205. You must be an active employer to obtain the poster. When faxing your request, please provide:

• Your TWC tax account number
• Address for mailing posters
• Number of posters you want printed in English
• Number of posters you want printed in Spanish (Spanish is not a requirement)

You can also order posters by calling (512) 463-2747 or any TWC local tax office.

If your business is not liable under the Texas Unemployment Compensation Act, but as a Texas employer you are subject to the Texas Payday Law, you should request the Payday Law Poster at 1-800-832-9243 or (512) 475-2670 or click on the linked title below.

Texas Payday Law Poster (PDF)

Additional Posters

There are additional informational posters that you may be required by federal law to post:

• Fair Labor Standards Act
  Employee Polygraph Protection Act
  Family & Medical Leave Act of 1993
  These posters are available at http://www.dol.gov/osbp/sbrefa/poster/main.htm.
  
  
• US Department of Labor-Occupational Safety & Health Administration (OSHA)
  This poster is available at http://www.osha.gov/pls/publications/pubindex.list.

Tax Tip for April, 2010

Overpaid your Unemployment Insurance (UI) Tax?

From time to time, an unusual event may cause an overpayment of UI tax. If you overpaid your account, TWC will refund the excess amount.

To make the process as quick and efficient as possible:

• check your account to be sure it is current for employer's quarterly reports
• review your report history for obvious errors
• submit a request signed by an officer or authorized representative (use the form C69QCR that notified you of the credit for faster service).
• request 'all available credit' or ask for a specific amount

Before TWC issues a refund, we review and verify the details of your account for the following:

• has required information about the structure and business name been provided?
• have all quarterly reports that are due been filed?
• have all reports processed properly?

After we verify the account, TWC approves the refund. The State Comptroller of Public Accounts prints the checks, and then returns them to TWC to mail. The entire process takes at least 90 days.

You have three years from the postmark date of the money to request a refund.

Tax Tip for March, 2010

Taxable Wage Calculations

Employers frequently ask questions concerning the proper calculation of taxable wages, Line 14 of Form C-3, Employer's Quarterly Report. The first $9,000 paid to an employee in a calendar year is the annual "taxable wages" for an individual and the key to the basic taxable wage formula.

The following example demonstrates the amount of total wages, taxable wages and tax contributions due for an individual for all four quarters of a calendar year. This example assumes an employer had only one employee earning $2,500 a month in 2009.

This example illustrates how to arrive at the taxable wage amount for an employer with multiple employees.

An employer must file reports for each quarter even if he has zero taxable wages and does not owe any tax. It is important that Line 14 contain either the taxable wage amount or a 'zero' if there are no taxable wages. Although reimbursing employers do not pay this tax, they must also submit an Employer's Quarterly Report to report wages paid to their employees.

Taxable wages reported by a predecessor account may be used in arriving at the $9,000.00 taxable wage base for the successor account during the same calendar year provided there has also been a transfer of compensation experience between accounts.

Tax Tip for February, 2010

Registered users of Unemployment Tax Services, the free TWC online utility, should update their online profile any time they change e-mail addresses. TWC uses the e-mail address to enable online password changes as well as a means of notifying employers.

Updating the profile is quick and easy. After logging in to Unemployment Tax Services, select the "My Profile" link from the upper right of any page. Next, the user will enter the new e-mail address and then submit.

To ensure that e-mails are received and not filtered, users should add the TWC e-mail addresses taxserv@twc.state.tx.us and tax@twc.state.tx.us to their address book.

Tax Tip for January, 2010

Annual Domestic Reporting

The annual report and contribution for domestic accounts that have requested annual filing is due on or before January 31, 2009.

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.

Earned Income Tax Credit

In accordance with Texas Labor Code 104.004 (a) and HB 2360 passed during the 81st Texas Legislative Regular Session, employers (a person who employs 1 or more employees) must notify all of their employees (an individual who is employed by an employer for compensation) of the federal earned income tax credit (EITC) general eligibility requirements, no later than March 1 of each year. The EITC is a refundable federal income tax credit for low to moderate income working individuals and families.

1. In person;
2. Electronically at the employee's last know e-mail address;
3. Through a flyer included, in writing or electronically, as a payroll stuffer; or
4. By mailing the information to the employee at the employee's last known address by United States first class mail.

Employers may use IRS Notice 797, or a written statement with the same wording as IRS Notice 797 when notifying employees. IRS - Notice 797 provides employees with the basic information for EITC.

There are several websites created to assist employees with additional information, eligibility requirements, general overview and income guidelines for EITC.

For more information, go to: http://www.eitc.irs.gov/central/Preview2009/ or, http://www.twc.state.tx.us/welref/wrjseek.html

Tax Tip for December, 2009

2010 Unemployment Insurance Tax Rates

Rising unemployment and layoffs placed increased demand on the Unemployment Compensation Trust Fund in 2009. As a result of this greater demand, and as required by formulas set in state law, 2010 employer tax rates will rise in order to replenish the fund.

The Texas Workforce Commission (TWC) has taken actions to minimize tax increases and keep as much money as possible in the Texas economy. First, each employer's deficit tax was adjusted down by 50 percent. The agency has secured interest-free loans from the U.S. Department of Labor through the end of 2010. Also, the agency will work with the Texas Public Finance Authority to issue bonds in the private sector next year to access funds at a lower interest rate than what will be available from other sources beginning in 2011.

The components of your 2010 tax rate are:

• The general tax rate is based on claims against your account. If TWC has paid benefits to your employees who were laid off or separated through no fault of their own in the past three years, you will be assessed a general tax.
• The replenishment tax rate is charged to all employers to cover unemployment claims not charged to a specific employer. This tax varies from year to year but tends to increase following economic downturns when claims increase and businesses close.
• The deficit tax rate is charged to all employers when the Trust Fund balance falls below a certain statutory level or balance.
• The employment and training assessment is a flat tax of 0.10 percent, paid by all employers, and is used to fund the skills training program.

You also may be able to reduce your employer taxes for 2010. 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 http://www.texasworkforce.org and click on the "Businesses and Employers" menu link for more information, or access the voluntary contribution analysis through Unemployment Tax Services. Under the Voluntary Contribution Analysis link, you will find a convenient way to calculate a "buy down" and evaluate the return on the up-front investment.

TWC is dedicated to finding ways to lower the financial impact of rising unemployment on Texas employers. One of the most effective ways is to help those who are out of work find a new job as soon as possible. This rapid reemployment emphasis is a primary focus of TWC and the 28 local workforce development boards. Together, we can weather the current economic challenges.

Tax Tip for November, 2009

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, 2009 to be effective for calendar year 2010. 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, 2009

Computation of the 2010 unemployment insurance tax rate is based on your employment experience for the past twelve calendar quarters. Benefit payments charged to your tax account and taxable wages, which you have reported and on which you have paid taxes, are used in the computation.

The Labor Code, Texas Unemployment Compensation Act, provides that only taxable wages on which taxes have been paid by October 31, 2009 can be used to compute your tax rate. If you have unreported wages or unpaid taxes that are due from the twelve quarters proceeding October 1, 2009, you are encouraged to submit your report(s) and payment by October 31, 2009. Payment of unemployment insurance taxes may decrease your 2010 tax rate.