PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 03-14-141.
Title of Rule: Unemployment insurance rules related to employer accounts, employer reporting requirements and penalties, conditions for relief of benefit charging, and charges to the separating employer.
Purpose: Chapter 4, Laws of 2003 2nd sp.s. (2ESB 6097) made substantive revisions to the unemployment insurance program. The proposed rules are intended to clarify the requirements of that legislation, define terms, and revise existing rules consistent with the amended statutes.
Statutory Authority for Adoption: RCW 50.12.010, 50.12.040, and 50.12.042.
Statute Being Implemented: Chapter 4, Laws of 2003 2nd sp.s. (2ESB 6097).
Summary: Amends rules to define terms regarding ownership transfers, to clarify employer reporting requirements, and to specify the order in which employer payments will be applied. New provisions regarding penalties for employers filing late or incomplete tax returns are established. Clarifies the penalties for employers who knowingly misrepresent the amount of their payroll. Benefit charging rules are amended to clarify conditions for relief of charges and conditions under which all charges will be assessed against the separating employer.
Reasons Supporting Proposal: To provide clarity for employers, claimants and staff regarding how the changes in the unemployment insurance benefits program will be administered, and to replace obsolete rules with language consistent with the amended statutes.
Name of Agency Personnel Responsible for Drafting: Juanita Myers, 212 Maple Park, Olympia, (360) 902-9665; Implementation and Enforcement: Annette Copeland, 212 Maple Park, Olympia, (360) 902-9303.
Name of Proponent: Employment Security Department, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Rules in Title 192 WAC are amended or adopted to conform to 2ESB 6097, passed by the 2003 legislature. The legislation made substantive changes in the laws governing employer taxes, reporting requirements, and penalties for employers who fail to comply with the reporting requirements or who knowingly misrepresent the amount of their payroll. The rules establish the range of penalties for employers to file untimely or incomplete reports. The rules further establish the reasonable audit expenses that will be assessed against an employer who is determined to have knowingly misrepresented the amount of his or her payroll.
2ESB 6097 modified the conditions under which employers may be eligible for relief of benefit charges, and established criteria outlining conditions in which certain employers may be charged for 100% of benefits paid on a claim. The rules further clarify how the department will assess benefit charges and grant relief of benefit charges.
The legislation and rules increase the penalties for employers who report untimely, incomplete, or inaccurate information. In some cases, employers will be charged for all benefits paid on a claim as opposed to their proportional share of base period wages.
Proposal Changes the Following Existing Rules: The rules are amended to reflect the change in maximum penalty for filing late or incomplete reports from $10 to $250. The rules are also amended to reflect the new penalties for employers who knowingly misrepresent the amount of their payroll. The benefit charging rules are amended to comply with the changes included in the legislation.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The rules will not impose more than minor costs on businesses in an industry or on small businesses in particular. Any costs associated with the changes to unemployment insurance taxes, reporting requirements, penalties, or benefit charging result from the legislation, not from the regulations implementing the legislative changes. As required by chapter 43.05 RCW, the department will provide education and technical assistance to employers prior to imposing any penalty for filing late or incomplete reports.
RCW 34.05.328 applies to this rule adoption. Violation of the requirements regarding timely and complete reports will subject the employer to a penalty fee as specified by rule. A copy of the preliminary cost benefit analysis is available from Juanita Myers, Unemployment Insurance Rules Coordinator, at (360) 902-9665 or jmyers@esd.wa.gov.
Hearing Location: Employment Security Department, Maple Leaf Conference Room, 2nd Floor, 212 Maple Park Drive, Olympia, WA, on July 14, 2004, at 1:30 p.m.
Assistance for Persons with Disabilities: Contact Mary Mendoza by July 13, 2004, TDD (360) 902-9589 or (360) 902-9281.
Submit Written Comments to: Larry Oline, Acting Rules Coordinator, Employment Security Department, P.O. Box 9046, Olympia, WA 98506, fax (360) 438-3226, by July 13, 2004.
Date of Intended Adoption: July 23, 2004.
May 5, 2004
Annette Copeland
for Dr. Sylvia P. Mundy
Commissioner
(1) Predecessor. You are a "predecessor" if, during any calendar year, you transfer any of the following to another individual or organization:
(a) All, or a portion, of your operating assets as defined in subsection (3) below; or
(b) A separate unit or branch of your trade or business.
(2) Successor. You are a "successor" if, during any calendar year, you acquire substantially all of a predecessor employer's operating assets. You are a "partial successor" if, during any calendar year, you acquire:
(a) A portion of a predecessor employer's operating assets, or
(b) A separate unit or branch of a predecessor employer's trade or business.
(3) Operating assets. "Operating assets" include the properties you use in the normal course of business operations to generate your operating income. They may include properties that are real or personal, and tangible or intangible. Examples include land, buildings, machinery, equipment, stock of goods, merchandise, fixtures, or goodwill. Employees are not operating assets.
(4) Transfer of assets. Transfers from a predecessor to
a successor employer may occur by sale, lease, gift, or any
legal process, except those listed in subsection (56) below.
(5) Simultaneous acquisition. For purposes of successor simultaneous acquisition, the term "simultaneous" means all transfers that occurred as a result of the business acquisition or reorganization, beginning when the acquisition started and ending when the primary entity is transferred.
(6) Exceptions. A predecessor-successor relationship will not exist:
(a) For the purposes of chapter 50.24 RCW (payment of taxes), when the property is acquired through court proceedings, including bankruptcies, to enforce a lien, security interest, judgment, or repossession under a security agreement unless the court specifies otherwise;
(b) For the purposes of chapter 50.29 RCW (experience rating), when any four consecutive quarters, one of which includes the acquisition date, pass without reportable employment by either the predecessor, successor, or a combination of both.
[Statutory Authority: RCW 50.12.010, 50.12.040. 00-05-068, § 192-300-050, filed 2/15/00, effective 3/17/00.]
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 98-14-068, filed 6/30/98,
effective 7/31/98)
WAC 192-310-010
Employer reports--RCW 50.12.070.
(1)
Master application. Every person or entity, which has one or
more individuals performing services for it in the state of
Washington, must file a master application with the department
((a master application)) in a format prescribed by the
commissioner.
(2) Quarterly tax and wage reports:
(a) Tax report. Each employer must file a quarterly tax report with the commissioner listing the total wages paid to all individuals in its employ during that calendar quarter.
(b) Report of employee's wages. Each employer must file a quarterly report of employee's wages with the commissioner. This report must list each employee by name, social security number, hours worked, and wages paid during that calendar quarter.
(c) Format. The quarterly tax and wage reports must be
filed in ((a)) one of the following formats ((prescribed by
the commissioner.)):
(i) Electronically, using the current version of UIFastTax, UIWebTax, or ICESA Washington; or (ii) Paper forms supplied by the department (or a certified version of those forms).
(d) Due dates. The((y)) quarterly tax and wage reports
are due by the last day of the month following the end of the
calendar quarter being reported. Calendar quarters end on
March 31, June 30, September 30 and December 31 of each year.
Therefore, reports are due by April 30, July 31, October 31,
and January 31, respectively. Exceptions to the time and
manner of filing the report must be approved in advance by the
commissioner.
(((d))e) Termination of business. Each employer who
ceases business or whose account is closed by the department
must immediately file:
(i) A tax report for the current calendar quarter which covers tax payments due to the date such account is closed;
(ii) A report of employee's wages for the current calendar quarter which includes all wages paid to the date such account is closed.
(((3) Report form instructions. All form preparation
instructions issued by the employment security department have
the same force and effect as if they had been incorporated
into this regulation.))
[Statutory Authority: RCW 50.12.070. 98-14-068, § 192-310-010, filed 6/30/98, effective 7/31/98.]
(2) A payment received without a tax report will be applied in the following order of priority, beginning with the oldest quarter:
(a) ((Lien fees)) Costs of audit and collection.
(b) ((Warrant fees)) Penalties for willful
misrepresentation of payroll.
(c) ((Late tax report penalty)) Lien fees.
(d) ((Late tax payment penalty)) Warrant fees.
(e) ((Interest charges)) Late tax report penalty.
(f) ((Tax payments.)) Penalties for incomplete reporting
or reporting using incorrect format.
(g) Late tax payment penalty.
(h) Interest charges.
(i) Tax payments.
[Statutory Authority: RCW 50.12.010 and 50.12.040. 98-14-068, § 192-310-025, filed 6/30/98, effective 7/31/98.]
(2) Incomplete Tax Reports. An employer is required to file the report required by WAC 192-310-010 in a complete manner and in the format required by the commissioner.
(a) An "incomplete report" is defined as any report submitted by either a contributory or reimbursable employer where:
(i) The entire wage report is not submitted timely; or
(ii) A required element is not reported (social security number, name, hours worked, or wages paid); or
(iii) A significant number of employees are not reported; or
(iv) A significant number of any given element is not reported such as, but not limited to, missing social security numbers, names, hours, wages; or
(v) No employer reference number or Unified Business Identifier (UBI) number is included with the tax or wage report.
(b) An "incorrect format" means any report that is not submitted in the format required by the commissioner under WAC 192-310-010(c).
(3) Penalty for filing an incomplete or incorrect format tax report. An employer who fails to file a report required by RCW 50.12.070 is subject to penalty as follows:
(a) Incomplete tax report. The penalty for filing an incomplete tax report will be two hundred fifty dollars or ten percent of the quarterly contributions for each occurrence, whichever is less. When no quarterly tax is due and an employer has submitted an incomplete report, the following schedule will apply:
| (i) | 1st Occurrence | $ 75.00 |
| (ii) | 2nd Occurrence | $150.00 |
| (iii) | 3rd and subsequent occurrences | $250.00 |
| (i) | 1st Occurrence | $150.00 |
| (ii) | 2nd and subsequent occurrences | $250.00 |
(((2))) (5) Report of employee's wages. Any decision to
assess a penalty for filing a late or incomplete report of
employee's wages as described in WAC 192-310-010 (2)(b) will
be made on an individual basis by the chief administrative
officer of the tax branch as provided in RCW 50.12.220.
(((3))) (6) Delinquent tax payments. For purposes of RCW 50.12.220, tax payments are delinquent as provided in WAC 192-310-020 and RCW 1.12.070.
(((4) Late penalty. For tax payments due on wages paid,
a minimum $10.00 penalty will be assessed for late payments.
(5))) (7) Penalty waivers. The department may, for good cause, waive penalties in the following situations:
(a) The return was filed on time but inadvertently mailed to another agency;
(b) The delinquency was due to an action of an employee of the department, such as providing incorrect information to the employer when the source can be identified, or not furnishing proper forms to permit the filing of tax reports or the payment of taxes on time;
(c) The delinquency was caused by the death or serious illness, before the filing deadline, of the employer, a member of the employer's immediate family, the employer's accountant, or a member of the accountant's immediate family;
(d) The delinquency was caused by the accidental destruction of the employer's place of business or business records; or
(e) The department finds the employer to be out of compliance during an employer-requested audit, but the department determines the employer made a good faith effort to comply with all applicable laws and rules.
(((6))) (8) Waiver requests. A request for a waiver of
penalties must be written, contain all pertinent facts, be
accompanied by available proof, and be filed through a tax
office. In all cases the burden of proving the facts is on
the employer.
(((7))) (9) Extensions. The department, for good cause,
may extend the due date for filing a report. The employer
must make a deposit with the department in an amount equal to
the estimated tax liability for the reporting period or
periods for which the extension is granted. This deposit will
be credited to the employer's account and applied to the
employer's debt. The amount of the deposit is subject to
approval by the department.
[Statutory Authority: RCW 50.12.010 and 50.12.040. 98-14-068, § 192-310-030, filed 6/30/98, effective 7/31/98.]
(2) For claims with an effective date on or after January 4, 2004, a contribution-paying non-local government base year employer, who has not been granted relief of charges under RCW 50.20.021(3), may request relief of charges for a voluntary quit not attributable to the employer under RCW 50.29.021(4) and WAC 192-320-065.
(3((1))) Reasons for a voluntary quit not attributable to
the employer. A claimant may have been denied unemployment
benefits for voluntarily quitting work without good cause, but
subsequently requalify for unemployment benefits through work
and earnings. Even if the claimant has requalified for
benefits, the following reasons for leaving work will be
considered reasons not attributable to the employer ((may
include, but are not limited to)):
(a) The claimant's illness or disability or the illness, disability or death of a member(s) of the claimant's immediate family;
(b) The claimant's domestic responsibilities;
(c) Accepting a job with another employer;
(d) Relocating for a spouse's employment;
(e) Starting or resuming school or training;
(f) Being in jail;
(g) The distance to the job site when the job was accepted and the distance at the time of the quit remained the same, or the job location may have changed; but the distance traveled or difficulty of travel was not increased;
(h) Being dissatisfied with wages, hours or other working conditions generally known when the job was accepted; and the working conditions are determined suitable for the occupation in the claimant's labor market.
(4((2))) Reasons for a voluntary quit considered
attributable to employer are those work-related factors of
such a compelling nature as to cause a reasonably prudent
person to leave employment. The work factors must have been
reported to the employer if the employer has reasons not to be
aware of the conditions, and the employer failed to improve
the factors within a reasonable period of time. The reason
for quitting may or may not have been determined good cause
for voluntarily leaving work under RCW 50.20.050. For benefit
charging purposes, however, ((S)) such work-related factors
may include, but are not limited to:
(a) Change in work location which causes an increase in distance and/or difficulty of travel, but only if it is clearly greater than is customary for workers in the individual's classification and labor market;
(b) Deterioration of work site safety provided the employee has reported such safety deterioration to the employer; and the employer has failed to correct the hazards within a reasonable period of time;
(c) Employee skills no longer required for the job;
(d) Unreasonable hardship on the health or morals of the employee;
(e) Reductions in hours;
(f) Reduction in pay;
(g) Notification of impending layoff; and
(h) Such other work-related factors as the commissioner may deem pertinent.
[Statutory Authority: RCW 50.12.010, 50.12.040. 00-05-069, § 192-320-070, filed 2/15/00, effective 3/17/00.]
(2) If a claimant quits work because of the working conditions listed in this subsection, the employer from whom the separation occurred will be charged for 100% of benefits paid on the claim if the employer is the claimant's last employer, a base period employer, and a contribution-paying employer. These working conditions include:
(a) A reduction in the individual's usual compensation of 25% or more under WAC 192-150-115;
(b) A reduction in the individual's usual hours of 25% or more under WAC 192-150-120;
(c) A change in the work location which caused a substantial increase in distance or difficulty of travel under WAC 192-150-125;
(d) A deterioration in the individual's worksite safety under WAC 192-150-130;
(e) Illegal activities in the individual's worksite under WAC 192-150-135; or
(f) The individual's usual work was changed to work that violates the individual's religious convictions or sincere moral beliefs under WAC 192-150-140.
(3) Benefits based on wages paid by the following entities will not be charged to the experience-rating account of the separating employer as described in subsections (1) and (2) if they were earned:
(a) In another state;
(b) From a local government employer;
(b) From the federal government; or
(c) From any branch of the United States military.
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Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 192-340-100
Reasonable audit expenses--RCW 50.12.220 (1)(b).
Reasonable expenses for auditing an
employer's books and collecting taxes may include:
(1) Salaries and benefits based on the payrolls documented for state staff conducting the audit (including reporting and follow-up costs);
(2) Communication costs such as telephone charges for arranging the audit, e-mails, mail or similar communication services;
(3) Travel costs for expenses such as transportation, lodging, subsistence and related items incurred by state employees traveling for the purpose of conducting the audit. Such costs may be charged on an actual cost basis or on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip, and results in charges consistent with those normally allowed by the department;
(4) Customary standard commercial airfare costs (coach or equivalent);
(5) Costs for materials and supplies (including the costs of producing reports and audit findings);
(6) Equipment costs necessary for conducting the audit;
(7) Collection costs, including court costs, lien and warrant fees, and related costs; and
(8) Other costs which the department establishes that are directly related to the audit or collection of the penalty (i.e. appeal costs).
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