Webcast Summary: Indiana Account Consolidations
Account Consolidation Overview
Account consolidations typically will permanently combine the unemployment experience of some or all of the state unemployment insurance (SUI) tax accounts of affiliated or related employers in the determination of a single tax rate. Although nine states currently have account consolidation provisions, Indiana, which codified its account consolidation provision in May of 2011, has recently increased its detection of employers operating in the state using multiple legal entities. An account consolidation is akin to the formation of a permanent “joint account” except account consolidations are often mandated or at the discretion of state workforce agencies as opposed to joint accounts which are elective in nature.
Indiana Account Consolidations
Purpose of the Law:
The purpose of Indiana’s consolidation provisions are not to prevent or prohibit employers from operating their businesses in the manner they believe most beneficial. Instead, the purpose is to close loopholes that have been known to facilitate rate manipulation, with the goal of leveling the playing field so that similarly situated employers are given the same SUI tax treatment.
Provisions of the Law:
The account consolidation provisions enacted by the state of Indiana specify that any employing unit that is wholly or partially owned by another will not be eligible for a separate SUI tax account if:
- The employing units are so closely related that it would be appropriate to disregard the corporate structure; or
- One of the employing units has failed to assume all of the requisite employment responsibilities necessary to provide its employees with employment.
The provisions go on to state that:
- Employing units that are not eligible for separate accounts are responsible for ensuring that their wages are reported under a single account; and
- Where employing units become ineligible for separate accounts through acquisition, the entities are responsible for reporting the acquisition to the Indiana Department of Workforce Development (DWD) and the DWD shall combine the unemployment experience of the two accounts.
Indiana uses various methodologies to detect employers that operate under multiple legal entities (i.e. SUI tax accounts), including:
- “SUTA dumping” detection software that monitors movement of employees between affiliated or related legal entities;
- Employer’s filing of compliance documents to report the acquisition of another unrelated employer; and
- Employer’s filing of new account registrations due to expansion within the state.
Rate Assurance Investigations:
Once the DWD detects that an employer is operating under multiple SUI tax accounts, the DWD may open a “Rate Assurance Investigation.” The investigation will typically begin with the issuance of a notification to the employer requesting documents and information that will be used to assist the DWD in making a determination as to whether or not the consolidation provisions should be applied. Should the DWD determine that a consolidation is appropriate, the DWD may attempt to impose the provisions retroactively (up to four calendar years). Employers have the right to protest such a determination should they believe the consolidation provisions do not apply under the particular set of facts and circumstances.
A Strategic Approach to Indiana Consolidations
Employers that believe they may be subject to the Indiana account consolidation provisions should take a strategic approach to addressing risks and opportunities, including the following:
For additional information on the issues discussed in the webcast, please contact Pete Krieshok at (314) 214-7325 or via email at email@example.com. You can also visit our blog at Equifax Insights Blog. For a replay of this webcast, please visit the following Replay Link.
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