Unemployment Insurance Handbook for Employers (UCB-201-P)
Section 2 - Tax
PART 1 - Establishing Coverage
As an employer of one or more individuals in Wisconsin, you are required to maintain employment records that will permit an accurate determination of your Unemployment Insurance (UI) tax liability. If requested, you must submit reports to establish if you are a covered employer and/or your contribution liability.
You are required to pay UI contributions on your payroll after you've met the statutory coverage liability. Not all employers are "covered" employers. Those that do not meet the coverage requirements or maintain only excluded employment are not subject to the UI law.
As an employer, you become "covered" and incur tax liability if you meet any one of the following conditions:
- Conditions Exclusive to Qualified Settlement Fund (QSF):
- Qualified Settlement Funds (QSF) can not be employers. No services are performed by any employees involved in the settlement for the QSF and the settlement fund cannot be considered the employer.
- Settlement wages must be allocated to and reported by the appropriate employer(s) involved in the settlement.
- Do not register the QSF as an employer under New Employer Registration.
- Conditions Exclusive to Commercial Employers:
- You paid wages of $1,500 or more in a quarter in any calendar year or;
- You employed one or more individuals in employment for some part of a day in 20 or more weeks in any calendar year. The weeks need not be consecutive and part-time employees must be included in the employee count.
- Conditions Exclusive to Agricultural Employers:
- You paid cash wages for agricultural labor of $20,000 or more in a quarter in any calendar year or;
- You employed ten or more individuals in agricultural labor for some part of a day in 20 or more weeks of any calendar year.
- Conditions Exclusive to Domestic Employers:
- You paid cash wages of $1,000 or more in a quarter for domestic service in any calendar year.
- Conditions Exclusive to Nonprofit Employers:
- You are a nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code and you employed four or more individuals on a day in 20 or more weeks in any calendar year.
- Other nonprofit organizations (i.e., non 501(c)(3)) fall under the commercial employer's conditions for liability (see Conditions Exclusive to Commercial Employers above).
- Conditions Exclusive to Government Employers:
- Government employers have mandatory coverage.
- General Conditions Under Which ANY Employer Will Be Liable for UI Taxes:
- You've paid any wages for Wisconsin employment and you have a liability for that year under the Federal Unemployment Tax Act (FUTA) or;
- You've taken over part or all of the business of an employer already covered under the law (see Part 6: Business Transfers and Taking over a UI Account) or;
- You have no liability by law, but you voluntarily elected to become a covered employer (with the Department's approval).
If you think you meet the above conditions or you expect to in the near future, you can complete a new employer registration form on-line:
- Go to http://dwd.wisconsin.gov/uitax.
- Click "New Employer Registration" link.
Governmental units, certain nonprofit organizations, and Indian Tribes can choose between the tax and reimbursement methods of financing unemployment benefit costs. (Only nonprofit organizations with a ruling of an IRS Code 501(c)(3) status can elect reimbursement financing.)
Tax financing employers pay a quarterly unemployment tax on the wages paid to their employees. Reimbursement financing employers do not pay a quarterly tax, although they must still file the quarterly tax and wage reports. Instead, they reimburse the department for 100% of the unemployment benefits charged to their account.
Form UCT-14384-1-E "Benefit Charges and Adjustments" is sent at the end of each period in which there have been benefit payments and/or adjustments debited or credited to the reimbursable employer's account. Depending on the reimbursable employer's account activity you could receive up to 4 statements in a month. The first or last statement of the month could be for more or less than 7 days to insure that only 4 statements are sent each month. See Example of UCT-14384-1-E.
Monthly billing statements (Form UCT-14309-E "Reimbursable Employer Statement") are sent at the beginning of the following month showing the employer's balance at the end of the prior month and a summary of the "Benefit Charges and Adjustments" statements sent during the month. See Example of UCT-14309-E.
Accounts for nonprofit organizations and Indian tribes are normally set up on the tax financing method but reimbursement financing can be elected. Accounts for governmental units are initially set up on the reimbursement financing method but tax financing can be elected.
Nonprofit employers electing reimbursement financing must file an assurance of reimbursement with the department. The assurance can be in the form of a surety bond, letter of credit, certificate of deposit, or any other nonnegotiable instrument of fixed value.
The employer's original assurance has to cover the 5-year period starting from the beginning of the year in which the employer's reimbursement financing election takes effect. The amount of the assurance must be at least equal to 4% of the employer's taxable wages for the past calendar year or projected payroll if larger. The adequacy of the assurance amount is redetermined every other year. If the employer ceases business or converts to tax financing, the assurance must remain in effect for up to 2 1/2 years to cover the period of benefit claim liability. At the end of this period, the assurance is returned to the employer.
Certain non-profit employers electing reimbursement financing may be subject to an annual assessment for payment of uncollectible benefit reimbursements due from employers no longer in business. The assessment will only be made in years where the amount of uncollectible debts exceeds $5,000. The total assessment against all employers is limited to no more than $200,000 annually.
When a governmental unit, nonprofit organization or Indian Tribe chooses to convert to reimbursement financing, the positive or negative balance in their account remains in the Unemployment Reserve Fund and is transferred to the Fund's balancing account.
A government unit, nonprofit organization or Indian Tribe interested in obtaining further information about reimbursement financing should contact us at:
- E-mail: UIReimburseErs@dwd.wisconsin.gov
- Telephone: (608) 266-9989
- Deaf, hearing or speech-impaired callers may reach us through WI TRS
Updated: February 7, 2013
Content Contact: UI Tax