Maine’s New UI Tax System
Last week, on behalf of the NPRC membership, Tom Crowley provided feedback to the Director, Division of Tax Services for the ME Bureau of Unemployment Compensation regarding their new tax system known as ReEmployME.
The issue causing most concern is the method by which Maine proposes to administer the seasonal employment provisions of the unemployment insurance law. The agency needs to be able to identify wages paid to individuals for work performed in seasonal employment because the seasonal provisions of the Maine law could impact the monetary determinations for individuals claiming unemployment benefits who have seasonal wages. The Bureau decided to create a new sub-account of the existing UI tax account. Under this arrangement, each employer identified by the agency as one having seasonal employment would be required to file separate wage and tax reports each quarter: one wage and tax report for non-seasonal wages and one for seasonal wages. The account number for seasonal reporting would be the same as the non-seasonal, except for a 3-digit suffix. Experience rating and taxable wage calculations are combined for seasonal and non-seasonal accounts. This reporting method significantly complicates payroll administration and wage and tax reporting for employers and payroll reporting organizations
Although the Bureau is only creating a sub-account, to accommodate the separate reports, employers will need to establish entirely separate payroll accounts; i.e., separate payroll accounts to generate and keep records of paychecks issued in-season versus out of season for the same employee, so that wages can be reported under the proper account. Factors that further complicate this reporting method are calculating separate excess wage / taxable wage totals for the seasonal / non-seasonal accounts for the separate contribution reports.
Industry consensus seems to be that such a requirement may be economically infeasible; i.e., would be so costly that some service providers may invite seasonal employers to find payroll services elsewhere, and/or seasonal employers may find it more cost-efficient to simply de-register as a seasonal employer, which could result in much higher UI claims and taxes.
Since the goal of the revised reporting is to identify seasonal wages, the NPRC recommended an alternative approach that should accomplish the same result. Instead of creating separate sub-accounts for each seasonal employer, modify the S Record of the wage reporting file by adding a field for seasonal wages, in addition to total wages. That would provide the agency with the seasonal wages by employee by quarter. That would allow the agency to import the seasonal wages into the benefit payment system so that appropriate action could be taken with respect to using the wages in a UI benefit claim.
Additionally, confirmation was requested that allows for a liberal waiver policy for employers/clients that are unable to comply with the seasonal reporting requirements for the fourth quarter of 2018. The due date of January 31, 2019 does not provide nearly enough time for employers to reconfigure their reporting systems to accommodate the seasonal reporting requirements.