New rule requires employers to file unemployment taxes electronically

By Taryn Phaneuf | Jan 19, 2017

HARRISBURG — New this tax season, Pennsylvania businesses are required to submit unemployment taxes electronically, the state Department of Labor & Industry announced.

The requirement comes with a $5,000 threshold. If an employer is liable for $5,000 or more for a payment period, the tax must be paid electronically. Once an employer’s liability reaches that amount, even if it takes several periods, all subsequent payments must be made electronically.

The timeframe differs between contributory employers, who must follow the new rule beginning the first quarter of this year, and reimbursable employers, for whom the requirement starts during the first monthly or quarterly benefit charge period this year.

Under the contributory method, Pennsylvania employers pay based on a contribution rate multiplied by the taxable wages paid to each employee every year, according to the state agency’s office of unemployment compensation. The taxable wage base for 2017 is $9,750 for each employee – up from $9,500 in 2016. Qualified employers can use the reimbursable method instead, opting to reimburse the unemployment compensation fund for benefits charged to their accounts on a quarterly or monthly basis.

The department made the new rule to work toward reducing its operating costs and creating a more efficient process, Micah Saul - a labor and employment attorney at the law office of McNees, Wallace, & Nurrick in Lancaster - told the Pennsylvania Record.

“There has not been much, if any, vocal opposition to the rule, presumably because the vast majority of employers have internet and computer access and should therefore have little problem making electronic payments,” he said. “To the extent that an employer is unable to make the electronic payments, the Department of Labor & Industry will consider requests for exemption from the new rule.”

In addition to streamlining the process and bringing down administrative costs, electronic payments can be processed more quickly, he said.

He added that he expects implementing the new rule will be smooth. He recommended that if any employers have questions, they contact the department or legal counsel early on, “well in advance of the due date for their payment.”

Electronic payments, including reimbursement of benefit charges, interest, penalty, and fees, should be made using the Unemployment Compensation Management System. Neglecting to follow the new rule has its consequences. Employers could face a penalty of 10 percent of the payment, with a minimum penalty of $25 for every occurrence and a maximum penalty of $500 for every occurrence.

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