Reimbursements are paid by submitting any banking instrument submitted with the Reimbursable Unemployment Benefits Statement.
An employer or other entity, which paid reimbursements in the preceding state fiscal year of $250,000 or more and anticipates to do the same in the current fiscal year, is required to transfer payment amounts by electronic funds transfer.
Political subdivisions of the State, federally-recognized Indian tribes, and nonprofit organizations described in Section 501(c)(3) of the Internal Revenue Code which are exempt from income tax under Section 501(a) of such code are entitled under the law to elect to pay reimbursements in lieu of paying taxes. Stated below are some matters to be considered when making the election.
To elect to become a reimbursing employer is comparable to making a decision to discontinue carrying casualty insurance. If no casualty occurs, the cost of the premium has been saved. Likewise, if no former employee is paid unemployment benefits, the organization has saved the cost of the tax but may have to pay the cost of a surety bond as a reimbursable employer which may be required to guarantee payment of reimbursements.
In the example under How Are Employee's Wages Reported?, the employer's total tax for 20xx is $90.00. If his tax rate later increased to 5.44%, his tax will be $489.60 a year. If his tax rate should decrease to 0.63%, his tax will be $56.70 for a year. Of course, experience rates are subject to change from year to year.
In the same example, if the employer had one employee and elected to pay reimbursements in lieu of taxes, he could be charged in one year as much as $8,294.00 for regular benefits plus the cost of extended benefits. This employer could under certain unique circumstances get a large additional charge in a subsequent benefit year based on wage credits earned by this claimant which were not in the base period of the claimant's first benefit year.
A taxed employer normally knows in December of each year his tax rate for the following year. A reimbursing employer never knows his potential liability and may be required to pay reimbursements more than two years after the individual has been separated from his employment.
A reimbursing employer can protest payment of benefits only if it was the last work the claimant had before filing the claim. This means that a reimbursing employer sometimes has no control over the award of benefits even though it must pay for them. For example: an employee voluntarily quits the reimbursing employer who holds the financial liability on the claim. It must pay for any benefits drawn despite the fact that the employee voluntarily quit employment with the reimbursing employer.
Additionally, a reimbursing employer, unlike a taxed employer, is not protected from charges to his account under certain circumstances if the employee's last separation is the result of a disaster declaration by the president of the United States, the governor, or is the result of a natural disaster, fire, flood, or explosion.
Even if benefits are paid in error, the reimbursing employer still owes the TWC for that money. We cannot credit the employer until we receive the money back from the claimant.
The Act provides that two or more reimbursing employers may file a joint application with the Commission for the establishment of a group account for the purpose of sharing the costs of benefits paid to former employees of group members.
The members of a group must designate an individual to act as the group representative to make reports for the group, to pay reimbursements, to furnish any bond for the group that may be required, etc.
The advantage in forming such a group is that the risk to a member as to payment of reimbursements may be shared among all members. On the other hand, a member may be required to share in the reimbursements for other members of the group although none of his former employees have been paid benefits.
Commission Rule 815.13 provides in part that "In all situations not specifically provided for in the Act or in the Rules of the Commission, a hearing may, at the discretion of the Commission, be afforded an employing unit, upon its written request, in any case involving tax liability or any question relating to contributions".
Shared Work Compensation offers an alternative to employers facing a reduction in force. Instead of laying off employees, the employer reduces the hours of work among a specific group of employees. Wages lost to the worker as a result of reduced hours is supplemented by a partial unemployment benefit amount.
An interested employer submits to the Commission a plan for participation in the program. If the plan is approved, workers who qualify for unemployment benefits will receive both wages and Shared Work benefits. The workers will receive the percentage of their regular benefits that matches the percentage of reduction in the employer's plan.
Benefits paid under shared work plans are charged back against employers' accounts for use in computing general (experience) tax rates. Thus, they affect employers' tax rates in the same manner and to the same extent as other chargebacks of benefits.
An approved shared work plan is effective on the date approved by the Commission. It shall expire at the end of the 12th full calendar month after its effective date; provided, that the plan is not terminated previously by the Commission.
Tax related inquiries should be directed to the nearest local Tax Office.