Joint and Combined Unemployment Tax Accounts

13 states currently allow contributory (unemployment tax paying) employers with more than one payroll reporting legal entity in a state to combine their unemployment experience with other legal entities to derive more favorable unemployment tax rate(s). For some employers with many legal entities in applicable states, there are hundreds of combinations that may be analyzed.

Joint accounts in applicable states are set up strictly for unemployment tax purposes only and have no other legal effect on any of the entities that are combined.

Although 13 states allow joint / combined accounts to be set up, some states offer employers more favorable unemployment tax treatment of the accounts that are combined than others. For instance, some states require that the joint account remain in place for 1 year where other states make the combination permanent. For states where the required duration of the joint account election is longer than 1 year, it is prudent to be more cautious in considering the potential impacts of future years on a required multiple year or permanent construction. If an employer decides to discontinue a joint account, some states restore your experience while others require that you give up your experience and take on a new employer rate.

It is important for our customers’ to consider the potential impacts of all of these factors in deciding whether or not to set up joint / combined unemployment accounts. Employers Edge offers the industry’s leading experts in analyzing joint accounts and can guide our customers through the multitude of combinations and the maze of differing state tax treatment of these constructions.

The 13 states currently permitting joint / combined accounts are the following:

• Arizona
• Arkansas
• California
• Connecticut
• Delaware
• Hawaii
• Minnesota
• Missouri
• New Jersey
• New York
• Ohio
• South Carolina
• West Virginia