The purpose of this PayDay is to alert our clients and readers to various developments, letters and procedures which are “new in 2020” pertaining to employers subject to the Indiana Department of Workforce Development (IDWFD) Many of these exact same issues are prevalent in other states as well. Please call us at 317-885-7600 or email payroll@accupay.com with any questions you have pertaining to Indiana unemployment issues discussed in this PayDay.
CREDIT NOTICES SENT BY IDWFD IN NOVEMBER—WHAT ARE THEY?
IDWFD sent employers “account notices” in November, most of which reported a “credit” being applied to the employer’s account, but they were difficult to understand. We have known for some time that benefits paid from March 13, 2020-October 31,2020 due to COVID would not be charged to the employers’ specific merit rated accounts, but instead would be “pooled/mutualized” as charges to be shared by all employers. During this period of time, the IDWFD was charging COVID benefit claims to specific employers—–they recently completed a project of reviewing all benefit claims paid and issued “credits” to specific employers’ merit rated account balances to remove the COVID benefits from specific charges into a “pooled/mutualized” account of those charges. IDWFD then sent out notices to all employers sharing with them the amounts of their “credits” to offset previous COVID charges for employee benefits. REIMBURSABLE EMPLOYERS—-Since you do not have merit rated account balances, you should review how much you have paid on monthly billings from IDWFD and how much they have refunded to you on the monthly invoices. Our understanding is that reimbursable employers should receive a 50% credit on their monthly benefit bills for all previous COVID employee charges.
FRAUDULENT BENEFIT CLAIMS—-WHY?
Many employers have contacted us about fraudulent benefit claims they have received. AccuPay has actually received a few itself. I spoke with the Tax Director of the IDWFD and she told me that fraudulent unemployment benefit claims are “rampant” in Indiana and actually across all states. Her understanding is that these claims are a byproduct of prior “corporate America” data breaches, such as Equifax, Target and others as she indicated. A fraudulent benefit claim does not mean that your computer system has been breached, nor ours, but instead cyber thieves are using name/social security information procured in prior year large breaches to file the fraudulent benefit claims. So the claimant, your employee, needs to be more concerned than the employer about somebody having their personal information. As an employer, you should file a “fraudulent claim” on the IDWFD website (AccuPay did this,) reporting information about the fraudulent claim. You should also let your employee know about the claim so they can pursue whatever action they choose to report their privacy breach—–perhaps notifying the police, etc.
INDIANA NEW HIRE REPORTING—–LETTERS AND NEW HIRE COMPLIANCE
The IDWFD developed a new program this year to ensure that employers are filing the required “new hire/rehire” reports with the Indiana New Hire Reporting Center. IDWFD is matching new hire reports with quarterly Indiana unemployment employee wage payroll tax returns (which AccuPay prepares) to find employees who are reported as having wages BUT not having a new hire report filed. If they find employees paid on quarterly wage reports, but with no new hire report filed recently, they will send out “non-compliance letters” to employers. This year’s letters are “warnings” to employers about this new program, but at some point IDWFD/New Hire could assess per employee fines for not reporting new hires. THE 60 DAY RULE—-IF an employee has not been paid for the previous 60 days and then is again paid after 60 days, New Hire requires that a “new hire/rehire” report be filed to report these employees. The date used for the “rehire” is the date they were again activated/began work after not being paid for 60 days. This year has obviously had many employees who went “off the payroll” for over 60 days and then came back to earn wages with the same employer. They need to have “new hire” reports filed. AccuPay is reviewing our system options/procedures to alert us to “rehires/reactivations,” so we can file the rehire reports for you as part of our regular, routine new hire reporting we provide to clients who have chosen that service from us. Clients of AccuPay should let us know IF you are again paying a former employee who has not been paid for the previous 60 or more days.
NOTE–Here is the link for the Indiana New Hire Reporting Center—-they will only tell you the employee names of omitted new hires IF you call them—-phone number is on their website.
MERIT RATE NOTICES FOR 2021—-DELAYED—WHAT YOU NEED TO KNOW
The IDWFD has advised us that employer merit rate notices (and the annual opportunity to “buy down” your tax rate with a voluntary payment) will likely not be mailed out to you/us until mid January of 2021 or later. This is due to the chaos of the pandemic, excessive benefit claims this year, AND Indiana having borrowed money from the Federal government. The results of this are as follows:
Generally, you receive your merit rate notice for 2021 mid December. You likely will not receive notices for 2021 until at least mid January. MAKE SURE YOU PROVIDE US WITH COPIES OF ALL MERIT RATE NOTICES YOU RECEIVE FOR 2021 AS SOON AS YOU RECEIVE THEM—-for Indiana and also all states which you file/pay unemployment in. When we receive copies of your various notices, AccuPay will again, proactively, calculate whether you should make any optional voluntary payment to “buy down” your 2021 tax rate. We can only make these buy down calculations for you IF we have a copy of all your state merit rate notices. Some states have already mailed out 2021 notices – KEY is to make sure you promptly send us a copy of all your state merit rate notices for 2021.
If a 2021 rate is not yet available, we will collect/impound state unemployment taxes from you starting with your first pay in January based on your 2020 SUTA tax rate(s). We will enter your new 2021 tax rates during Q1 of 2021 once we receive the notices from you. Your SUTA tax rate changes in 2021 will be calculated retroactively to January of 2021 by our payroll software, and any variance between the rates will be collected or refunded on the next payroll. State SUTA tax returns are not due until April 30, 2021 for Q1 2021(generally true for most states).
In the future, we may need to again deal with potential “retroactive FUTA taxes” owed (like some years ago) since Indiana (and many other states) have borrowed funds from the Federal government to pay their state unemployment benefits. The retroactive FUTA tax is owed to the IRS to “pay” the interest due to the Federal government on the loans made to states that borrowed money to pay benefits. Some of you may remember the complexity of those “credit reduction states” and how to determine how much retro IRS FUTA tax is owed. We will keep you abreast of future developments in this area—Indiana is among several states who have borrowed from the Feds to pay state unemployment benefits for Title XII loans.
This PayDay is “Indiana specific” as to Indiana unemployment issues, BUT most states operate unemployment similarly—–so similar issues in other states. As always, let us know how we can help you with your payroll, tax, HR, etc issues—–Call your payroll specialist at 317-885-7600 or email payroll@accupay.com.
Our next PayDay will be about the just released 2021 employee W-4 form—which is virtually identical to the 2020 W-4, BUT the 2020 W-4 was radically different than pre 2020 forms.
Merry Christmas!!