Frequently Asked Questions About Unemployment Taxes
What is the taxable wage base?
Am I a successor?
Why did I receive a bill?
What is the current interest rate?
What is the current Contribution Penalty?
What is the Payroll Penalty?
Can I get a waiver from the charges?
Can I appeal this bill?
Why did I receive a bill when I know that I paid the taxes on time?
Can I enter into a payment plan for past due payments?
Why did you withhold my income tax refund?
Does Maine have a leasing company law?
What is seasonality?
Why do I have a lien against my property?
I have a question about my experience rate
Why are wage records so important?
What is direct reimbursement employer?
What is Reasonable Compensation to S Corp Officers for unemployment tax purposes?
Effective January 1, 2000, the taxable wage base for the State of Maine is $12,000. Wages earned by each employee in excess of $12,000 are not taxable.
If you acquire substantially all of the assets of a subject employer’s organization, business, or trade, you may be liable as a successor employer. As a successor, you acquire the experience rate of your predecessor. However, if you acquire the predecessor business out of bankruptcy (free and clear of liens), you will acquire the predecessor’s rate only if it is lower than the average employer rate. If not, you will be assigned the average employer rate. Please complete a "Combined Application for Tax Registration". You must have Acrobat Reader installed on your computer to download the application by clicking on this link: http://www.maine.gov/revenue/forms/general/reg.pdf or you may download the form by visiting the Maine Revenue Services website. http://www.maine.gov/revenue/forms/homepage.html Please be sure to fill out section #6 on the application. Section 1228 of Maine Employment Security Law addresses successor liability. If your predecessor has an outstanding unemployment insurance balance, you could be liable for that amount.
There are several reasons why you may have received a bill:
- You may have remaining taxes due after a change in status, such as when you acquire another business.
- You may have paid the wrong amount on your original bill or or made contributions at the wrong tax rate, and are being billed for the remaining amount.
- You may have have submitted reports and/or payments that were late, incurring interest and penalties. Quarterly wage reports and contributions payments are due on or before these due dates: April 30, July 31, October 31, and January 31. If your reports or payments are received late, interest and/or penalties will be assessed to your account. Maine Revenue Service sends the first bill. Further notices come directly from the Bureau of Unemployment Compensation.
Currently, the interest rate is 7% per year and it is compounded monthly. If you are late in submitting wage reports and/or tax payments for a fraction of a month, you are charged interest for the entire month. You may submit a Waiver of Interest and Penalties for good cause. If it is determined that your late records or payments were caused by an unavoidable occurrence, then up to 75% of the interest accrued to your account may be cancelled.
Contribution penalties accrue to your account when you are late in making unemployment contributions. Currently, the contribution penalty is 1% of the unpaid contributions due per month, up to a maximum of 25% of the amount unpaid.
Payroll penalties accrue to your account every quarter that you are late in submitting quarterly wage reports. Currently, the payroll penalty is $25 or 10% of the taxes due, whichever is greater.
If you submit a written request for a "Waiver of Interest and Penalties," the charges to your account may be waived for good cause. Your reasons for the request for a "Waiver of Interest and Penalties" should be outlined in your initial request.
Please send your request to:
Bureau of Unemployment Compensation
47D State House Station
Augusta, ME 04333-0047
or fax it to (207) 287-3733 / TTY: Maine relay 711
You may appeal an unemployment tax bill within 30 days of the mailing date on the bill by writing to:
Unemployment Insurance Commission
57 State House Station
Augusta, ME 04333-0057
or fax it to (207) 287-4554 / TTY: Maine relay 711
First, look at the amount due. If there is a minus sign after the amount, then this is a credit to your account. You may request a refund by calling us. If the amount due is positive, then you should call us and follow the procedures noted on the bill.
Yes. We welcome payment plans as a method to resolve delinquencies. Please call the Field Advisor and Examiner nearest you or an Unemployment Tax Representative listed in the phone listing.
If you or the person or company involved owes us back taxes, we are able to withhold any income tax refund, regardless of any payment plan. We have legal authority to offset and withhold money you owe for any outstanding bill from money being returned to you as a refund. If your refund is greater than the amount of back taxes owed to us, then you will receive the remaining amount. Call us using the phone listing if you have further questions.
Yes. 26 M.R.S.A. 13 sec.1221 relates to employee leasing companies and their client companies. Under employee leasing agreements, the employee leasing company is responsible for meeting unemployment tax requirements. However, the client company will become liable for meeting unemployment tax requirements if the employee leasing company should not pay.
26 M.R.S.A. 13 sec. 1251 allows industries and certain businesses that operate for less than 26 weeks in a calendar year to be deemed "seasonal." Seasonal businesses are required to file quarterly wage reports every quarter during the calendar year. For the quarters the seasonal business is not in operation, the employer should report zero wages. When the State of Maine recognizes a business as seasonal, the seasonal business cannot be charged for unemployment benefit claims from former workers if the work performed by those employees was performed exclusively within the seasonal period of the business. See also Table of Seasonal Industries (Me. FX-33) and Seasonal Industries and Unemployment Benefits (Me. I-17).
When unemployment taxes remain unpaid after repeated attempts to collect, we can secure any interest you have in real property as a means of collection. Once the lien is paid in full along with any other delinquent costs, we will record a discharge at the Registry of Deeds in the appropriate county, which will clear your title.
26 M.R.S.A 13 sec.1221 concerns experience rates. Your individual experience rate is calculated each year after July 31, and takes into account all payments and charges made to your account before that date. Payments and charges applied to your account after that date will be calculated for the following year. Three variables are used to calculate your rate:
- Your three-year average taxable payroll
- The amount of benefits charged to your account in the past year
- The amount of taxes paid from July 1 of the previous year to July 31 of the current year
When any or all of these variables change, your rate can be affected. Please call us using the phone listing. However, if you acquire a business as a successor you inherit the experience rate of your predecessor. For more on successors, see Am I a successor?
Accurate and up-to-date wage records are required each quarter in order to process claims for unemployment benefits. The wage information you provide allows us to match your records with those reported by the claimant. Wage records are a good check and balance system against former employees receiving benefits fraudulently.
A direct reimbursement employer can be either a governmental entity (Federal, State, County, Municipal government employers) or a 501(C)(3) nonprofit organization (see Glossary for a definition of a 501(C)(3) nonprofit organization) that is liable to pay unemployment insurance contributions. These employers may choose not to pay quarterly unemployment contributions, but instead pay, on a dollar-for-dollar basis, all of the unemployment benefits awarded to a former worker.
S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly. The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state "Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation." Several court cases support the authority of the IRS to reclassify other forms of payments to a shareholder-employee as a wage expense which are subject to employment taxes.