State governments primarily pay out unemployment benefits funded by specific taxes collected for that purpose. Given that navigating through state unemployment programs presents many challenges, we have created a blog series outlining some of the specifics, such as employer liability, employee eligibility, benefit levels and duration in different states. Unemployment Insurance in Texas The Texas Workforce Commission (TWC) administers the UI program in Texas. The Texas Unemployment Tax Act (TUCA) establishes the provisions of the UI system in Texas, defines employment and establishes which types of employers participate in the unemployment tax system. Employers who meet requirements for UI employer liability in Texas are required by law to participate in the Texas state unemployment tax program. Liable employers must report employee wages and pay the unemployment tax based on the TUCA. Employers covered by UI employer liability in Texas include: Sole proprietorships; Partnerships; Limited Liability Companies (LLC); Professional Limited Liability Companies (PLLC); Limited Partnerships (LP); Limited Liability Partnerships (LLP); Professional Corporations (PC); Professional Associations (PA); corporations and foundations; Associations; Trusts; Estates; Banking institutions; Political subdivisions; and Government agencies. UI employer liability in Texas differs for different types of employment and TWC uses three employment categories: regular, domestic and agricultural. Regular Employment Under any of the following circumstances, employers meet requirements for UI employer liability in Texas if they: Have Texas employees and are subject to the Federal Unemployment Tax Act (FUTA) in Texas or another state; Pay at least $1,500 in total gross wages to employees in any calendar quarter; Pay at least one employee for a minimum of one hour a day during 20 different weeks in a calendar year; Have been designated as a 501(c)(3) organization by the IRS and have at least four full- or part-time employees for 20 different weeks in a calendar year; or Acquire or take over, through any means, the total or partial assets of a business, trade, organization or workforce that is liable for the UI tax. Domestic Employers Under any of the following circumstances, employers meet requirements for UI employer liability in Texas if they: Pay $1,000 or more in total gross wages in a calendar quarter; or Take over the domestic employees from another household that is liable for the UI tax. Agricultural Employment Under any of the following circumstances, employers meet requirements for UI employer liability in Texas if they: Employ at least three employees for a minimum of one hour a day for 20 weeks in a calendar year; Pay at least $6,250 in total gross cash wages to employees in a calendar quarter; Employ a seasonal worker on a truck farm, orchard or vineyard; Employ a migrant or seasonal worker who works for a farmer, ranch operator or labor agent; or Acquire or take over, through any means, the total or partial assets of the business, trade, organization or workforce that is liable for the UI tax. UI Employee Eligibility in Texas TWC evaluates eligibility for unemployment benefits claim based on: Past wages; Job separation; and Ongoing eligibility requirements. To qualify for UI employee eligibility in Texas, employees have to meet requirements in each of these three areas. Past Wages Past wages are one of the requirements for UI employee eligibility in Texas that also serves as the basis of potential unemployment benefit amounts. TWC uses the taxable wages, earned in Texas, that employers have reported during the base period to calculate unemployment benefits. The base period is the first four of the last five completed calendar quarters before the effective date of the initial claim. To have a payable claim, employees must meet the following requirements: They have wages in more than one of the four base period calendar quarters; Their total base period wages are at least 37 times their weekly benefit amount; and If they qualified for benefits on a prior claim, they must have earned six times their new weekly benefit amount since that time. Job Separation To meet the requirements for UI employee eligibility in Texas based on job separation, employees must be either unemployed or working reduced hours through no fault of their own. Examples include layoff, reduction in hours or wages not related to misconduct, being fired for reasons other than misconduct, or quitting with good cause related to work. Ongoing Eligibility Requirements In addition to the past wages and job separation, there are requirements for UI employee eligibility in Texas that employees must continue to meet. To do so, employees must be totally or partially unemployed and meet all of the following conditions: Meet all work search requirements, unless TWC exempts employees from work search; Request payment for weeks of unemployment, when scheduled; Be physically and mentally able to work; Be available for full-time work; Participate in reemployment activities as required; and Respond to requests from TWC or a Workforce Solutions office as instructed. Reducing Unemployment Costs Employers have several things to keep in mind when it comes to paying taxes. Understanding unemployment insurance and how unemployment claims can affect their tax rates is one of many challenges that employers have to overcome. Given that each claim assessed to an employer’s account can lead to a tax rate increase in future years, they should take all the necessary steps to reduce their unemployment costs. While determining whether former employees are eligible for unemployment benefits or going through the hassle of fighting unemployment claims is complex and time-consuming, employers need to prevent UI benefit charges to keep their unemployment tax rate low. To simplify this process and reduce the overall expenses, employers can use an efficient software tool to manage their unemployment costs. This allows them to significantly improve every aspect of managing unemployment claims, consolidate relevant UI information for better decision making, gain access to more accurate and timely data to improve business processes, work with knowledgeable unemployment tax professionals and rely on their expertise. To simplify this process and reduce the overall expenses, employers can use an efficient software tool to manage their unemployment costs. This allows them to significantly improve every aspect of managing unemployment claims, consolidate relevant UI information for better decision making, gain access to more accurate and timely data to improve business processes, work with knowledgeable unemployment tax professionals and rely on their expertise.

There are several updates for employer tax credit programs in recent weeks relevant to businesses. These include an explanation from the IRS Chief Counsel on the proper treatment of improperly forgiven PPP loans, an update from a coalition of nonprofits seeking a retroactive restoration of the Employee Retention Credit (ERC), and new guidance from the IRS on the Work Opportunity Tax Credit (WOTC). IRS Chief Counsel Memo: Proper Treatment of Improperly Forgiven PPP Loans A new Chief Counsel memo dated August 19, 2022, explains that while Congress excluded forgiven PPP loans from gross income in the Consolidated Appropriations Act, 2021 (Pub. L. 116–260), if forgiveness was obtained despite not meeting the requirements for that forgiveness, the loan proceeds should then be included in gross income. They conclude: “If a taxpayer who does not factually satisfy the conditions for a qualifying forgiveness causes its lender to forgive the PPP loan by inaccurately representing that the taxpayer satisfies them, the taxpayer may not exclude the amount of the forgiven loan from gross income under 15 U.S.C. § 636m(i) or section 276(b)(1) of the CTRA 2020.” PPP loans were administered through the Small Business Administration (SBA), and IRS does not have direct jurisdiction over the issues involving the loans or their forgiveness. However, this aspect of taxable income treatment enables the IRS to get involved in the PPP loan forgiveness area. For taxpayers who took advantage of both the PPP and ERC programs, there is also a tax implication, namely the proper interaction of forgiven PPP loan funds and ERC qualified wages. This gives the IRS yet another angle to investigate the proper use of PPP loan funds. Nonprofits Reiterate Request to Restore ERC A coalition of nonprofit organizations have updated and resent their letter to President Biden and Congressional leaders. The update, dated September 13, 2022, includes their request “to retroactively restore the Employee Retention Tax Credit, as proposed in the bipartisan ERTC Reinstatement Act (H.R. 6161/S. 3625), extend this refundable payroll tax credit through 2022, and modify nonprofit eligibility beyond the current ‘gross receipts’ test and definition of eligible payroll expenses to include child care and education subsidies.” There does not appear to be any serious discussion in Congress to extend this employer tax credit program. IRS Updates WOTC Guidance A press release from the IRS alerts taxpayers to an update of their WOTC information webpage. As noted in the press release, the new information includes an emphasis on the pre-screening requirement that has been part of the program since its inception in 1996. It is interesting that IRS is choosing to highlight and reiterate rules that have always existed. Prior to the update, the relevant text read: Pre-screening and Certification. An employer must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. An eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state workforce agency within 28 days after the eligible worker begins work. Employers should contact their individual state workforce agency with any specific processing questions for Forms 8850. The revised text reads: Pre-screening and Certification An employer must pre-screen and obtain certification from the appropriate Designated Local Agency (referred to as a State Workforce Agency or SWA) that an employee is a member of a targeted group to claim the credit. To satisfy the requirement to pre-screen a job applicant, on or before the day that a job offer is made, a pre-screening notice (Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit) must be completed by the job applicant and the employer. The Targeted Jobs Tax Credit (TJTC), which preceded WOTC, did not contain a pre-screening requirement. In enacting WOTC to replace the TJTC in 1996, Congress included the requirement that employers pre-screen job applicants before or on the same day the job offer is made. In doing so, Congress emphasized that the WOTC is a subsidy designed to incentivize the hiring and employment of individuals who are members of targeted groups. On page two of Form 8850, there are four dates that must be provided before Form 8850 can be submitted to a SWA. They are the dates that the job applicant Gave information, Was offered job, Was hired, and Started the job. To confirm that the employer pre-screens the job applicant, and obtains information provided by the job applicant on the basis of which the employer believes that the job applicant is a member of a targeted group, the date the applicant Gave information about being a targeted group member must be a date that is the same as, or before the date the applicant Was offered job. The dates that the job applicant Was hired and Started the job must be on or after the dates the applicant Gave information and Was offered job. Form 8850 including the dates entered on page two of Form 8850, must be signed under penalties of perjury and must be submitted to the SWA (or postmarked, if mailed) no later than 28 days after the date that the job applicant Started the job. Some individuals have a Conditional Certification (DOL-ETA Form 9062) issued by partnering agencies or SWAs. Employers can contact their SWAs for more information on Conditional Certifications. If an employer does not receive a certification on or before the day that the individual begins work, the employer must request certification by submitting Form 8850, to the SWA of the state in which their business is located (where the employee works) within 28 days of the individual beginning work. Employers should contact their SWA with any specific processing questions for Form 8850. Experian Employer Services tax experts regularly monitor and track updates to employer tax credit policies. Learn more about our tax credit solutions here.

The DHS issued a request for public comments on possible alternative document procedures for Form I-9. This change could greatly ease remote I-9 processes.

Many vendors make big, generic promises about the ERC that fall short. Consider these four questions to ask an ERC provider before making a decision.

The ERC is based on a percentage of qualified wages but can vary depending on the determination of classifying as a large or small eligible employer.

The Treasury Inspector General for Tax Administration has issued a new report on IRS ERC refund processing delays affecting employers.

Form I-9 compliance is essential. A mistake can result in a severe penalty. Protect your bottom line: read our resource on how to avoid I-9 violations.

Learn about different aspects of California UI tax to stay compliant, control UI costs and reduce the risk of incurring unnecessary penalties.

Form I-9 compliance can be one of the more daunting employer obligations companies face. The seemingly simple form is much more complex than it first appears. Failing to remain compliant with rule changes, exceptions, retention policies and more puts an organization at risk of an audit and the potential for a costly fine. However, there are steps companies can follow to improve I-9 compliance, reduce their risk for audits and simplify the process for their business and their employees. Watch this webinar with Experian Employer Services’ Vijay Thakkar, I-9 & E-Verify Compliance Expert and Jeremy Sedrick, Director, Pre-employment Services, for an overview of 7 ways to improve your I-9 compliance and prepare for a more successful audit. The following is an excerpt from the webinar, "7 Ways to Improve Your I-9 Compliance." Watch the full webinar here. Vijay Thakkar: So let's take a look at some settlements and lawsuits which will give you a much better picture of what I was talking in the previous slides. Not addressing the issue of technical and substantive violation while hiring unauthorized workers or requesting additional documentation or unfair having unfair documentary practices can results in thousands and millions of dollars worth of points. So the first example is of a staffing company. This particular organization had less than 50 full-time employees and hundred of hundreds of seasonal employees. They failed to prepare 213 for their 213 employees, they failed to prepare I-9's, and when requested by the agency they failed to produce the full form I-9. They did not complete the section 1 or section 2 of the I-9's properly for 1,000 plus I-9's. They even went on attempting and back dating 178 forms of their I-9 and the agency also found that they failed to complete the I-9 section 3. So it's not just one violation, it's a bunch of violations on that from section 1, section 2, back dating section 3, not completing the form I-9 and can you guess the penalty on there? $1.5 million. That's the penalty they paid for less than 50 full-time employees and over 1,000 plus seasonal employees. Now let's take a look at the at another case, and this is for a retail organization. In this particular situation the HR at this organization rejected the expired permanent resident card with valid i-797 which extended the validity of the expired permanent resident card and instead requested a new PR card and as Jeremy had stated in the previous slide you can accept an expired PR card or green card as long as it's supported by a valid I-797, which extends the validity. So in this particular scenario the HR said no we cannot accept your I-797 you go and bring me a new PR card which was still processing. The result? $73,263 in civil penalties and resulted in providing back wages to a lawful permanent resident who was impacted by this particular situation it also resulted in internal training for all the HR's at the organization and departmental monitoring and reporting. Moving on to the next case. This is of a security services company. So this particular organization acquired another security services company and the HR at this organization requested lawful permanent presidents to produce permanent resident card list A documents and did not accept a combination of list B and C. As Jeremy clearly mentioned, when completing the I-9 section 2 you have two options: either you present a list A documentation which substantiates a work authorization and identity,. whereas a combination of list B and C to verify the identity and for work authorization only. In this it was a clear case of rejecting documentation that were truly valid in the first place and the result was $194,000 in civil penalties and discrimination training for their HR department and departmental monitoring for two years. Watch the full webinar to learn more.

Get an overview of the latest updates made to 2022 Form 941 for the second quarter and make sure to comply with the necessary changes.

The Inflation Reduction Act has implications for tax credits. Here's how it affects WOTC, Empowerment Zone credits, ERC and more.

Learn about the common reasons for unemployment insurance overpayments and measures that states take to reduce and prevent them.

Learn more about WOTC eligibility and WOTC target groups as well as why this program is considered a win-win situation for employers and employees.

Find out about differences between employment verification and reference checks and best practices resulting in more informed hiring decisions.

Get an overview of common income verification challenges to stay prepared, resolve them successfully and timely eliminate any financial risks.

Learn more about reemployment tax liability and employee eligibility in Florida to stay compliant with the necessary regulations and prevent potential costs.

Get an overview of the UI Integrity Act and recent actions taken to reduce improper payments to prepare and ensure UI integrity compliance.

Learn more about UI employer liability and employee eligibility in New Jersey to stay compliant with the necessary regulations and reduce potential costs.