If you have a business with employees in New York State you would generally have to pay unemployment tax. According to the New York Department of Labor, the requirement to register for unemployment tax depends on the type of employer. General business employers would be liable for unemployment tax in the calendar quarter they pay at least $300 in remuneration or they obtain any or all the business of an employer that is already liable for unemployment tax.
Agricultural employers are subject to New York unemployment tax on the first day of the calendar year they employ ten or more agricultural workers on at least one day in each of 20 different weeks during that year or the prior year, or in the calendar quarter they pay $20,000 or more in remuneration to agricultural labor workers, or the calendar quarter any remuneration is paid to agricultural workers if the employer is liable for unemployment tax in any other state for agricultural workers.
Nonprofit employers are subject to New York unemployment tax the first day of the calendar quarter they pay $1,000 or more in remuneration, or the calendar quarter they employ four or more workers on at least one day in each of 20 different weeks during this year or the prior calendar year.
Employers of household employees are subject to unemployment tax starting in the calendar quarter they pay $500 or more in remuneration.
General business and household employers can register online. Non-profit and agricultural employers cannot file online. Non-profit employers must submit Form NYS-100N, and agricultural employers Form NYS-100A. A federal employer identification number, obtained from the IRS, is needed to register.
Once you are registered you are assigned a New York employer registration number. You will have to file quarterly tax returns on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return. This return can be filed online on the New York State Department of Taxation & Finance website.
According to the New York Department of Labor, unemployment insurance covers services performed by any employee under the supervision, direction and control of an employer. This includes full and part-time, temporary, seasonal and casual employees working under a written or verbal contract. And the services could be performed on or off the employer’s premises and in the employees’ homes. Compensation for unemployment insurance purposes in New York includes salaries, commissions, bonuses and the reasonable value of board, rent, housing, lodging or other similar benefit.
Corporate officers who perform services for the corporation are considered employees and are covered by unemployment insurance. This includes officers of professional, subchapter S and closely-held corporations.
According to the New York Department of Labor, the earnings of a sole proprietor are not subject to unemployment insurance contributions and services cannot be covered on a voluntary basis. The same applies to members of a limited liability company and partners in a partnership. Also, the spouse and children under 21 years of age of a sole proprietor are excluded for unemployment insurance purposes.
Salespersons are considered covered employees if substantially all the work is performed personally by the salesperson, the salesperson does not have a significant investment in the facilities used for performing the work, except for transportation facilities, and the salesperson has a continuing relationship with the employer. Licensed real estate brokers and insurance agents are generally excluded from unemployment insurance coverage if their remuneration is directly related to sales rather than the number of hours worked.
Your business would not be subject to unemployment tax on independent contractors. According to the New York Department of Labor, independent contractors are in business for themselves, offering their services to the general public. The independent contractor relationship depends primarily on the level of supervision, direction and control exercised by the business that contracts the services.
If you have employees working in more than one state there are four tests to apply to determine to which state the employees should be reported for unemployment tax purposes. The first test is localization – where the employee’s services are performed. The services are considered to be localized in New York State if the services performed outside the state are incidental to the services performed in New York and are temporary, transitional and for isolated transactions.
If the employee’s services are distributed between two or more states, the second test is the employee’s base of operations. If no services are performed in the employee’s base of operations, the third test is the place of direction or control. This does not have to be the location of the employer’s principal office. It can be the source of authority over supervision, where job assignments are made, instructions are given, and payroll records are kept.
If the first three tests do not determine the allocation of the services to one state, the fourth test is the employee’s state of residence, if some services are performed in that state.
The New York State unemployment tax applies on the wage base ($10,300 in effect for 2014). The initial rate for new employers is 4.1% and the rate is then adjusted annually based on the employer’s prior employment and unemployment experience.
Sources:
Employer Overview, Unemployment Insurance, New York State Department of Labor
Employer Registration, New York State Department of Labor
Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return
Form NYS-100A, New York State Employer Registration for Unemployment Insurance, Withholding, and Wage Reporting for Agricultural Employment
Form NYS-100N, New York State Employer Registration for Unemployment Insurance, Withholding, and Wage Reporting for Nonprofit Organizations
Online Services, New York State Department of Taxation & Finance
