Looking for a State Of Hawaii Department Of Labor And Industrial Relations Forms And Templates? Download it for free!

Form Uc-336 - Election By Family-Owned Corporation To Be Excluded From Coverage Under Section 383-7(20), Hrs Page 2

ELECTION BY FAMILY-OWNED CORPORATION TO BE EXCLUDED FROM COVERAGE UNDER

SECTION 383-7(20), HAWAII REVISED STATUTES

WHO IS ELIGIBLE?

If your business is a family-owned private corporation organized for profit and:

The corporation has, as its only employees, individuals of a family, related by blood or marriage; and

each employee owns are least fifty percent (50%) of the shares issued by the corporation,

you are eligible to elect exclusion from coverage under Section 383-7(20).

WHAT YOU SHOULD CONSIDER BEFORE ELECTING EXCLUSION FROM COVERAGE.

The exclusion from coverage is irrevocable for five (5) years.

In the event your business closes, you will not be eligible for unemployment insurance benefits.

You are still liable for Federal Unemployment Taxes (FUTA).

Your FUTA tax liability as an excluded corporation may be more than the combined State UI and

FUTA tax liability of a covered corporation. This is because you no longer qualify for a 5.4% FUTA

tax credit afforded to employers covered under Hawaii State Unemployment Insurance (SUI) laws. As

a result, your FUTA tax rate will increase from 0.8% to 6.2% of the first $7,000 paid to your

employees.

For example: In calendar year 1990, a Hawaii employer with one employee that owned at least 50% of

the shares issued by the corporation was paid $19,900. The employer has a Hawaii SUI

tax rate of 0.5% and is required to pay 0.5% of the taxable wages of $19,900.00 or

$99.50 is SUI taxes. In addition, the employer must pay FUTA taxes at only 0.8% of

the FUTA taxable wage base of $7,000 or $56.00 for a total tax liability of $155.50. If

the employer elects exclusion from Hawaii SUI, the employer will not be liable for the

$99.50 in SUI taxes but may pay FUTA taxes at 6.2% of $7,000 or $434.00 -- a tax

increase of $278.50.

REPORTING REQUIREMENTS

Upon request, will be required to furnish the department a copy of From 940, "Employer's Annual

Federal Unemployment (FUTA) Tax Return" that you filed with the Internal Revenue Service.

You are also required to report the following changes that affect your eligibility for exclusion from

coverage with five days from the date of change:

Date that the corporation hired employees other than 50% owners;

Date that any owner owns less than 50% of shares issued by the corporation;

Date that any owner is not a family member related by blood or marriage;

TERMINATION OF YOUR EXCLUSION

After five years, you may request, in writing, to terminate your exclusion from coverage.

Form Uc-336 - Election By Family-Owned Corporation To Be Excluded From Coverage Under Section 383-7(20), Hrs Page 2