Get an overview of common income verification documents that may be of use when responding to verification requests.

As federal and state legislative sessions unfold, employers find themselves navigating a dynamic landscape of potential changes to unemployment taxes. This year, like many before it, has seen a flurry of activity with over 100 bills in various stages of consideration since January 1, 2024.  Addressing Trust Balances and Solvency  A recurring theme in these bills is the allocation of funds for state unemployment trust balances and programs. Across 10 states, legislation is under discussion proposing appropriations ranging from $2 million to nearly $90 million for bolstering respective unemployment insurance programs. This is particularly crucial for states with precarious trust fund balances that may not withstand economic downturns. According to the 2023 State Unemployment Insurance Solvency Report by the United States Department of Labor, only 16 states met the recommended minimum solvency standard by the end of 2023, unchanged from the previous year. Prior to the pandemic, this number stood at 31 states highlighting the significant impact of the pandemic. The risk of insolvency looms large for states ill-prepared to handle increased claims during recessions.  Facing potential insolvency, states may resort to requesting advances via Title XII loans from the federal government. However, this solution comes with the obligation of repayment as evidenced by the experience of two states and one territory mentioned on the 2023 Federal Form 940, all of which lost a portion of their FUTA credit due to outstanding loans.  Other Hot Topics: Labor Disputes, Weekly Benefit Amounts and Fraud  The payment of benefits during labor disputes is another pertinent topic in recent legislative agendas. With labor disputes increasingly making headlines and disrupting economies, legislators in 10 states are deliberating on the current disqualification of unemployment benefits for claimants involved in such disputes. If proposed legislation passes, employees involved in labor disputes would be eligible to receive unemployment benefits. While this may not directly impact all employers, it could significantly affect tax account funds for those embroiled in labor conflicts.  Legislators are also addressing claimant weekly benefit amounts and work search requirements to ensure accountability and prevent misuse of benefits. This includes initiatives to verify claimants' efforts in seeking employment such as following through with interviews and maintaining communication with prospective employers.  Data integrity and fraud prevention remain key areas of focus. With fraud reaching alarming levels during the pandemic, states are taking proactive measures, aided by grants from the American Rescue Plan Act, to modernize their unemployment platforms and enhance detection capabilities.  Several bills passed both state-level houses and senates and are eligible to be sent to respective governors for signature.  Below are those states along with a synopsis and link to the bill:  Colorado – HB 1189   This measure appropriates $76,527,050 for program costs related to unemployment insurance.  New Mexico – HB 2 This measure appropriates $13,846,600 for unemployment insurance to administer an array of demand-driven workforce development services to prepare New Mexicans to meet the needs of businesses. These measures would more-so benefit claimants and their ability to file claims quickly and efficiently.    Utah – HB 170 This measure addresses multiple issues:  Claimant would be disqualified from receiving unemployment benefits if they fail to appear without good cause for a scheduled interview for suitable work.  Claimant’s failure to accept within two days after the date the offer was sent, an offer of suitable work from an employer or the employment office as failure to accept suitable work.  Develop and maintain a website for employers to access information and report potential fraud related to unemployment insurance claims.  Virginia – SB 542 This measure makes an amendment to the VA Unemployment Compensation Act regarding labor dispute disqualification. It provides that a lockout by an employer will not constitute a labor dispute and locked out employees, who are otherwise eligible, will receive unemployment benefits unless one of the following occurs:  Recognized or certified collective bargaining representative of the locked out employees refuses to meet with the employer under reasonable conditions to discuss issues giving rise to the lockout.  There is a final adjudication under the federal National Labor Relations ACT (NLRA) that such representative refused to bargain with the employer in good faith.  The lockout is the direct result of such representative’s violation of an existing collective bargaining agreement.    Effective July 1 after enactment.  In the ever-evolving landscape of unemployment law, staying abreast of statutory changes is essential for managing costs effectively. Stay tuned for more insights on this and other pertinent topics. 

It has been almost four decades since the Immigration Reform and Control Act was introduced in 1986. Yet, many employers still have trouble understanding the importance of avoiding common Form I-9 compliance violations. These violations can have a serious impact on a business, and there is a broad range of Form I-9 compliance violations resulting from negligence. The penalties the U.S. Immigration and Customs Enforcement (ICE) can impose for even the most benign can be very costly and detrimental to employers. For industries that typically employ a large number of immigrants, but even for small businesses, immigration compliance is a business necessity. To prevent costly errors, improve I-9 administration and minimize the risk of violations in future operations, every organization should seek to establish a detailed and comprehensive policy and adhere to it.  In February 2024, the Department of Homeland Security (DHS) released increased fines for Form I-9 civil penalties to account for annual inflation. The new fines are effective for Form I-9 penalties assessed after February 12, 2024, for associated violations that occurred after November 2, 2015. To avoid Form I-9 fines, employers need to be aware of the recent adjustments: The penalties now range from $281 to $2,789 (previously $272 to $2,701) for the paperwork violation (per relevant individual) The penalty for the first offense for unlawful employment of aliens has increased from $676 - $5,404 to $698 - $5,579, per unauthorized alien. The penalty for the second offense for unlawful employment of aliens has increased from $5,404 - $13,508 to $5,579 - $13,946, per such alien. The penalty for the third offense for unlawful employment of aliens has increased from $8,106 - $27,018 to $8,369 - $27,894, per such alien. The violation relating to employer’s failure to notify of Final Nonconfirmation of employee’s employment eligibility has increased from $942 - $1881 to $973 – 1,942, per relevant individual. The penalty for unfair immigration related employment practices has increased from $557 - $4,465 to $575 - $4,610 for the first order, per discriminated individual to $6,913 – $23,048 for third and subsequent offense. The fines for unfair documentary practice have increased to $230 - $2304, per individual discriminated against. Whereas the penalty for document fraud can vary anywhere from $575 - $11,524 per document pursuant to 8 U.S. Code § 1324c (a) (1) – (6) on whether it’s first or subsequent offense. On average, 65%-75% of the I-9s audited have one or more errors. For example, the proposed fine for an employer with 1,000 I-9s that is found to have 65% error rate (i.e. 650 I-9s) with substantive errors would face a potential fine of over $1.8 million (650 x $2,789 = $1,812,850). Taking into account that any mistakes made in filling out and filing Form I-9 can be even more costly than before, employers need to adhere to the necessary rules and procedures. To avoid Form I-9 fines, they should regularly assess their organization’s hiring processes, retention and storage policies, fully understand the types of Form I-9 violations and lawfully correct any errors if the need arises. How to Take Proactive Measures to Avoid Form I-9 Fines ICE actively conducts worksite enforcement audits and if employers fail to complete, retain or make Form I-9 available for inspection, the punishments imposed can result in significant penalties. Therefore, to avoid Form I-9 fines, employers are encouraged to take proactive measures, develop proper procedures and perform regular self-audits. On the other hand, employers who fail to do this or to properly train and supervise the preparation and maintenance of Form I-9 expose themselves to sizable risks by making common I-9 mistakes. While some errors may be corrected, employers can avoid Form I-9 fines and significant expenses by developing internal procedures to ensure that every form is properly completed, verified, maintained and readily accessible. To simplify this and transform hiring compliance into a highly efficient and reliable operation, they can automate Form I-9 administration, convert paper documents to compliant electronic forms, filter outdated files, remediate errors and avoid costly Form I-9 penalties. As a result, employers replace the risks and expenses of outdated, obsolete I-9 processes in favor of smarter, faster and more reliable Form I-9 management and compliance. Complete Form I-9 properly, save time on the review process, and ensure compliance during the hiring process while meeting United States Citizenship and Immigration Services and ICE regulatory mandates.

Learn about different payroll tax forms, when to use and file them, and ensure compliance with different payroll tax requirements to avoid penalties.

Learn more about optimizing Form W-2, its purpose and filing instructions in order to meet the requirements and prevent penalties for late, incomplete or inaccurate forms.

Get an overview of the differences between IRS Form 940, Form 941, and Form 944 to ensure tax compliance by filing them accurately and on time.

Changes to unemployment tax and benefits in Connecticut may affect employers as the state seeks to address its trust fund solvency.

Changes were made in 2023 to Form IA 12.3, a separation notice New York employers must provide their employees upon termination.

Experian Employer Services works extensively with states and has seen how technology has changed and improved this industry. Sometimes that is a positive change such as the State Information Data Exchange System (SIDES).

Find out which taxes are payroll taxes and how to report them to maintain compliance with regulations and IRS requirements.

Learn how to differentiate between Form W-2 and Form W-4 to meet the necessary requirements and ensure payroll tax compliance.

The long-anticipated final rule regarding the treatment of independent contractors was published in the Federal Register on January 8, 2024, by the United States Department of Labor. This new rule, effective as of March 11, 2024, seeks to realign certain core factors that are part of the process to determine employee classification. This realignment negates the employer-friendly rule put in place by the former administration and better aligns with established judicial precedent.

Learn more about the right approach to ensure successful post-merger integrations as a critical aspect of M&A transactions.

Learn more about Form W-3 in this overview, including how and when to file for better payroll tax compliance.

Form I-9 and E-Verify are often confused. Learn more about their differences are to avoid costly mistakes and secure immigration compliance.

Representatives Lloyd Smucker (R-PA) and Terri Sewell (D-AL), together with several other lawmakers, have introduced the “Improve and Enhance the Work Opportunity Tax Credit Act.” According to Congressman Smucker’s press release, “The Improve and Enhance the Work Opportunity Tax Credit Act of 2023 would update the WOTC, which has not been changed since its enactment twenty-seven years ago, and encourage longer-service employment. The bill would (1) increase the current credit percentage from 40% to 50% of qualified wages and (2) add a second level of credit for employees who work 400 or more hours. In addition, the bill eliminates the arbitrary age cap at which SNAP recipients are eligible for WOTC. This change will provide an incentive to hire older workers and better align the credit with the work reforms adopted in the debt ceiling negotiations in 2023.” The text of the bill can be found here. The following are the specific changes the bill proposes: For certified employees who work at least 400 hours in their first year, increase the credit percentage from 40% to 50%. For certified employees who work more than 400 hours in their first year, increase the qualified wage caps as follows: For target groups with a cap of $6,000 in qualified wages, double the qualified wages to $12,000 for a total possible credit of $6,000 (compared to the current $2,400). Disabled veteran: The current credit is 40% of the first $12,000 (up to $4,800); the bill would increase that to 50% of the first $24,000 (up to $12,000). Long-term unemployed veteran: The current credit is 40% of the first $14,000 (up to $5,600); the bill would increase that to 50% of the first $28,000 (up to $14,000). Long-term unemployed disabled veteran: The current credit is 40% of the first $24,000 (up to $9,600); the bill would increase that to 50% of the first $48,000 (up to $24,000). The Summer Youth target group would remain at 40% and not go up to 50%. The age ceiling for the SNAP target group, currently at age 39, would be eliminated, allowing any new hire that otherwise meets the SNAP requirements to be certified. How and When Could This Happen? This bill represents the most significant proposal to enhance the value of WOTC in many years. However, to be considered, Congress needs to negotiate a tax bill. Tax bills are typically included with large legislative packages such as annual appropriation bills. Congress passed a continuing resolution in November to avoid a government shutdown and delay annual appropriations legislation until 2024. In this instance, Congress created two deadlines at which different parts of the government could shut down without new legislation: January 19 and February 2. According to the Washington Post, House Speaker Mike Johnson “pushed through the laddered approach — leaning on support from Democrats to pass the GOP-controlled chamber — while vowing not to take up another CR in January or February. He reiterated that pledge to House members in a letter last week. ‘It continues to be my intention that the House and Senate complete action on full-year bills ahead of the January 19 and February 2 deadlines provided for in the last continuing resolution,’ Johnson wrote. ‘I do not intend to have the House consider any further short-term extensions.’” Therefore, one opportunity for tax legislation will be in January in the context of government funding. Despite Speaker Johnson’s statements, that process could certainly be delayed further into 2024. Former House Ways and Means Chairman Dave Camp recently interviewed the current Ways and Means Chairman, Jason Smith, at a PwC event. According to Politico’s Weekly Tax newsletter, “[Chairman] Smith believes that a variety of potential vehicles could exist next year, according to Camp — which would mean avenues beyond government funding measures needed early in 2024.” However, even if Congress does take up tax legislation, it is unlikely that this WOTC bill will rise to the top of priority issues. Nevertheless, it introduces important policy considerations for the future of the program, which comes up for renewal at the end of 2025. Department of Labor to Study WOTC DOL has funded an independent contractor, Economic Systems, Inc., to perform an evaluation of the WOTC program. Among the questions the evaluation seeks to research are: What are the characteristics of jobs of WOTC-hires? What types of employers apply for WOTC? How is WOTC reflected in employer hiring and retention practices/policies? To what extent does pre-screening for WOTC eligibility affect employment outcomes? According to a public notice, surveys of various interest parties will be issued in the winter of 2024-2025. State WOTC Programs Several state legislatures have proposals to institute some kind of state WOTC program. Maryland successfully passed a state income tax credit match to WOTC effective in 2022. Here are some of the others we are watching: Georgia House Bill 372 Missouri Senate Bill 1207 New York Senate Bill S4833A & Assembly Bill A1991A North Carolina House Bill 853 Pennsylvania HM 41747 Pennsylvania HM 40254 On December 19, 2023, the city of Tacoma, Washington passed an ordinance creating a $1,000 local WOTC for employers that add a new position for an individual certified by the State Workforce Agency as a member of the vocational rehabilitation WOTC target group.

Learn more about Form 941 in order to improve your tax compliance with proper and timely submissions of the form.

Enhance your organization's success by improving the employee onboarding process with solutions from Experian Employer Services.