1. What is the definition of "employer"?
2. How does my business register as a "new" employer?
3. What are taxable wage inclusions and exclusions?
4. What is a "reimbursable" employer (not-for-profit and government entities)?
5. What if my business has employees working in several states?
6. How are my tax rates determined?
7. What is SUTA dumping?
8. How does my business file quarterly reports and returns?
9. How can my business pay its unemployment insurance taxes?
10. How does an employer compute excess wages for the quarterly contribution report?
11. What is magnetic tape reporting?
12. What is e-wage of quarterly unemployment wages?
13. How are benefits charged to the employer account?
14. Are there non-charges and credits?
15. How can my business file a protest or ask a question about the employer account?
16. Can my business get information about the employer account over the telephone?
17. Can my business get information about the employer account over the Internet?
18. How do I change my address?
19. How do I verify my tax payment?
20. What changes to the unemployment insurance system are planned for the future?
21. Employer's Quick Reference Guide
22. Publications and Forms

1. Agricultural Employer - if during any calendar quarter of the current or preceding year paid cash remuneration of $20,000 or more to individuals performing agricultural labor; or employed at any time 10 or more individuals for a portion of a day in any 20 weeks in the current or preceding calendar year.
2. Domestic employer - if during any calendar quarter of the current or preceding calendar year there is a total payroll of $1,000 or more to an individual(s) performing domestic service.
3. Farm Crew Leader - if crew leader holds a valid certificate of registration under the Farm Labor Contractor Registration Act of 1963; or the crew leader provides mechanized equipment which substantially all the individuals operate or maintain, provided the individuals are not employees of another employer.

Employment is defined as any service performed for remuneration (payment) whether full-time or part-time. This also includes salaries paid to corporate officers who are employees of the corporation (including close and subchapter S corporations).

One of the most common employment exclusions is an "independent contractor." The criteria for independent contractor status are:

• The individual who performs the work is free from control and direction over its performance both in fact and under the contract;
• The individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work; and ,
• The work is: (a) outside the usual course of business of the person for whom the work is performed, or (b) performed outside any place of business of the person for whom the work is performed.

When independent contractor status is in question, employers should determine if the person has a Federal Identification Number. Independent contractors are required to file business tax returns and have a Federal Identification Number.

The following categories are specific exemptions from covered employment under Section 8-206 of the Maryland Unemployment Insurance Law provided certain criteria are met:

If there are any questions concerning the categories listed, please call the Unemployment Insurance Employers Line on (410) 949-0033 in the Baltimore area or toll-free on 1-800-492-5524.

The following wages are taxable:

• Meal and lodging provided by an employer to an employee, unless the meals and lodging are provided on the employer's premises for the employer's convenience.
• Tips which are reported pursuant to Section 6053 of the Internal Revenue Code.
• Payments to workers for: (a) dismissal; (b) vacations; (c) sick leave (for first six months only); and (d) advances to employees for travel or other expenses for which no accounting or reporting to employers is required.
• Payments by the employer of the employee's share of Social Security (except for payments made by domestic and agricultural employers).

Notation: The Federal Unemployment Taxable (FUTA) wage base remains unchanged at $7,000.

The following wages are not to be reported:

• Value of any special discount or markdown allowed to a worker on goods or services purchased from or supplied by the employer where such purchase is optional with the worker.
• Payments toward retirement or a death benefit if the employee has no right to receive cash instead, or to assign his/her rights therein, or to receive a cash payment in lieu thereof on withdrawal from, or termination of such insurance plan or upon termination of his/her employment.
• Facilities or privileges (such as entertainment, cafeterias, restaurants, medical services, or so-called "courtesy discounts" on purchases) furnished or offered by an employer merely as a convenience to the worker or as a means of promoting health, goodwill, or efficiency of his/her workers.
• Discounts on property or security purchases.
• Customary and reasonable directors' fees.
• Supper money given to a worker to compensate him/her for the additional cost of a meal made necessary by working overtime.
• Payments by the employer to or on behalf of an employer for sickness or accident disability after the expiration of six calendar months.
• Wages of a sole proprietor, his/her spouse and children of the sole proprietor under 21 years old, and owner's parents.
• Wages of partners (wages of spouses are taxable). For example - If two brothers own a business:
  A. Wives work in the business - covered employment, wife is not same relationship to both partners; or,
  B. Parents work in the business - exempt, same parent relationship to both partners.
• Wages earned by an individual who is enrolled in a full-time educational program that combines academic instruction with work experience, which is an integral part of the educational program.
• Employee pretax contributions and salary reductions or deductions under IRS Section 125 cafeteria plans in order to purchase the following benefits: accidental and health insurance, life insurance, or dependent care assistance.

If there are questions concerning the inclusions and exclusions listed, please call the Unemployment Insurance Employers Line on (410) 949-0033 in the Baltimore area or toll-free on 1-800-492-5524.

The election of the reimbursement method for newly formed not-for-profit organizations must be made in writing to the agency within 30 days of coverage under the law. Once electing the reimbursement method, Maryland law only permits an employer to change his/her option after two years on written notice to the Assistant Secretary not less than 30 days prior to January 1 of the year the new options becomes effective (if approved).

Billing for benefits chargeable to the not-for-profit organization or government entities is made via the "Notice of Benefit Payments Charged to Your Experience Rating Account" (DLLR/DUI 64A). This quarterly statement lists all claimants collecting benefits during the previous quarter. Organizations receiving this form have 15 days from the "Date of Invoice" to file a written protest. Interest is charged for late payments.

1. The service is localized in Maryland; or ,
2. When there is employment in more than one state and some service is performed in the state where the base of operations is located, then the earnings are to be reported to that state where the individual's base of operations is located. If no services are performed in the state with the base of operations and some services are performed in the state where direction or control is received, then the earnings are to be reported to the state where the individual's direction or control is received. If there are no services performed in the state where the base of operations is located or where direction or control is received, then the individual's state of residence is to be used.

The objective is for all services performed by an individual for a single employer to be covered under one state law, wherever the services are performed. Employers may elect to cover an employee through a Reciprocal Coverage Agreement between states. For additional information, contact the Unemployment Insurance Employers Line on (410) 949-0033 in the Baltimore area or toll free on 1-800-492-5524.

New Account Rate

"New Employer" means an employing unit that does not qualify for an earned rate. The tax rate for a new employer will be the average of the rates for all employers in the State during the last five years. Construction companies headquartered in another state will be assigned a tax rate that is the average of the rates for all construction employers in Maryland during the year for which the rate is assigned.

Standard Rate

If an employer is eligible for an earned rate, but has no taxable wages in a fiscal year (July 1 to June 30) because the employer failed to file its quarterly tax and wage reports, the employer is assigned the standard rate. The standard rate is the highest rate from the "Table of Rates" that is in effect for the year.

Experience (Earned) Rate

After an employer has paid wages to employees in two rating years (July 1 to June 30) prior to the computation date (July 1st prior to the rated year), he/she is entitled to be assigned a tax rate reflecting his/her own experience with layoffs. If the employer's former employees receive benefits regularly which result in benefit charges, the employer will have a higher tax rate. On the other hand, firms which incur little or no benefit charges will have lower tax rates.

The earned rate is determined by finding the ratio between the benefits charged to your account and the taxable wages that you reported in three fiscal years prior to the computation date. If you have only been in business for two fiscal years prior to the computation date, just the experience in those two years is used. The benefit ratio is then applied to the Tax Table in effect for the year. The table in use for a particular calendar year is determined by measuring the adequacy of the Maryland UI Trust Fund to pay benefits in the future. There are six (6) tables, ranging from the lowest (A) to the highest (F). See the Employer Quick Reference Guide for more information.

Transfer of Experience Rate

Frequently, an employer will acquire his/her business from a previous owner or the employer will reorganize his/her business. The effect of various transactions on the employer's contribution rate are summarized below:

1. Reorganizations - This is when a new employing unit is formed. The assets, employees, and business or trade are the same under the new organization as they were under the old. The new organization retains the contribution rate and has the same liabilities as before the changeover.
    

2. Successorship - If an existing employing unit acquires the assets, business, organization, or trade of another employing unit, the acquiring employing unit is known as a successor employer.
   
   An employing unit transferring by sale or otherwise, all or part of the organization, trade, business, or assets to another employing unit or employing units is known as a predecessor employer.
   
   Commencing January 1 after the transfer, the successor's rate of contributions for each calendar year is based on its experience with payrolls and benefit charges combined with the experience with payrolls and benefit charges of the predecessor. The successor is liable for all contributions, interest and penalties owed by the predecessor employer at the time of the transfer.
    

3. A person who is not an employing unit at the time of acquisition of a business, trade, or organization whether in full or in part will be assigned a new account rate, provided there is no common ownership with the predecessor employer.
   
   A person who is not an employing unit at the time of transfer of a business, trade, or organization and there is any common ownership with the predeccessor, will be given the experience rate of the previous business, trade, or organization. For example, in a partnership when one partner buys out another partner and the remaining partner retains the majority interest in the previous business.
    

4. Out-of-State Transfers - Employers transferring all or part of their business from another state to Maryland may be eligible to transfer their experience rate to Maryland.

For additional information regarding "employer rates," contact the Unemployment Insurance Employers Line on (410) 949-0033 in the Baltimore area or toll free on 1-800-492-5524.

You are required to report your payroll and pay unemployment insurance taxes four times a year. Form DLLR/DUI 15/16 will be sent to you at the end of each quarter. If you do not receive a blank form, call (410) 949-0033 from the Baltimore area or toll free on 1-800-492-5524. You have one month following each quarter to file reports and pay the tax. You must file on time in order to:

• Receive maximum credit for your state payments against Federal Unemployment Tax (FUTA) payments;
• Receive credit for your payroll in "experience rating"; and,
• Avoid interest charges at a rate of 1.5% per month for late payments and a penalty assessment of $35 for each late report.

Accuracy when reporting the taxable wages is extremely important. It affects the amount of taxes owed and your tax rate. In Maryland, an employer's "benefit ratio" is determined by dividing the amount of benefits charged against the employer's account by the amount of taxable wages.

Maryland employers are required to file wages and tax returns each quarter. Each return covers the activity during the calendar quarter. The return is due by the end of the month following the end of the quarter. Payment is due with the return.

• Pay by E-Check (free) at the time of the filing, through the application
• Pay by Credit Card (the greater of $1.00 or 2.5% of the tax due) at the time of the filing, through the application
• Pay by paper check and mail to P.O. Box 17291 Baltimore, MD 21297-0365
• Pay by E-Check (free) after the time of the filing, directly at the provider's site at Official Payments' E-Check web site.
• Pay by Credit Card (the greater of $1.00 or 2.5% of the tax due) after the time of the filing, directly at the provider's site at Official Payments' Credit Card Web site.
• Pay by ACH Credit after obtaining approval from DLLR by using the Electronic Funds Transfer Guide. 

The gross wages paid to a claimant by all employers in the base period are used in determining a UI claimant's weekly benefit amount (WBA). An employer's percentage of charging for UI benefits is based on the following elements:

1. Base Period Gross Wages Paid by the Employer - The base period is defined in Maryland's Unemployment Insurance Law as the first four of the last five completed calendar quarters prior to the filing of the claim, and is used to establish eligibility for benefits.
    
2. Percent of Liability - If a claimant has only one employer in the base period, the employer's account would be charged for 100% of any benefits paid and chargeable. If the claimant had two or more employers during the base period, all employer charges are pro-rated based proportionately on the wages the employer paid to total wages paid. The percentage of charges is rounded to the nearest hundredth part for each base period employer.

The percentage, times the total amount of benefits ultimately received by the claimant while employed, equals your benefit charges. You are notified of the exact amount of charges at the end of each calendar
quarter.

Benefits charged to your account will usually increase your tax rate and will result in higher tax payments that will enable the UI Trust Fund to recover the benefits paid over a three-year period. Of course, the best way to minimize unemployment insurance costs is to avoid layoffs. The Maryland Unemployment Insurance Law provides for "Work Sharing," which makes it cheaper to keep employees on the payroll, perhaps at reduced hours during a slack period instead of a complete layoff. Care should be exercised when hiring employees, especially for temporary positions. Ensure that a new hire is qualified in order to avoid a potential layoff situation.

Some employers find it advantageous to hire a student or a person with a steady full-time job for a temporary position because that individual may not be as likely to file a claim for unemployment insurance benefits after the temporary job ends.

Finally, document unsatisfactory work performance and the reasons for separation, should it be necessary to contest a claim filed by an individual. The Maryland Unemployment Insurance Law provides that your account is not charged for benefits in certain situations.

The list below indicates reasons for non-charging and credit provisions:

1. Voluntary quit without good cause attributable to the employment.
    
2. Voluntary quit for a better job.
    
3. Voluntary quit to attend approved training.
    
4. Discharge for reasons which constitute gross misconduct in connection with the work.
    
5. Discharge for reasons which constitute aggravated misconduct in connection with the work.
    
6. If the claimant is originally granted and paid benefits, but as a result of a redetermination or an appeal is later disqualified, a credit will be given, except to reimbursing employers, for benefits paid prior to the redetermination or the appeal decision. Credits will only be given to reimbursing employers when the claimant repays any benefits improperly paid. Subsequent benefits will only be charged if the claimant resolves the disqualification and the benefits are otherwise payable.
    
7. Part-time/full-time employment - If a claimant loses his/her full-time job, but continues to work his/her part-time job, partial benefits received by the claimant will not be charged to the part-time employer's account as long as the claimant remains actively employed. Employers receiving a "Request for Separation Information" (DLLR/DUI 207) for claimants actively employed on a part-time basis should clearly indicate the claimant's continued part-time status.

The employer should include in the protest or appeal the employer's name, the employer's account number, the name and title of the individual submitting the protest, the date of the protest, and most importantly, the specific factual reason for the protest or appeal. The employer should attach any documentation that supports their contention. The Division of Unemployment Insurance will respond to the employer's protest by issuing a Review Determination. 

With respect to your Maryland unemployment insurance account, the Employers Line will provide your account balance and current tax rate anytime of the day or night. You will need your ten-digit Maryland account number (which begins with two zeros) to receive the information.

• File and pay your taxes on-line
• Use the WebWage feature in WebTax to automatically file and pay accounts with large payrolls
• Review and print prior WebTax contribution and employment reports filed on-line
• Review and print your quarterly benefit charge statements
• Review and print your annual Experience Rating notice.
• Request to close your account

Here are some of the improvements that will be implemented in 2006 for WebTax:

• Review and print your employer account history of payments
• Change your employer account address and contact information
• Automatically calculate your excess wages as you file on-line
• Allow delinquent quarters to be filed on-line