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Questions About Quarterly Bond Contributions

Why must I pay bond contributions in addition to UI tax?
Nevada received federal loans to pay unemployment insurance benefits.  To repay the loans, Nevada issued bonds.  To repay the bonds, all contributory employers, in addition to paying UI taxes, must also pay quarterly bond contributions.  (NRS 612.6102-612.6134)

Why can’t I just send one check to pay for both UI taxes and the bond contributions?
The bond contributions being collected are for a specific purpose, to repay the bonds issued by the State of Nevada, through the State Treasurer.  As such, the bond contributions must be accounted for and maintained separately from UI taxes, and cannot be paid electronically.

I use a reporting service to file my UI taxes.  I thought they would also file the new quarterly bond contributions, but they did not.  What do I need to do now?
Please contact your reporting service to learn directly from them what they are able to do for you regarding the bond contributions.

The collection of bond contributions will be administered using the same laws as those for regular UI contributions, except that bond contributions cannot be paid electronically.  Quarterly bond contributions must be paid by check, separate from UI contributions.

Do not assume your reporting service is taking care of the Bond Billing Invoice for you. Please contact them.

Please pay bond contributions by a separate check, made payable to Employment Security Division.  Indicate “Bond” on the check memo line as well as on the envelope, if not using the return envelope with blue markings. 

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Bonds Issued to Repay Federal Loans

The State of Nevada has issued special revenue bonds, as provided for in recent legislation SB515, for the purpose of repaying federal loans needed to pay unemployment benefits.  An advantage to using bonds to pay for these loans is that Nevada will no longer be a federal unemployment (FUTA) credit reduction state for the 2013 tax year, restoring the full federal credit offset of 5.4%.  Additionally, with the loans being repaid, no future interest associated with them will be accruing.  Contributory employers subject to Nevada unemployment insurance (UI) taxes will be required to pay a quarterly bond assessment to cover the principal, interest, and administrative payments on the bonds. 

This notice is to advise you that collection of bond contributions will begin with the first quarter 2014, with a due date of April 30, 2014 and will continue to be collected quarterly from employers until the bonds are fully repaid in late 2017 or early 2018.  Bond contributions are separate from, and in addition to, regular quarterly Nevada unemployment insurance taxes.  The collection of bond contributions will be administered using the same laws as those for regular UI contributions.

Bond contribution rates will be calculated according to the formula established in the regulation. Quarterly Bond Contribution = quarterly Taxable Wages paid X your assigned Bond Factor. 

In late January 2014, employers or their authorized agents will be advised by mail of final details, including their assigned bond factor based on 2014 UI tax rates.  Like your UI tax rate, your bond factor will be reviewed annually, and is based on the employer’s previous experience with unemployment.  Employers with low UI rates will have lower bond factors than employers with higher UI rates.  (Tax Rate Notices for 2014 are scheduled for mailing on or before December 31, 2013.  The taxable wage base for 2014 is $27,400 per employee.)

For more information:

Nov 26, 2013: Press Release Regarding State Repaying Unemployment Insurance Debt

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Taxable Wage Base for 2017:

Effective January 1, 2017, the taxable wage base for calendar year 2017 is $29,500. (The taxable wage base for calendar year 2016 is $28,200).  The taxable wage base for Unemployment Insurance (UI) contributions is calculated each year at 66 2/3 percent of the average annual wage paid to Nevada workers. UI taxes, payable to the Employment Security Division, are paid on an individual's wages up to the taxable wage base during a calendar year. Although total wages paid to each employee must be reported to the Division each quarter, any wages paid to an individual, which exceed that amount during the calendar year, are not taxed.

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Mandatory Electronic Payments:

If the quarterly tax due is $10,000 or more the payment is required to be made electronically. This also applies to authorized agents and submitters who file for multiple employers. If the total aggregate amount of contributions is $10,000 or more, Nevada law requires the payment to be made electronically by either ACH Credit or ACH Debit.  Electronic Payment System

To begin electronic payments, please contact the Employment Security Division, Electronic Payment System Customer Service, at (775) 684-6345, during regular business hours.

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Employee Misclassification:

Contents:
What is employee misclassification?
What is the definition of an independent contractor?
Why is it important to correctly classify workers?
What are the penalties that an employer may be subject to regarding employee misclassification?
Where can I get additional information about employee classification?
As an employer how can I correct my error of misclassification?
How can I resolve misclassification issues with the IRS?
 

What is employee misclassification?

Employee misclassification  occurs  when  an  employer incorrectly classifies a worker as  an  independent  contractor  rather  than  an employee.   

The practice of employee misclassification can be a costly mistake if left uncorrected.  It is the responsibility of every employer to correctly identify workers and report wages for employees.  If workers are misclassified as independent contractors when they are actually employees, and therefore not correctly reported, there are significant penalties for failure to report wages and pay related Unemployment Insurance (UI) tax.

Employee misclassification can also be an attempt by some employers to avoid their legal obligations under federal and state labor laws, employment and tax laws, including the laws governing minimum wage, overtime, unemployment insurance, workers’ compensation, temporary disability insurance, wage payment, and federal income tax.

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What is the definition of an independent contractor

Nevada Unemployment Compensation Law does not define “independent contractor” but uses what is commonly referred to as the “ABC” test. 

Unless otherwise specifically excluded, payment for services is subject to unemployment taxes as an employee, unless the following three conditions are met:
 

A.  The person has been and will continue to be free from control or direction over the performance of the services, both under his contract of service and in fact; and            

 

B.  The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

 

C.  The service is performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged, of the same nature as that involved in the contract of service.           

A written contract alone is not sufficient; all three conditions must be met in fact for the workers to be correctly identified as independent contractors. 

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 Why is it important to correctly classify workers?

Employee misclassification has serious adverse effects on employees, businesses, and the Nevada economy, including: 

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What are the penalties that an employer may be subject to regarding employee misclassification?

Failure to report wages and pay related Unemployment Insurance (UI) tax could result in the following penalties: 

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Where can I get additional information about employee classification?

The Contributions Section of the Employment Security Division is available to help you and will work with you to correctly classify your workers. Regarding employee classification, please call the Employer Registration Unit at (775) 684-6310.

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As an employer how can I correct my error of misclassification?

A payment agreement can be negotiated for the amount due, which will suspend any legal action against your business, as long as you pay the taxes and penalties due according to the agreement. 

If you have questions or need to make a correction to your reporting, please contact the nearest Field Audit Office location of the Employment Security Division, in Reno at (775) 823-6680, Carson City at (775) 684-6390, or Las Vegas at (702) 486-0250.

How can I resolve misclassification issues with the IRS?

The Voluntary Classification Settlement Program “At a Glance”

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Alternate Base Period:

Nevada Revised Statute 612.025 adopts an alternate base period for determining entitlement to unemployment insurance benefits.  A standard base period for a benefit claim is defined as the first four of the last five completed calendar quarters.  If a claimant is monetarily ineligible under a standard base period, the law change allows wages paid in the most recently completed calendar quarter to be considered for determining entitlement.  Therefore, the most recently completed four calendar quarters will be used as the "alternate base period."

The impact of the law for Nevada employers is that you may be asked to provide wage information for a specific former employee, for the most recently completed quarter, prior to the usual quarterly reporting due dates.

Note: Even if you supply wage information "early" for an alternate base period, you must report that same information when you file and pay your quarterly unemployment insurance tax report.

If wage information is needed prior to the usual due date for the Employer's Quarterly Contribution and Wage Report, you will receive a request to provide the total amount of gross wages and any tips paid during the most recently completed quarter.  The most likely months in which additional requests will be necessary are the months prior to each reporting cycle:

January - wages for the 4th quarter, prior to January 31 due date

April - wages for the 1st quarter, prior to April 30 due date

July - wages for 2nd quarter, prior to July 31 due date

October - wages for the 3rd quarter, prior to October 31 due date

Your timely cooperation in supplying wage information, if requested, is important.  The quarterly wages are necessary to determine a person's entitlement to unemployment insurance benefits and, if claimant is eligible, will allow the benefits to begin without delay.

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