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PAYROLL PROCESSORS

DOs and DON’Ts for Clients of Payroll Processors in Maine:

Using the services of a payroll processor can be a convenient and economical way for an employer to ﬁ le and pay unemployment

contributions. However, employers face certain risks associated with the use of a processor, including possible lack of compliance

and the risk of loss of funds that are under the control of the processor. Ultimately, it is the employer who bears the responsibility for

meeting its payroll tax obligations. If you are an employer that uses the services of a payroll processor, you should take the

following precautions:

 Educate yourself — understand your ﬁ ling requirements and the risks associated with using a payroll processor.

 Verify with the Bureau of Consumer Credit Protection, (207) 624-8527 or , that the processor is licensed

and has provided proof of ﬁ delity insurance to protect payroll funds, including coverage for crimes such as fraud and theft. If

the processor has access to your company’s tax funds, verify with the state that the processor has also posted a surety bond

or letter of credit, or is enrolled in the state’s Payroll Processor Recovery Fund.

 Obtain veriﬁ cation from the payroll processor and its insurer that the processor’s liability insurance will remain in effect for a

speciﬁ ed period of time.

 Read your contract with your processor carefully.

 Ensure that the agreement/contract and any power of attorney that your processor has with you speciﬁ cally requires

that all notices sent by the IRS and state tax agencies be sent directly to you.

 Never hesitate to contact tax authorities or the Bureau of Consumer Credit Protection directly.

 Check with the appropriate tax agency periodically to ensure that returns and payments are ﬁ led in a timely manner.

 Insist on veriﬁ cation from your processor that any problem for which the employer has received a tax agency notice has been

resolved.

 Never assume that everything is ﬁ ne solely because you have not received notice of any problems from the IRS, MRS or

MDOL.

 Never sign a tax return before it is completed.

 Require that the processor provide copies of returns, not just summaries, at the time of ﬁ ling.

 If you are using a nationwide payroll service, be sure you are assigned a direct contact person and telephone number.

A payroll processor is an entity that performs the following

highest volume during the previous calendar year or $50,000,

services for one or more employers: prepares and issues

whichever is greater. The bond need not exceed $500,000. A

payroll checks, prepares and ﬁ les state or federal income tax

letter of credit or participation in the state’s Payroll Processor

withholding reports or unemployment insurance contribution

Recovery Fund can be substituted for a surety bond. A payroll

reports or collects, holds and turns over to the State Tax

processor must provide certain information to each client at

Assessor or to federal tax authorities income tax withholding or

least every quarter. Such information includes an accounting of

unemployment insurance contributions. By January 31 of each

funds received and disbursed, contact information for state and

year, all payroll processing companies must obtain a license

federal tax agencies to verify payments have been made, and

from the Maine Department of Professional and Financial

notice that bonding does not necessarily ensure that all claims

Regulation, Bureau of Consumer Credit Protection (www.

will be covered if the payroll processor fails to comply with its

credit.maine.gov).

responsibilities.

All payroll processors must provide proof of ﬁ delity insurance

A payroll processor may not designate itself as the sole

equal to twice the highest gross weekly payroll processed by

recipient of notices from state or federal authorities for

the business in the preceding year or $5,000,000, whichever

nonpayment of taxes or unemployment contributions.

is less. For ﬁ delity insurance coverage, the processor may

A payroll processor shall ensure that such notices are

choose from a ﬁ delity bond, employee dishonesty bond, third-

provided directly to the affected employers.

party ﬁ delity coverage or liability insurance that includes crime

Failure to license or abide by all statutory requirements will

coverage.

subject a payroll processor to certain civil penalties. Further

Payroll processors who have authority to access, control,

information and applications may be obtained from the Bureau

direct, transfer or disburse a client’s funds must also provide

of Consumer Credit Protection. Call (207) 624-8527 or visit

evidence of a surety bond in an amount equal to the total of

the website at (select

“Who We

all local, state and federal tax payments and unemployment

Regulate”, then go to Payroll Processors and click on “Licensing

contributions remitted by the payroll processor on behalf of

Information”).

employers in this state in the three consecutive month period of

Unclaimed Property Reporting Requirements

Maine businesses are required to identify, report and remit un-

The report must be ﬁ led May 1 for life insurance property and

claimed property to the Ofﬁ ce of the State Treasurer in accor-

gift cards/certiﬁ cates and November 1 for all other property,

dance with 33 M.R.S., Chapter 41. Information on how to report

such as bank accounts, uncashed checks and securities.

unclaimed property is available on the Maine State Treasurer’s

Visit or call (207) 624-7470 for

website at .

more information.

Instructions For Form Me Uc-1 - Quarterly Return Of Unemployment Contributions - 2017 Page 2

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