Tax Department Tip of the Month

Tax Tip for November, 2008

Those employers who employ only domestic employees may file and pay their Texas Unemployment Tax annually instead of quarterly. An employer who elects to report wages and pay contributions on an annual basis must complete and return the Annual Domestic Election Form by December 31 to enable them to begin filing annually for the next year.

Only those employers who have only domestic employment qualify for annual filing. Employers are not eligible for annual filing if they have more than one type of employment.

The election form must be postmarked no later than December 31, 2008 to be effective for calendar year 2009. If you have questions about electing to report annually, please contact any TWC Tax Office or contact the TWC Tax Department Status Section at (512) 463-2731 or e-mail us at tax@twc.state.tx.us.

Tax Tip for October, 2008

Computation of the 2009 unemployment insurance tax rate is based on your employment experience for the past twelve calendar quarters. Benefit payments charged to your tax account and taxable wages, which you have reported and on which you have paid taxes, are used in the computation.

The Labor Code, Texas Unemployment Compensation Act, provides that only taxable wages on which taxes have been paid by October 31, 2008 can be used to compute your tax rate. If you have unreported wages or unpaid taxes that are due from the twelve quarters proceeding October 1, 2008, you are encouraged to submit your report(s) and payment by October 31, 2008. Payment of unemployment insurance taxes may decrease your 2009 tax rate.

Tax Tip for September, 2008

Self Reset Your Password

Unemployment Tax Services offers a self reset password process for users who have either forgotten or revoked their password.

Forgotten Passwords

1. Select the Forgot Password link from the Logon page.
2. Enter the User ID and Name.
3. Enter the Security Answer.
4. Enter and retype the new Password

Revoked Passwords

The Reset Password program is automatically invoked when the user revokes their password or fails to correctly answer their security question after two attempts.

1. Enter and retype the new Password on the Reset Password page.
2. Click the link provided in the email message that has been sent to your email address on file.
3. Enter your User ID and new Password on the Finish Password Reset page to finalize the reset process.

Tax Tip for August, 2008

Texas Minimum Wage Increase

Section 62.051 of the Texas Minimum Wage Act automatically adopts the federal minimum wage as the Texas minimum wage. Federal law raised the federal minimum wage from $5.85 to $6.55 effective July 24th, 2008.

For a summary of the Texas Minimum Wage Act, please visit http://www.twc.state.tx.us/ui/lablaw/tmwsum.html.

Tax Tip for July, 2008

2008 Surplus Credit Payment

2008 Surplus Tax Credit payments are currently being mailed to Texas employers. TWC is issuing the surplus tax credit payments after qualified employers file their first quarter 2008 tax returns and pay the taxes due. The potential 2008 surplus credit for an eligible employer is 0.13 percent of the unemployment insurance (UI) taxes paid between October 1, 2006 and September 30, 2007.

Because the surplus credit you are due is a credit against future UI tax liability, in some cases, you may owe only the Employment and Training assessment and not owe any UI taxes for 2008. If this is the case, your 2008 surplus credit, which is a credit against actual UI taxes paid, will be available during 2009 and 2010.

Tax Tip for June, 2008

2008 Surplus Credit

Once again the Unemployment Compensation Trust Fund has risen above levels mandated by state law. In addition to the one-year suspension of the 0.12 percent replenishment tax, TWC will continue to distribute the surplus tax credit announced in October 2007. The first checks are scheduled to be mailed to employers early in June of 2008.

In order to qualify for the 2008 surplus tax payments - employers must meet certain requirements including having a 2008 tax rate greater than 0.10 percent, having payroll during 2008 and having filed all prior tax reports and paid all tax due.

Employers must be experience-rated, which means they have been in business with payroll for at least 18 months prior to October 1, 2007. Employers subject to UI taxes include those paying $1,500 in wages in a calendar quarter or having at least one employee during 20 different weeks in a calendar year.

TWC will issue the surplus tax credit payments after employers file their first quarter 2008 tax returns and pay the taxes due. The potential 2008 surplus credit for an eligible employer is 0.13 percent of the UI taxes paid between October 1, 2006 and September 30, 2007.

Tax Tip for May, 2008

Any user of Unemployment Tax Services may now remove their access to tax account(s) without intervention by TWC staff.

Bookkeepers who were no longer providing a service for certain employers were required to contact either TWC or an account administrator of the account to have access to the account removed. In many of these cases, the users were forced to contact TWC because the account administrator had left employment or could not be reached. Pending users and users other than account administrators were then rendered unable to either gain access or manage the account. This new feature greatly benefits bookkeepers who are constantly changing their clientele base and tend to be the sole user with access to the employer unemployment tax account.

The following steps should be taken by users to remove their association from an employer tax account:

1. Logon to Unemployment Tax Services.
2. Select the My Employers link from the Home page.
3. Select the Remove link located next to the employer account you wish to remove.
4. Select the Yes button on the Confirmation page. Users receive the following message on the Confirmation page: "Removing this employer will permanently take away your access to the employer's unemployment tax account. Are you sure you want to continue?"
5. Confirmation message "Employer removed" will display.

Tax Tip for April, 2008

Registered users of Unemployment Tax Services, the free TWC online utility, should update their online profile any time they change e-mail addresses. TWC uses the e-mail address to enable online password changes as well as a means of notifying employers.

Updating the profile is quick and easy. After logging in to Unemployment Tax Services, select the "My Profile" link from the upper right of any page. Next, the user will enter the new e-mail address and then submit.

To ensure that e-mails are received and not filtered, users should add the TWC e-mail addresses taxserv@twc.state.tx.us and tax@twc.state.tx.us to their address book.

Tax Tip for March, 2008

Texas Workforce Commission Revised 2008 Tax Rate Information

Dear Employer,

The strength of the Unemployment Compensation trust fund in 2007 brought the Texas Workforce Commission (TWC) the opportunity to enact a one-year suspension of the 0.12 percent replenishment tax. The TWC is pleased to inform you that in addition to the surplus tax credit we will be distributing during 2008, your 2008 tax rate will be lowered by 0.12 percent. This is a change from the tax rate notice you received in December.

Enclosed is your revised tax rate notice for 2008 that includes this one-year suspension of the replenishment tax. Please use this rate for your 2008 Employer's Quarterly Tax Report calculations rather than the rate notice you received during December 2007.

The following bullet points describe each component of your revised 2008 tax rate.

• The The General Tax - is the unemployment insurance component of your Effective Tax Rate and is based on claims against your account. If TWC paid benefits to former employees who were laid off or separated through no fault of their own in the past three years, you will pay the General Tax.
• The Employment Training Assessment - charged to all employers who are eligible for a computed tax rate to finance the Skills Development Fund Program. The Employment Training Assessment calculation is a separate line item on the Employer's Quarterly Tax Report and is the same rate for all employers.

Because the surplus credit you are due is a credit against future unemployment insurance (UI) tax liability, in some cases, you may owe only the Employment and Training assessment and not owe any UI taxes for 2008. If this is the case, your 2008 surplus credit, which is a credit against actual UI taxes paid, will be available during 2009 and 2010.

Again, we pledge our continued efforts to help you keep your taxes as low as possible.

Texas Workforce Commission

Tax Tip for February, 2008

Asset Recovery Companies

Before you sign a contract with an Asset Recovery Company please go to the Texas Comptroller of Public Accounts' website and search for your business. The Comptroller's unclaimed property website is: https://txcpa.cpa.state.tx.us/up/Search.jsp

There are legal and profitable asset recovery companies that help individuals and businesses find lost money. While most of these organizations provide a service to the community, some are trying to take advantage of Texas employers.

Tax Tip for January, 2008

Annual Domestic Reporting

The annual report and contribution for domestic accounts that have requested annual filing is due on or before January 31, 2008.

The online version of the annual report is available now for those domestic employers who elected to file and pay their state unemployment tax annually. TWC encourages Annual Domestic Filers to file their annual report and pay their tax due online by using Unemployment Tax Services, a free online service. During the quick and simple registration process, new users create a User ID and password that will be used each time they access the online system. To register for access and to learn about other online services, visit our Unemployment Tax Services web site.