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Home > FMS Policies and Procedures CA > Pay and File Taxes on Behalf of Consumers > State Unemployment Tax Returns and Payments

State Unemployment Tax Returns and Payments

Policy: 

In accordance with State regulation, consumers must file and pay State Unemployment Tax, as calculated on workers gross wages, individually using the individual participant’s account number designated for this purpose.  Payments and returns are made and filed per regulation on a quarterly basis.

Each participant employer has his/her own experience rate for State Unemployment Tax.  This means that each individual employer may pay a different tax rate for State Unemployment Tax.  In most states, new employers are designated a standard "New Employer Rate".  New employers usually maintain the "New Employer Rate" for some uniform time period.

Each state maintains a taxable wage base.  The taxable wage base is the amount of gross wages paid to an workers in a calendar year that are taxable for State Unemployment Purposes.  Any wages paid to the workers in excess of the taxable wage base are considered "Excess Wages" and are not taxable for State Unemployment Purposes.

 
F/EA utilizes the employer tax cost allocation in the participant's budget to pay State Unemployment Tax.
 
F/EA utilizes a reconciliation process to ensure that payments are made and returns filed on behalf of consumers accurately, timely and in accordance with existing regulation. This reconciliation is performed by the F/EA Accountant quarterly.
 
On a quarterly basis, F/EA Quality Assurance Administrator audits filings and deposits for State Unemployment Insurance. Quality Assurance Administrator collects a random sample of payments and compares payments rates and thresholds on report to payroll edit registers and rate notices.
 
Additional policies, for each portion of the process, are presented below prior to the procedure outlined for each process.
 
Documentation showing payments of State Unemployment Tax made on behalf of consumers is made available to Program Administrator and consumers upon request.
Procedure: 

Filing and Payment

  1.  At quarter end, <<Staff Title>> within Payroll Department uses Payroll System to produce State Unemployment Tax report for each employer
  2. Each report shows <<insert per state requirements>>:
  • Employer gross wages paid in the quarter
  • Employer Unemployment Tax Rate
  • Taxable wages
  • Excess wages
  • Unemployment tax liability
  • Employee name and Social Security Numbers paid this quarter
  • Gross wages by workers
  • Taxable wages by workers
  • Excess wages by workers
  1. Using Payroll System, <<Staff Title>> produces payments to accompany State Unemployment Tax reports <<payments may be paper checks or an Electronic Funds Transfer file>>
  2. <<Staff Title>> selects sample of 10% of employers represented by agent for the quarter
  3. <<Staff Title>> selects Unemployment Insurance Tax reports and corresponding payments for 10% of participants for quality check
  4. <<Insert process used to Quality Check data>>
  5. After reports and payments have successfully passed the Quality Check process, <<Staff Title>> submits reports and payments to State Department of Labor
  6. <<Insert process to submit reports and payments.  May be electronic or on paper.  Process will vary depending on state.>>

Reconciliation of Unemployment Return and Payment

On a quarterly basis, within 30 days of the unemployment return and payment due date (30 days to allow time for payments to clear the bank), the F/EA Accountant reconciles unemployment returns to debits from the program operating bank account. F/EA performs a quarterly audit of returns and payments to ensure that the payroll system is accurately producing unemployment reporting and payment data, including filing state unemployment in accordance with each employer’s unemployment insurance rate, wages and wage base threshold.
  1. Each quarter F/EA sends a Transmittal Report for e-filing showing the employer, state ID, State Unemployment tax payment, total wages, excess wages, taxable wages, tax rate, Federal ID and monthly workers counts
  2. F/EA Accountant collects Transmittal Report and copy of Division of Unemployment Assistance check from applicable file folder
  3. F/EA Accountant opens spreadsheet called Quarterly Tax Reconciliation CYYY saved at <<File Path>>
    1. Open the tab labeled for SUTA and the quarter in question
    2. Complete the Quarterly Tax Reconciliation by entering values next to the labels using the <<Transmittal Report>> and payments to State Department of Labor
  4. Compare the sum of payments on the <<Transmittal Report>> to the amounts debited for State Unemployment Tax from program operating account <<insert detail>>
  5. Identify any discrepancies
  6. Any discrepancies must be researched and resolved
  7. Report discrepancies to Payroll Department as applicable
  8. Payroll Department will file amended returns as applicable
  9. If no discrepancies identified, F/EA Accountant prints Quarterly Tax Reconciliation document
  10. F/EA Accountant signs and dates Quarterly Tax Reconciliation document next to “Prepared By”
  11. F/EA Accountant provides Quarterly Tax Reconciliation document and supporting documents to <<Staff Title>>
  12. <<Staff Title>> signs and dates Quarterly Tax Reconciliation document next to “Verified By”
  1. <<Staff Title>> scans all documents and stores them at <<File Path>> 
  2. Signed reconciliation sheets are stored for a minimum of 7 years.
Internal Controls: 

The internal controls used by F/EA to monitor this process establish responsibility, segregate duties, document procedures and ensure independent internal verification.

  1. On a monthly basis, F/EA reconciles State Unemployment Insurance (SUTA) payments to debits for such payments from Program Operating Account (See Reconciliation of General Ledger Liability Account for Unemployment Tax)
    • This verifies that payments are actually made
  2. Payroll Department submits a UPS shipping receipt showing the date the paper returns and payments are mailed to State Department of Labor
    • F/EA Accountant reviews UPS shipping receipt to ensure that paper returns are mailed on or before due date
  3. Payroll Department submits a transmittal receipt showing the date the electronic returns are submitted to State Department of Labor
    • F/EA Accountant reviews transmittal receipt to ensure that paper returns are mailed on or before due date
  4. The F/EA Accountant performs the quarterly SUTA return and payment reconciliation
    • The F/EA Accountant compares values on relevant documents for accuracy
    • The F/EA Accountant enters all transactions on a control document, the Quarterly Tax Reconciliation sheet. This sheet is prenumbered.
    • After performing the reconciliation, the F/EA Accountant signs and dates the control document.
  5. The <<Staff Title>> reviews the reconciliation statement and the supporting documents for accuracy
    • The <<Staff Title>> verifies not only completeness, but also validity.
    • The <<Staff Title>> reviews all documents for mathematical accuracy.
    • After reviewing, the <<Staff Title>> signs and dates the control document, the reconciliation sheet.
  6. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for reconciliations.
  7. The reconciliation and supporting documents are scanned and saved for a minimum of 7 years per the File Retention Policy.