Introduction to Unemployment Joint Accounts
In some states, unemployment agencies permit employers with common ownership and related business activities to apply for a joint experience rating account. This is when the experience-rating factors of two or more employers are merged for purposes of their UI tax rate calculation. In some cases, this can result in a reduction in tax liability.
Thomas & Company will automatically perform an annual joint account analysis for all employers who are eligible. This analysis is often concurrent with annual tax rate notice issuance.
Joint Account Background
In a joint experience rating account, the member accounts are joined for rate calculation purposes only. The employer accounts continue to be separate in all other aspects, such as continuing to file their quarterly unemployment returns individually.
The state agencies vary widely when it comes to how joint accounts are administered and the rules that govern them. For this reason, joint accounts can be more attractive in some states than in others. For example, the minimum commitment to a joint account in Ohio is only 1 year, whereas once a joint account is established in Delaware, it is permanent.
In most states, if a joint account is dissolved, each of the employer accounts will emerge from the group with their own individual factors in tact (WV). However, in other states, these employers will forfeit their experience rating factors when they leave a joint account and they will be treated as a newly liable employer (MO).
Factors When Considering a Joint Account
- Is the payroll and employment in these employer accounts stable? Do you anticipate a significant reduction or increase in payroll in the coming year?
- Are any of the companies you are considering combining into a joint account scheduled to be sold, closed, or merged soon? Or is there a possibility that they will be?
- Any additional forward looking information you have about the companies/employer accounts may be helpful when making decisions about a joint account.
- How long is the commitment of the joint account? What are the possible changes to the employer’s business structures over this time period?
- Will the companies be permitted to keep their individual experience rating factors when the joint account is dissolved?
Furthermore, when considering a joint account, it is important to bear in mind that any tax savings as a result of the joint account are a matter of cash flow only and not a true long-term savings. This is because, although the employer’s tax liability would be reduced, the reserve account balance will also be lower by virtue of not paying those taxes, which will cause future tax rates to be higher.
Tax Rate Notices
Timely receipt of the employer’s tax rate notices is necessary for Thomas & Company to perform a joint account analysis.
Where it is permitted, Thomas & Company has obtained powers of attorney, address of record, and authorization status with the state agencies for the employers that we represent. This allows the annual tax rate notices to be mailed directly to our office. Receiving these notices timely permits the verification, protestation (if necessary), and evaluation of voluntary contributions and joint accounts.
Please note, if a tax rate notice is sent directly to you from the state agency, this could be an indicator that it was not received by Thomas & Company. Please send us a copy of any unemployment tax document, including rate notices, that you receive directly from the state agency as soon as possible. These can be sent to us at
[email protected].
How Do Voluntary Contributions Impact Joint Accounts?
It is important to note that the establishment of a joint account may rule out a recommended voluntary contribution. Do not make a voluntary contribution to an individual employer account if you are considering including it in a joint account.
In some cases, a voluntary contribution to an individual employer account will be more advantageous than a joint account. In other cases, the joint account may be more advantageous than the voluntary contribution.
In some joint account states, voluntary contributions are also permitted to be made to the joint account itself. When we complete the joint account analysis, we will also evaluate any potential joint accounts for a voluntary contribution.
Joint Account Analysis
Your joint account analysis will be emailed to you. The analysis will include specific details about the potential joint account as well as important details about how joint accounts are administered and the rules that govern them in that state. Our experienced analysts will be available to help answer any questions you have about the analysis.
If you have a specific individual you wish to receive this analysis, please provide Thomas & Company their name and contact information at
uitax@ thomas-and-company.com.
Joint Account Application Process
If a joint account is requested, Thomas & Company can submit the joint account application on your behalf in most cases. In some cases, the application must be signed by an officer. If so, we will prepare the application and send it to you for signature.
In most states, the joint account application requires documentation of common ownership such as the employer’s most recent 851 Federal Affiliations Schedule or an official organizational chart. We will request this from you as part of the application process.
Each state has their own application deadline. Depending on when the rate notices are received, you may have a few weeks or only a few days between the receipt of the joint account analysis and the application deadline.
Once a joint account application is approved by the state, revised rate determinations will be issued. We will verify their accuracy and forward them to you as soon as they are received.
