UI Tax Services

A: In a few states, employees do contribute a small share. However, during the formulation of the federal/state system, the consensus of opinion among the states was that this would lead to assertions that the employee has a vested right to the money. But, the intent was to make benefit entitlement contingent only upon certain conditions regarding employment and unemployment. If the employer bears the entire cost, he will more likely participate in the benefit entitlement process in order to control his costs and limit payment to the truly unemployed.

Q: How can I control my tax costs?

A: There are a number of things you can do to help control your costs, all of which impact your reserve ratio or the Unemployment Insurance Trust Fund. Generally, the higher your reserve ratio, the lower your taxes will be:

· Pay your taxes on time. This is a factor used in your reserve ratio calculation. (Timely payment also ensures full credit against your Federal Unemployment Tax.)

· Respond to division notices timely, honestly, and accurately. Whether benefits are paid is often determined by employer responses. Without sufficient facts, the division must act on whatever information is available. Benefits paid in error will likely impact your future tax rates. This is your only opportunity to provide this information.

· If you feel a determination from the division is in error, file a timely appeal and attend all hearings.

· Review your benefit charges and tax rate notices carefully for errors. Remember - the time to protest benefit charges is at the time the claim was filed, not when the "Notice of Benefit Payments Charged" statement is mailed.

· Keep accurate, written personnel records of your employees' performance and conduct. Be particularly specific when responding to the division regarding reasons for separations.

· Offer job openings to unemployed workers, if possible. This reduces overall cost and possibly your individual tax rate. Take advantage of our free Job Connect offices.

· Avoid layoffs whenever feasible. Workers could possibly be used temporarily in a part-time position or in some other capacity. Contact other employers in your industry for possible job openings.

· Notify the division if an unemployed claimant refuses suitable work, or any other instance you think an individual is abusing the system.

Q: How is my tax rate determined?

A: New employers pay Unemployment Insurance (UI) taxes at a rate of 2.95 percent of taxable wages until they are eligible for “experience rating." There is an additional tax of .05 percent of taxable wages for the Career Enhancement Program (CEP).

Once you are eligible for experience rating, your rate is determined by two factors:

· Your reserve ratio, which is a measure of your previous experience with unemployment; and

· The reserve ratio schedule in effect.

The administrator establishes, by regulation, the schedule to be in effect for each calendar year. Changes to the schedule are made according to the trust fund balance, economic conditions, and forecasts. The law provides for an annual test of the trust fund for a guideline. The balance should be sufficient to pay benefits for one full year, disregarding any additional income (Department of Labor recommends sufficient funds to pay benefits for 1 1/2 years).

The regulation is filed pursuant to the Administrative Procedure Act and the Nevada Open Meeting Law, upon the recommendation of the Employment Security Council. A meeting is held with the council during October of each year, and a public hearing is held in November; both are open to the public.

Q: How am I notified when my rate changes?

A: Each December, employers receive a Notice of Employer’s Contribution Rate (form NUCS 4290 for new employers, and form NUCS 4291 for experience rated employers) advising them of their tax rate for the following calendar year. The notice includes accumulated taxes paid, benefits charged, average taxable wages for the prior three years, and calculation of their “reserve ratio”.

Employers should examine their rate notices carefully. You have 15 days from the date of mailing to request a review. If you have any questions regarding your rate notice, contact the Contributions Section, Status Unit.

Q: What is an Experience Rating and how does it affect my tax rate?

A: Once an employer becomes eligible for “experience rating,” he will receive one of 18 unemployment insurance tax rates, ranging from .25 percent to 5.40 percent of taxable wages. Each employer’s tax rate may vary from year to year, depending on previous experience with unemployment and the rate schedule in effect.

Nevada uses the “Reserve Ratio” formula to determine previous experience, which is the method used by a majority of the states. The Employment Security Division maintains a permanent “Experience Record” for each employer, consisting of accumulated taxes paid, accumulated benefits charged to his account, and average taxable payroll for the prior three years. Each year, the employer’s reserve ratio is calculated from his experience record to determine his tax rate under the schedule in effect. Generally, the higher the reserve ratio, the lower the employer’s tax rate will be.

For more information regarding the reserve ratio calculation, please see the Employer Handbook.

Q: What is the self-insurance or "reimbursement" option?

A: The law provides state and local government, certain nonprofit employers (those who are exempt under Section 501(c)(3) of the Internal Revenue Code), and Indian Tribes an option to pay quarterly taxes, or they may elect to be self-insured under the "reimbursement" method. If the "reimbursement method is chosen, the employer must file quarterly wage reports, but does not pay quarterly taxes for unemployment, nor for the Career Enhancement Program (CEP).

When choosing the "reimbursement" method, instead of paying quarterly taxes, an employer must reimburse the state on a quarterly basis for all unemployment benefits charged to his account. The Employment Security Division administers all claims for reimbursement employments in the same manner as for tax paying employers. If an employer elects the "reimbursement" method, he cannot change back to the taxing method for at least two calendar years, and must notify the division no later than December 1, to be effective for the following calendar year.

Q: How do I know if unemployment benefits have been charged to my UI Employer Account?

A: We mail benefit charge statements at the end of every calendar quarter. The statement will list each former employee who has collected unemployment benefits during the quarter and the amount of unemployment benefits paid. The charge statement details the dollar amount being charged to the employer's account and the percentage of unemployment benefits paid to each individual charged to that employer.

Q: I’m a base period employer. One of my workers quit without good cause, yet my experience record is still charged with part of his benefits. Why should I be charged when I had no control over his leaving?

A: The law provides for disqualification for voluntary quits and misconduct, if it was the reason for the separation for his last employer. If the worker quit or was discharged from a base period employer who was not the last employer, he may still receive benefits. In general, benefits are charged proportionately to base period employer regardless of reason for separation. However, if one of the employers paid 75 percent or more of the wages, he will be charged for all of those benefits (other base period employers are not charged at all) unless he can prove that the worker quit without good cause or was discharged for misconduct.

Q: If an employee quits or is fired, can he draw benefits?

A: If the division determines that the employee either quit without good cause or was fired for misconduct in connection with his work from his last employer (or is some cases his next to last employer), he will be disqualified. Accurate employer records and participation in the benefits process are vital to the division’s ability to make the correct decision.

Q: I have written agreements with my workers that they are independent contractors. Doesn't that exempt them from unemployment tax?

A: A written contract does not necessarily establish independent contractor status. In fact, any agreement by an individual which waives his rights to benefits is void (NRS 612.700). And while the written contract provisions may be considered in any determination, the conditions described in NRS 612.085 must also be met in fact.

Q: My workers meet all the requirements of an independent contractor for IRS purposes. Doesn’t that exempt them from state unemployment taxes?

A: Not necessarily. Nevada Unemployment Compensation Law does not define “independent contractor.” It uses what is commonly referred to as the “ABC” test. This test is unique to the Unemployment Compensation Program. Unless otherwise specifically excluded, payment for personal services is deemed subject to unemployment taxes unless the following conditions are met. All three conditions must be met in fact; a written contract alone is not sufficient. The burden of proof rests upon the employer to demonstrate the existence of these conditions:

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

If you cannot demonstrate the above conditions, the person is an employee. A written contract, in itself, does not establish “independent contractor” status. If in doubt, contact the Contributions Section for a ruling.

Q: Are "Cafeteria" and 401k plans reportable wages?

A: Yes. Amounts deducted from employees' gross salaries to pay for these items are wages. If, however, the employer makes a matching contributions to an employee's 401k plan, the amount contributed by the employer is not wages.

Q: I'm an officer and sole shareholder of a subchapter S corporation. Why should I have to pay taxes on myself? I'll never be able to draw benefits.

A: A corporation is a separate legal entity and thus a separate “employing unit” under Nevada Unemployment Compensation Law. Therefore, any individual performing services for wages is an employee of the corporation. Subchapter S status pertains to federal income tax laws and has no bearing on state law. Unemployment compensation is an insurance program; and while the likelihood of drawing benefits may be less than in other situations, it is still possible, if all other requirements are met.

Q: If I have already paid taxes on an employee in another state, and then transfer him to Nevada, can those wages be considered when calculating nontaxable wages?

A: Yes, as long as he continues to work for the same employer.

Q: Why do I have to report tips separately on my quarterly tax reports?

A: Tips are included in a claimant’s earnings when determining if he is entitled to benefits and in what amounts. However, the maximum weekly benefit amount changes each year and is equal to 50 percent of the average weekly wage paid to Nevada workers. The law requires that tips be excluded from the calculation of the maximum weekly benefit amount. Reporting tips separately is important for employers, since it reduces overall costs and tax rate.

Q: What posters and notices are required by Nevada law regarding unemployment insurance?

A: Each employer is required to post a Notice to Employees (form NUCS 4324) at each work place and must provide a leaflet, Information for the Unemployed Worker (form NUCS 4139), to each employee who separates from employment.

Q: What if I sell my business?

A: If you sell your business, notify the division immediately in writing. Within 10 days of sale or change in ownership, you must file final Employer's Quarterly Contributions and Wage Report (form NUCS-4072) and pay any contributions, forfeits, or interest due.

Q: What if I acquire an existing business?

When acquiring an existing business, you must complete a Nevada Business Registration (NBR) form or register online. Upon registering the acquisition, the Employment Security Division will send you a Notice of Eligibility/Application for Transfer of Experience Record (form NUCS 4460). You may either pay unemployment insurance taxes at the new employer rate of 2.95 percent (.0295) of taxable wages for a period ranging from 14 to 17 calendar quarters (the same rate a s a new business), or apply to transfer the experience record from the previous owner and pay at the tax rate of the previous owner. Such a transfer requires the mutual written consent of the buyer and seller.

Confidential Services:

Q: Who can access confidential services?

A: Confidential services can only be accessed by employers and their agents who have created an online account.

Q: What confidential services are available online?

A: Both interactive and inquiry functions are available. Listed below are the confidential services currently available or which will be available soon:

· Tax and Wage Reporting – Submit your Employer's Quarterly Tax & Wage Report (form NUCS-4072) and Reimbursable Employer's Quarterly Wage Report (NUCS-4062) using one of the methods indicated below:

o MMREF file transfer - Electronically file quarterly tax and wage reports utilizing State/Federal specifications based on the Social Security Administrations MMREF-1 record format.

o Online Data Entry - Keying wage data online.

o Auto Load SSN - Auto load employee information from a prior quarter.

o File Upload - Upload a Microsoft Excel Spreadsheet saved as a CSV (Comma delimited) file or a Text (Tab delimited) file.

· Online Payments - Make a payment on an Employer Account

· View/Update Account Information – View/Update employer account information including the following:

o Owner Information

o Notification Address Information

o Business Location Information

o Business Records Information

o Account Balances - View current account balance

o Authorized Agents - view a listing of agents currently authorized to access your account information

o Web Contract Information

o Web Transaction Log

o Rate History - Coming Soon!

o Account Status – close or re-open an employer account

· Print Previously Filed Electronic Transmissions

o Employer’s Quarterly Contribution and Wage Report (NUCS-4072) and Reimbursable Employer's Quarterly Wage Report (NUCS-4062)

o Nevada Business Registration (form APP-01.00)

o Supplemental Registration (form NUCS-4058)

o Application for Election of Coverage (form NUCS-4059)

o Election of Tax Payment Option (form NP-4)

o Internet Nevada Business Registration Addendum

o Report of Changes

· Change Password/Update Web Contact

· Reset Password

· View Web Transaction Log

Q: What should I do if I experience technical difficulty using an online application?

A: If you experience an error during use of our online services, please make a note of the error message and contact the appropriate help desk. Please see our Directory of UI Tax Contacts to determine whom you should call for further information.

Q: What should I do if I have questions regarding an online application?

A: Help is available online for pertinent steps in each application. If you still have questions, please see our Directory of UI Tax Contacts to determine whom you should call for further information.

Q: The application "timed out" while I was using it. Now what should I do?

A: For security reasons, if each screen is not completed within a reasonable period of time, a “time out” occurs and you will be disconnected. If your data was not saved previously, you will lose all information and must begin the application over again.

If you saved your data, you may return to it by entering your tracking identification number and password after selecting “return to saved” from the New Employer Registration Menu.

Q: I saved my data online, but later could not retrieve it? Why?

A: Data can only be retrieved for 30 days from the initial submission date. Once this date has passed, you will lose all information and must begin the application over again.

Online Employer Registration:

Q: What is online employer registration?

A: Online registration is an Internet filing application that allows businesses to register for Nevada unemployment insurance taxes online via the Internet.

Q: Are employers required to use the online registration process?

A: No, use of this service is optional. Employers may still register using the Nevada Business Registration form located here.

Q: What types of business entities can I register?

A: The following types of business entities can be registered online:
· Sole Proprietor
· Partnership
· Corporation
· Limited Liability Entities
· Non-profit organization-501 (c) (3)
· Association
· Governmental
· Other (trust, estate, receivership, etc.)

Q: Who cannot register online?

A: You will not be allowed to register more than 30 days in advance of your first anticipated payroll. You will not be allowed to register if you are exempt from the Nevada Unemployment Compensation Law and do not wish to voluntarily elect coverage.

Q: Who needs to register?

A: All new or acquired businesses paying wages in Nevada are required to register with the Employment Security Division. Registration is also required for an existing business, which has changed ownership or the type of entity has changed, i.e., sole proprietor to a partnership, or a partnership to a corporation, etc.

Q: Who is subject to Nevada Unemployment Taxes?

A: The law provides different liability provisions for various categories of employers. Your business will be classified as one of the following:

· General Employer – Most employment is considered general employment. This includes all types of work except agricultural services, domestic services performed for 501(c)(3) Non-profit organizations, Indian Tribes, or Governmental Entities. Liability provisions are:

o You have paid wages of $225 or more during a calendar quarter.