Form Nys-50 - Employer'S Guide To Unemployment Insurance, Wage Reporting, And Withholding Tax Page 36
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52Page 36 of 52 NYS-50 (1/14)
Additional assessments under the Unemployment
be imposed for this failure is $10,000 for any one calendar quarter
(Tax Law section 685(v)(5)).
Insurance Law
Filing using prescribed format within 30 days of notification — If
Unemployment insurance failure to file penalty
within 30 days after notification from the Tax Department by certified
The penalty under section 581.2(b) of the Unemployment Insurance
mail, the employer files its quarterly combined withholding, wage
Law for failure to file a return is 5% of the unemployment insurance
reporting, and unemployment insurance return using the prescribed
contributions due for each month the return is late, up to 25%. The
format, the penalty imposed for failure to file using the prescribed format
penalty may be no less than $100.
will be abated.
SUTA dumping penalties
Other penalties that may apply include, but are not
Employers and financial advisors engage in SUTA dumping when they
limited to:
attempt to manipulate state experience rating systems in order to obtain
Late filing penalty
a lower UI rate than their unemployment experience would otherwise
allow.
The penalty under section 685(a)(1) for late filing is 5% of the unpaid tax
for each month (or part of a month) the return is late. This penalty cannot
SUTA dumping is present when a business attempts to transfer
exceed 25% of the tax paid late unless the return is more than 60 days
to another employer, where there is at least 10 percent common
late, in which case the penalty will not be less than the lesser of $100 or
ownership, management, or control of the two employers, some or all
100% of the amount required to be shown as tax on the return.
of its workforce, payroll, or both. SUTA dumping also occurs when a
person who is not liable for contributions at the time he or she acquires a
Late payment penalty
business of an employer is found to have acquired the business solely or
primarily for the purpose of obtaining a lower rate.
The penalty under section 685(a)(2) is ½ of 1% of the unpaid tax for
each month (or part of a month) the payment is late. This penalty cannot
A penalty is assessed if a violation of the statute is determined to have
exceed 25% of the tax paid late.
occurred. The penalty will be 10 percent of the employer’s wages subject
to contributions in the last completed payroll year, or $10,000, whichever
Interaction of late filing and late payment penalties — The late filing
is greater. An individual who knowingly advises another individual to
penalty will be reduced by ½% (to 4½%) for each month in which both
violate or attempt to violate the statute is subject to a civil penalty of
the late filing and late payment penalties are imposed.
$10,000. In addition to these penalties, any violation of this statute
constitutes a Class E felony punishable by imprisonment.
New hire reporting penalties
The penalty under 685(w) for failure to timely report newly hired
The New York State Department of Labor has developed programs
employees or for failure to file a report showing the required information
and procedures to detect SUTA dumping. You may report any possible
is $20, multiplied by the number of employees not reported or the
incident of SUTA dumping by contacting the Unemployment Insurance
number of false or incomplete reports filed. However, if the failure is a
Special Services and Liability Unit at (518) 485-2144, or by calling our
result of a conspiracy between the employer and employee, the penalty
confidential 24 hour toll-free fraud number at 1 888 598-2077.
will be $450, multiplied by the number of employees not reported or the
number of false or incomplete reports filed.
Wage reporting accuracy
When inaccurate or incomplete information in the wage reporting
Withholding tax fraud
system is discovered through the benefit claim process, a $25 penalty is
The penalty is two times the deficiency of tax (Tax Law section 685(e)).
assessed.
When inaccurate or incomplete wage reporting information is discovered
Willful failure to collect and pay over tax
through a review of an employer’s records, the following penalties apply
Any person required to collect and pay over withholding tax who willfully
for each employee for whom information is not reported accurately:
fails to do so shall be liable for a penalty equal to the total amount of the
• For the first failure for any calendar quarter in any eight consecutive
tax not collected or paid over as well as any interest due on the tax. The
calendar quarters, $1 per employee, not to exceed $1,000.
amount of interest is calculated from the date the failure occurred to the
date the penalty is paid (Tax Law section 685(g)). (See part D, Personal
• For the second failure for any calendar quarter in any eight
responsibility, on page 26.)
consecutive calendar quarters, $5 per employee not to exceed
$2,000.
Individual penalties
• For any subsequent failure in any eight consecutive calendar quarters,
A penalty of $5,000 is imposed on persons who for a fee, compensation,
$25 per employee not to exceed $5,000.
or as an employee, aid or assist in the giving of fraudulent returns,
If an employer provides complete and correct wage information within
reports, statements, or other documents (section 685(r) of the Tax Law).
30 days of receiving notification of such failure, this penalty will be
A penalty of $500 per statement is imposed on an individual who makes
abated.
a statement that decreases income tax withholding without a reasonable
basis (i.e., a taxpayer claims excessive withholding allowances resulting
Unemployment insurance fraud
in underwithholding of tax for the year). This penalty will be waived if
If an employer’s failure to comply with unemployment insurance
the individual’s tax liability is equal to or less than the taxpayer’s credits
reporting requirements is determined to be due to fraud with the intent
(including the credits for tax withheld and estimated tax). (Tax Law
to avoid payment, 50% of the total amount of the deficiency may be
section 685(s))
assessed and collected in the same manner as if it were additional
contributions due. Criminal penalties may also be imposed.
Criminal penalties
Any person who commits a tax fraud act as defined in Article 37 of
Additional assessments under the New York State
the Tax Law would be committing a class A misdemeanor. If a person
Construction Industry Fair Play Act
commits a tax fraud act with intent to defraud the state or political
The New York State Construction Industry Fair Play Act took effect on
subdivision or to evade tax, the person is committing a class E, D, C or
October 26, 2010. The law created a new standard for determining
B felony.
whether a worker is an employee or independent contractor in the
For additional information, see TSB-M-09(12)I, Amendments That
construction industry. It provides new penalties for employers who fail to
Encourage Compliance with the Tax Law and Enhance the Tax
properly classify their employees.
Department’s Enforcement Ability.
Penalties
A person who willfully fails to pay over any withholding tax will also be
An employer that willfully violates the Fair Play Act by failing to properly
prosecuted under the Penal Law, possibly for a felony.
classify its employees will be subject to civil penalties of up to a $2,500
fine per misclassified employee for a first violation and up to $5,000 per
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