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Florida Reemployment Tax Basics: Foundation for Your SuccessWe would like to begin. Florida Reemployment Tax Basics, Foundation for Your Success. Hi, Jody and Michael. Thank you for joining us today. >> Good afternoon. This is Jody Burke. We are so glad you could join us today. We are excited to be with you and share a few basics about reemployment tax. Before we get into the presentation , I want to apologize, I want to say I am struggling with laryngitis. If you hear my voice cracked please don't let it be a distraction. Some of the things will talk to you about today, we will be fine for you what an employee is and we will talk to you a little bit about what your responsibility is as an employer and [Indiscernible] and we will talk to you about what his liability for the [Indiscernible] and what constitutes [Indiscernible] and we will discuss tax rates and Michael will go over with you how to file a report and finally will talk to about a few issues that we think are important for you to know and help you to be better prepared. Michael cut take it away. Every state has an unemployment compensation program which operates in coordination with the federal compensation program . The US Department of Labor and the Internal Revenue Service administer the federal unemployment tax sometimes abbreviated as FUTA and the Florida Department of revenue collects the state employment tax sometimes abbreviated as SUTA. The Florida legislature in 2012 change the name of Florida's unemployment compensation program to the reemployment assistance program so in Florida unemployment tax became reemployment tax and the Florida Department of economic opportunity handles reemployment systems claims. Reemployment tax is held on wages paid to employees and there are two basic types of employees. A statutory employee and a common-law employee. A statutory employee is a worker specifically deemed to be an employee by statute. There are only a few statutory employees and the most common of which is an officer of a corporation. Corporate officer form services for the Corporation and is by law an employee. This is regardless of whether compensation for the services is received. Similarly, a member of a limited liability company perform services for the LLC is deemed an employee of the LLC if the LLC is treated as a corporation for federal income tax purposes. The second type of employee is a common-law employee. This type of employee is much more numerous than the statutory employee and makes up the great majority of employees. A common-law employee is a worker who is subject to the will and control of the employer, not only as to what shall be done, but how it shall be done. Sales personnel are generally considered common-law employees. The fact that a salesperson is paid solely by commission does not remove the salesperson from the employer's direction and control. Jody will discuss who are employees in greater detail later on. An employer is any entity for whom service is performed. Employers pay reemployment tax. Workers who do not pay any part of reemployment tax and an employer must not does not make payroll deductions for this purpose. This cost is passed on to consumers in the price of goods and services. All reemployment tax collected by the Department of revenue is deposited into a trust fund for the sole purpose of playing -- paying benefits -- benefits. This money is not used for any other state expenses. Sometimes people confuse reemployment tax with workers compensation, but they are two separate taxes administered by two separate agencies. Workers compensation and involve the delivery of medical benefits to an injured worker while reemployment tax involves the collection of wages data and taxes needed for the evaluation and payment of reemployment assistance claims. A businesses liable for reemployment tax if the employer has paid at least $1500 in wages in a calendar quarter or has had at least one employee for any portion of the day in 20 different weeks in a calendar year or is liable for federal unemployment tax so, as an example, assume you have one employee that you hired on January 1. You pay be employee $100 per week. You will never meet the first criteria because there are only 13 weeks and a quarter so you will never reach the $1500 a quarter threshold . But you would eventually make the second criteria at the 20th week of employment, which would be in may. I will talk about the due date later but in this example, since May is in the second quarter, you would be required to register and file by the month following the end of the second quarter which would mean in our example by the end of July. Other liability criteria apply to employers in the areas of agriculture, nonprofits, and domestic, meaning household, employment. Remember, to meet liability, you only have to meet one obligation, not all of them. I have a question for you, Michael. On the bullet regarding the 20 different weeks in a calendar year, do those weeks have to be consecutive? >> The weeks do not have to be consecutive. Also, it does not have to be the same worker. So if you employ Jack for 10 weeks and then replace them with Joe Chi you would be deemed an employer after Joe worked for 10 weeks. Notice that the 20 week requirement and also the $1500 in wages a requirement both apply to part-time workers, not just full time. So if you met the criteria to be liable for the tax cut what exactly are you supposed to report facts what are wages? Will you discuss what constitutes wages, Jody. >> Wages are defined as all compensation or payment. This includes salaries and that is primarily the way you will see wages paid is in salary. But you can also have commissions or bonuses if you pay individuals for vacation pay or sick pay. Sometimes backpay awards are provided or cash value of non- cash compensation. Let me give you an example of non-cash compensation. If you are business end a vehicle, and you allow an employee to drive it for personal use, the fair market value of the use of that vehicle would be considered wages. If the employee uses it for both business and personal, only the value of the personal use would be considered wages. I do want to say there are several French benefits mentioned in this statute which include some health insurance and life insurance, which are not subject to tax and would not be included in your gross wages. Gross wages must be reported. However, only the first $7000 of wages paid in the calendar year are subject to tax. Any amount over that $7000 is considered access wages and not subject to tax. For example, if you paid an employee $10,000 in the first quarter of the year, $10,000 would be gross and $7000 would be taxable and $3000 would be access. This is for the remaining quarters of the year all wages paid to that employee would be reported as gross and access. There are certain types of employment that are not covered under this tax or are considered exempt from the tax. First one would be a sole proprietor. Wages paid to them are not subject to this tax. Edition wages paid to what I refer to as linear family his parents or spouse or children under the age of 21, wages paid to these individuals would also be exempt from the tax. If the employees any nonfamily members or any children over the age of 21, their wages would be subject to the tax. Similarly with a partnership. Partners are exempt as are their family members , the parents, children under the age of 21, and these include step relationships by the way. Those would be exempt and any nonfamily members would be subject to tax , their wages. Notice we don't have spouse listed in a family relationship and that is because an employee in a partnership in order to be exempt, have to have the same relationship to all the partners. For example, you have two brothers who own a partnership and their mother works for them. She is mother to both partners and she has the same relationship to both. So her wages would be exempt. However, if one of the brothers a wife who works there for wages would be taxable because she is not wise to both partners , at least we hope not. Okay. Let me give you some hypotheticals and you tell me if I need to report wages and who should be reported. Example 1. I go into business for myself as a sole proprietor. Do I need to register and report? If it is just you and you only have family members that I mentioned previously working for you, then you would not have to register. My wife and I go into business as a partnership, do we need to register and report? No. The only people employed are you and your wife and the only ones working than the exemption would not have to register. What would happen if we hired an assistant? Is that person is a nonfamily member then you would have to register and report their wages. Thank you. Another example would be employees of the church. Stood -- churches are statutorily exempt and don't have to report their compensation and not subject to this tax. Also real estate agents and barbers and insurance agents are exempt from reemployment tax if they are paid only by commission. Now make note, if these individuals received part salary and Park commission, then the total compensation is considered wages and taxable. Okay. Let's assume you are registered and you have taxable wages to report. What tax rate will you apply to those wages? With reemployment tax there is no set flat rate that is applicable to all employers. There is a range within your tax rate can fall. It can be anywhere between .1% and 5.4%. When you first register with the department to report and file the employment tax cut you will be assigned an initial tax rate of two points 7%. To give you an idea of how this will translate into dollars, if you are paying the initial rate of two points 7% on the first $7000 of wages to an employee, you will pay $189 for that employee for the year. If you are at the minimum rate of .1% you will only pay seven dollars per employee for the year. And if the maximum rate of 5.4%, you will pay $378 per employee for the year. Now, these are the state tax rates. The federal tax rates ., Which Michael referred to earlier, is 6% or $420 for the employee for the year. However, if you file your reports timely and pay your tax to the state time eight you will be allowed a five-point 4% credit towards that 6% which will reduce the federal tax rate to .6% resulting in $42 per employee. I mentioned that a newly registered employee will be assigned a tax rate of 2.7%. You will report at this rate for about 10/4. After that time you will be assigned an earned rate. I want to point out here that the main factor in determining and earned tax rate is the amount of benefit charges paid to X employees compared to the amount of taxable wages. So if you have a small payroll, and a large number of claims , unemployment claims, you will get a high rate, but if you have a large payroll and only a few claims, you will receive a lower tax rate. Your rate can vary as I mentioned some .1% to 5.4% and this rate, once you have the earned rate, it will be recalculated every year based on the previous 36 months. And you will receive a notice of your new rate in December of each year for the subsequent year, so for example in this year, and December of this year, you will receive a notice of what your tax rate will be for 2018. Michael, I know when I was first learning this tax cut I never really understood the rate -- the responsibilities. I never completed a return. There are some things I have to be aware of right? Absolutely. You have to register with the Department of revenue for reemployment tax. If you meet one of the employer criteria, so you started your business in January, and by February or March you have paid more than $1500 in wages, you will need to register by the end of April. The month following the end of the quarter in which became liable. You register by completing the Florida business tax application form DR DR1. This can be done online or in paper. The application asks a number of questions about reemployment tax and it also includes non-reemployment tax questions to determine if any taxes are applicable. Employers are also required to file quarterly reports which can be done online on paper. It is very important to file the quarterly report timely in part because the report contains information that is essential for the determination of the reemployment assistance claim. I will discuss those reports in greater detail shortly. Employers should also maintain complete and accurate payroll records and keep copies of those records it for at least five years. Employers are required to post form RT-83 which is available on our website under forms and publications which gives employees general information about Florida's reemployment assistance program law. In addition, employers need a timely notification to the department of any changes in their business which can be done online or on paper. This site contains a list of some of the changes for which a business needs to notify the department. If you get a new Federal employer identification number, if your mailing address or business location changes, if you change your business structure, say you were a sole proprietor and you incorporate. If you start leasing employees or if you close your business. We have on our website and update account information option and for most of these changes you can simply fill in the form online and hit submit. Notify the department in writing if you file for bankruptcy, purchase or sell all or part of your business, Incorporated business, and if you change a partner in a partnership. Notify the department as soon as these changes occur. The law specifically requires notification within 90 days when you purchase or sell part or all of the business. That deadline is important for the buyer because the buyer generally has the option of accepting the sellers reemployment tax rate if the department is timely notified of the transfer. >> Attacks report is required every calendar quarter even if there were no taxable or gross wages and even if there were no employees to report for that order. Employers are required to file quarterly reports form RT-6, and pay any tax due on those reports in the month following the end of the quarter the employee is reporting. So if you started employment in the first quarter of 2017, the first report would be due in April. And installment plan is available for the first three And installment plan is available for the first three quarters. The plan allows the employer to distribute the tax liability evenly throughout the remaining quarters instead of having to pay the entire quarter at one time. The installment plan costs five dollars. There is no application needed for the installment plan. You just submit the portion of tax due along with a one-time payment of five dollars. More information on this plan is available on our reemployment tax webpage under tax return and payment information. >> Do know that if you are paying online, you cannot wait until the last day of the month. A payment must be initiated by 5 PM Eastern time on the business day prior to the final due date to ensure that it is received by the department on the final due date. This slide can be used as both a registration and a report due date calendar. If you met the liability requirements in May, which is in the second row, you need to register and file by the end of July. If you met the liability requirements in August, third row, you would need to register and file by the end of October. Since the due dates are quarterly, you are only filing for report to your. I suggest to help you remember the due date so that you sign up on our website to receive email reminders and we will send you a due date reminder before the report is due. The law does impose a penalty of $25 for untimely reports. Interest accrues at a floating rate currently 8% on repayments -- late payments. If you had 10 or more employees you are required to do this electronically. E-filing criteria is a look back period and it looks to see if you had 10 or more employees in any quarter and a prior state fiscal year which runs from July through June. So even if you currently only have five employees, you would be required to report and pay electronically if you had 10 employees in any quarter in the previous state fiscal year. The e-filing system itself repopulate the screen with your previously reported workers and a re-printable confirmation sheet in case there are questions about when you filed. We offer to sign on options when you go online. You can enroll and you will be issued a user ID and password or you can simply login to file and pay by using your number and account number. And employer will have access to more information including the employer's bank account and contact information along with information regarding prior returns if the employer enrolls. The employer can file and pay without enrolling using it RT account number and the employee identification number. But they will have to reenter their contact and banking information each time for security purposes. We encourage all employers to file electronically. But I am using the paper RT-6 copy to give you an idea of what information is needed. When reporting -- preparing the report, prepare the back page which is on the right hand of your slide to identify employees and their wage data. This data is totaled and brought to the front page. You will need the employee's name, the amount of gross wages you paid the employee, and the employees Social Security number. I strongly urge you to get the Social Security number when you first hire the employee. Otherwise, there will be a problem whether you file or whether you hire a payroll company to file the report. This next slide is the back page of the RT-6 For each employee you put in their Social Security number inbox 10 and their name and box 11 and their gross wages in box 12 A and the taxable wages in box 12 B and gross wages can be any amount. It depends on how much you paid the employee that quarter but the taxable wages will never exceed $7000. So in this example, John was paid gross wages of $10,000. This goes into his box 12 A and Jane was paid gross wages of $6000 which goes in her box 12 A. In box 12 B you fill in the amount of taxable wages up to the $7000. For John cut that would be $7000. He of course actually receives that but only $7000 of taxable. For Jane, her taxable wages would be $6000 which goes does was all the wages she received. As you can see from the blue boxes, you first total the gross wages in box 13 A, and then total the taxable wages in box 13 B. The total gross wages is $16,000, and the total taxable wages is $13,000. Now that we are finished with that page, we flip to the front page and we complete boxes to through nine based on that information. Line 2 is the greatest -- gross wage amount be carried over from the back page. Line for is the taxable wages amount we carry over from the back page. Line 3 asked for the amount of excess wages which is the amount of wages you paid in excess of $7000. This is calculated by subtracting the taxable wages from the gross wages. You multiply the taxable wages by your tax rate and that is the amount that is owed, assuming no penalty or interest is applicable. So in this example, you owe a total of $351 and tax for these two employees for the first quarter. Okay. Now assume we are in the second quarter and that you paid the same employees the same amount of money in the second quarter. As you fill out the report for the second quarter, remember that the law only imposes tax on the first $7000 in wages. Well, you already paid all the tax due for John for the year and the first quarter. But you paid tax on this taxable wages up to the cap of $7000. You will still include John, and you a list his gross wages in your second quarter report , but is taxable wages for the second quarter or zero because you paid tax on the first $7000 in the first quarter. You also pay tax on Jane's $6000 in the first quarter so since the wage base is $7000, if you pay Jane an additional $6000 in the second quarter, you only owe tax on an additional $1000. Since the law only imposes tax on the first $7000 in wages. So your tax bill for the second quarter would be calculated by multiplying James taxable wages of $1000 by your tax rate, which is .027 since you are a new employer, which equals $27. Note, that your bill for the first quarter was $351 and your bill for the second quarter is $27. And almost in all cases you will pay your largest reemployment tax bill in the first quarter. Remember that Jody pointed out that a new employer will pay a total of $189 per worker per year, so your total reemployment tax bill for the two workers is $378. This is of course 189×2. Since both employees in our example have reached or $7000 taxable wage base cap at the end of the second quarter, you will owe no additional tax for the third or fourth quarters no matter how much you may pay these two employees. Do remember that you will still need to report them and their gross wages on your third and fourth quarter reports. But they will have no more taxable wages for the rest of the year. >> The report also asks inbox one for the total number of employees for your pay period and that includes the 12th of the month. You make sure you fill this out otherwise you will receive a letter from the department. If you timely file a complete report in the proper format, all is well. But the law does impose penalties for late filing, for filing erroneous or incomplete or insufficient reports which includes a bad Social Security number, and for not filing and paying electronically when you are required to do so. Generally any penalty may be waived for good reason that the employer needs to respond in writing within 20 days to the penalty notice. Jody will now respond -- discuss the four most common issues that employers have regarding reemployment tax. There are several issues you can encounter during your career as an employer and the most common and probably the ones most challenging for employers are the ones you see listed on your screen. Independent contractors, how do you handle them. What do you do with casual labor? Officers of a S corporation and what is considered taxable wages for that officer. And finally limited liability companies. How does tax apply to them . Let's talk about independent contractors first. What are they and how do you treat them for reemployment tax? Michael, what do you say? This is the most common error we see in employee reporting. Absolutely. This comes up constantly in my 24 years and working with reemployment tax It's a challenge. Michael defined an employee for you at the beginning but let me just refresh that. An employee is basically an individual providing services who is subject to the will and control of the employer. An independent contractor is exactly the opposite. This is an individual providing services for the employer who is not subject to the will and control of the employer. An independent contractor is not an employee. Their compensation is not reported for reemployment tax. The business does not control how and when and why they do the service. The business is concerned with the and part. And they have done it and you have paid them to do it. Let me give you an example of an air conditioning repair man. Let's say you as an employer, your air conditioner goes out. It's hot in July and you want it fixed. You don't care how he fixes it, you care when. So you won't tell him how to do it. So he is independent. P is using his own tools and you don't care what tools he uses. He uses his own tools and does it when he can within your timeframe. And all you are interested in is do I have cool air at the end of the day. You have no control over him so he is independent. A key point here , the employees wages are subject to tax, but an independent contractors compensation is not. So you can see why it is important to collect does correctly distinguish between the two. Sometimes the distinction between the two is very gray and it's not always easy to say whether an individual is an employee or independent contractor. Florida law gives us some things about rules regarding the relationship. The common models rely on 10 factors to help us make the determination and we will discuss those in detail in a second but I want to make you aware that the Florida law, while similar to federal law regarding independent contractors, if not identical or exactly the same . Here are your 10, my rules and we will talk about them and we will take them one by one. The first one deals with control. I have just mentioned this and this is the most important of the 10 factors. How much control do you as the employer exercise over the individual that is providing the service. Let's use my air-conditioning repairman versus a stop.. The air-conditioning repairman we discussed and you are not controlling what he is doing that you have a stock clerk a person hired to maintain your inventory and manage it and keep it in certain locations and keep track of what comes in and out. You control that and tell this person where you want this Stockton stationed and how and what paperwork to bring them in. They use your computer to track it and you are controlling what they do. You tell them one to come in to work and you tell them how to do their job and you are concerned with the and the product as well. The stock clerk will be an employee whereas the air-conditioning repair man is independent. The second factor is is the individual in a distinct occupation or do they have a business separate from the employer. An example of this would be a CPA or your air-conditioning repairman. He has his own business and he is providing services to other businesses or entities or individuals, not just you. Same with a CPA firm. They have their own business and they do business for a lot of people and not just engage primarily for you. Does the individual providing the service to have their own business separate and distinct from yours? If they do they are independent. Number three is a provision. Does the person rate -- require supervision. Are you or someone on your staff supervising the work they are doing and seeing if it is done correctly. Demian the virtual -- individual is an employee. If they don't require supervision they are independent. Number four is a skill required to perform the service. If the individual, that service requires a high level of skill, I go back to my repair man, not just anyone can repair and air-conditioner. If the skill is required as high it's more than likely independent contractor. Not to say that employees don't have skill that usually independent contractors a very specific and the service they provide in the school required to provide that service. The tools and equipment, who provides that? Number five. The air-conditioner gentlemen is providing his own voltmeter and screwdriver and wire. Whereas the stock clerk, you are providing the computer and any type of tools he is using to stock their shelves and maintain your inventory. If you are providing the tools and equipment, more than likely the individual is an employee. If the person providing the service is providing it, like we -- than likely they are independent. Number six is the length of time the person is employed. The longer you have a relationship with them the more likely they are an employee. Number seven, the method of payment. How are you paying them? Are you paying them by time or job? They are generally paid by some form of time increment like the week or month and independent contractors are normally paid by the job. You will pay the air-conditioning man $1000 to fix the air-conditioner. I hope it's not that much. Number eight, whether the work is a part of the regular business. Let's say for example that you have your trucking company and you have people to load your truck sonication. That is a regular part of your business. So they are employees. But if you have somebody come in to wash windows in your business, unless you are in the business of washing windows, that is a service not in the regular course of nature of your business so that individual would be independent. Number nine, what -- whether the parties believe they are creating the relationship of employer and employee. A lot of times you will see a written contract. If you are an individual providing a service for somebody they have a job order invoice or something like that. Let me caution you here just because you have a written contract with an individual it does not necessarily make them an independent contractor. We look to the nature of the relationship. You may have a contract signed with the individual but if you are exercising control over them like how and when and where and why they do the job, providing tools and equipment, paying them by a time increment, they are an employee whether they have a written contract or not. Be careful taking that is all you need to make them independent and keeping you having to report those wages. Number 10, is the hiring party of business? Generally, if a business is more likely -- it's more likely that it is an employee. If the hiring party is an individual like somebody cutting the grass, it is more likely to be independent. If you are faced with it decision -- a decision of whether somebody is independent Arnott, applying these factors should help. I have a situation that comes up frequently. What would happen if a business as a contract -- has a contract signed by a worker that says that person is independent but the facts show the business has control over how the worker performs the services? That is why I went into that a minute ago. That is common because so many people think that is all they need. If all they have is a contract and a fax show they actually control that work by providing the tools and equipment and the factors are listed here we look to the nature of the relationship rather than the contract. Another issue we encounter is casual labor. What is that? Services provided that are not in the course of the employer's regular business. This means labor that is occasional or seasonal or every now and then and as I mentioned, the window washer a few moments ago. Unless you are in the business of washing windows, if you have someone that is watching your windows and they are not in their own -- have their own business. Let's say an individual will wash the windows for you on occasion, that would be considered casual labor because it is not in your course of business. Now let's not confuse casual labor with temporary or part-time employment. You may have someone who works for you occasionally but if they are providing services they are a regular part of your business and I mentioned the truck loading a moment ago if you are transportation company and they are considered an employee and the wage is taxable. So the key thing to remember here is if you have an individual that is providing services for you occasionally every now and then, if it is in the line of the regular course of business they will be an employee. But if it's not in your course of business it will be casual labor. By law, let me go back , casual labor is exempt unless it is provided to a corporation. If you are a corporation listening in, take note. Anyone providing service to you that you considered casual labor must be reported for reemployment tax purposes. The next issue I want to talk about its officers of a S Corporation. When he was given you the definition of employee the included officers of corporations providing services and that is true and statutorily as an officer is providing services for Corporation he is considered an employee and if he or she receives any form of compensation, it's considered payment for services rendered. Let me give you an example. Let's say you were a sole proprietor and you operated a grocery store for 20 years. Now, I have already told you that the sole proprietors wages would be exempt so you have not had to report the wages for 20 years. Well, your accountant advises you to incorporate . So you become a S-Corporation. For years you have not reported your wages but now you are an officer of a S-Corporation and because your organizational structure has changed, your wages now become taxable and that gets really confusing for some people, but it is important that you realize that officers of a S-Corporation providing services they are subject to tax. Sometimes instead of paying the officer a reasonable salary cut a business will only pay an officer a very small salary but in addition they will give officer distributions, either throughout the year or year and in a big some. If the salary is not reasonable for the services provided in some or all of those distributions may be considered as taxable compensation. In addition there are certain non-salary compensations that may be considered wages. For example, a house payment or car payment or your property tax assessment. Let's take you back to the sole proprietor who became a S-Corporation. Many run their extensions to the business because it's their business and they are the only ones really involved. But if you start doing that once you become a S-Corporation, any of those expenditures paid by the corporation that are being paid on your behalf could be considered wages if you are regular salary is not sufficient so just be aware of that. Jody, here is another hypothetical. What happens when an officer of the Corporation perform significant services for the corporation and reports zero wages for himself or herself? But receives a significant distribution? Good question. We would consider that called the distribution is wages cut compensation, because they are providing services and they need to be compensated. The final issue we will talk about is limited liability companies and how the tax applies to them. If you are filing for federal tax purposes as a partnership or a sole proprietorship, then you will -- of the members of the LLC will be exempt just like a partnership or a sole proprietorship. Consequently, if the LLC is filing as a C core are S Ct. then members would be subject to tax just as officers of the corporation are taxed. This concludes our discussion of the issues so let's move onto another necessary bit of information. What records and my required to retain and how long? Michael touched on this briefly at the beginning. Michael, can you expand on this? Certainly. Employers are required to maintain records for five years and to make them available to the department upon request. Employers need to maintain the name and the Social Security number for each worker and the county where the services were performed, and all payment information. The US Department of Labor requires the Florida Department of revenue to order -- audit a certain number of employers every year. If your business is selected for the audit you will receive written notice which usually covers a one-year period. A field audit takes an average of one day to review your records. If you ever receive a notice of audit, you should review the pressure that is referenced at the bottom of the slide. Is the audit includes that additional workers or wages should have been included in prior reports cut you will receive written notice and have a chance to meet with the Department of revenue to discuss the findings. You will also have a chance to protest any assessment issued. Protests are heard and decided by the Department of economic opportunity. >> In addition to their reemployment tax responsibilities employers are also required to report new hires which includes a rehires within 20 days of the hiring date if you have any questions there is a toll-free know -- number listed on the slide along with a website for additional information. >> Lastly, the Department of economic opportunity determine the eligibility of each reemployment assistance claim and pays reemployment assistance benefits when appropriate. The Department of revenue only handles the tax administration part of reemployment. And so we are not involved in the evaluation or payment of claims. We do recommend that you responded timely to any notices from DDO since the payment of claims can increase the tax rate. Jody, can you go over what we covered this afternoon and closes out? We covered a lot of material so let's just recap. We defined for you what an employee is, and he also explained to you what your responsibilities are for this tax. We talked about what makes you liable and we defined taxable wages. I talk to you a little bit about the various tax rates you can encounter and Michael explained how to file reports. And then we went over some issues that we thought were important and wanted you to be aware of. We hope this webinar has been helpful to you and provides a foundation for your success for your business with these basics and you now have a better idea of the roles and responsibilities. We have included on the screen for you and telephone number and website which you can access if you have questions in the future. I know we shared some real-life situations that you may face but we know you may still have some questions and I think we are ready to answer them. Thank you so much Jody and Michael. We will now start the QA portion of our call where I will be reading the questions that are participants have sent an and everyone please that your questions by using that chat function located on the left-hand side of your screen and in the time remaining we will address just as many as we can. Our first question comes in from [Indiscernible]. He asked, should all of the officers of a corporation that perform a job for the corporation pay themselves -- themselves a salary? >> Well, whether they pay themselves a salary is within their discretion . If they do end up paying a salary though and the officers perform services, then that would be considered wages. So should they pay salary versa distribution? It really doesn't matter to the department as long as those will be reported because those will both be considered wages if the officer is performing services for the corporation. >> That is true. Yes. If I have a LLC and my daughter-in-law works with me, is her income taxable? It depends on how she files federally. If she is filing -- if it's her daughter-in-law, or wages will be taxable. If it was her daughter, it may be different. If it's a daughter-in-law, those would be taxable. You know for a limited liability company it is complex because it depends on how the individual chooses to have that LLC treated for federal income tax purposes. If the LLC is classified as a sole proprietor, for federal income tax purposes, then the member is not going to be -- their wages won't be taxable similar to a sole proprietor. A daughter would be but a daughter-in-law would be taxable, right? Right. It depends on how the limited liability company was set up. If it was set up as a corporation, then classified as a corporation for federal income tax purposes, then the individual may perform services would be considered taxable because the same as a corporate officer. So without knowing how they request this it is not possible to give a definitive answer. Okay. Our next question is from Carol. He asked sole proprietor in a noun relative assistant report both for taxes. >> If it's a sole proprietor, then they don't need a report. If you have this nonrelative of reporting services for their business then that person would be considered an employee and a sole proprietor would have to pay taxes on the wages paid to the individual. >> All right. Our next question comes from Lynn. You stated that the return can be filed either online or paper but I have been fined for submitting paper. What makes it required to be online? To file online or electronically, if I am understanding, it depends upon your history. If you had 10 or more employees in the past, and the lot makes the prior state fiscal year which runs from July through June, if you had 10 employees in any quarter in that prior state fiscal year, then you will be required to file electronically or online. As I said, we encourage all employers to file electronically even if they don't have to because there are many benefits to filing online. But that is something that the law describes if you have 10 or more employees in a prior state fiscal year of any quarter or prior state fiscal year, then you are required to file electronically. Jody and Michael, Dave asked , are there fees for submitting changes online. For example, mailing address change. Excellent questions. There are no fees for filing. The form, as a matter of fact, I pointed out . We do have updated account information on our website where you just go to that page and you fill in whatever changes that need to be made and you hit submit and for most of the changes you have to report, that is all you need to do. Absolutely no charges involved. Okay. If all of these laws are just for Florida . Every state has what other states called unemployment compensation and we call it reemployment. All the laws are slightly different. There are a lot of similarities but Georgia law is different from our law and Alabama law is different from our law and every state has a program but they have their little tweaks in the laws to make it different. And so as a matter of fact one of the big differences is the wage a. We have a $7000 wage base cap here in Florida. There is only one other state that has a wage base cap that low. Every other state in this country has the wage base which exceed $7000. I think it goes up to $54,000. Yes, state law is different and yes every state has a program but there are distinctions between them. Okay. [Indiscernible] and a pair. -- Payor. We don't have monthly filers for reemployment tax we have quarterly filings and she may be thinking of sales tax. There is one small exception to the quarterly filing any person who only has domestic employees and by domestic I mean household like a maid or chauffeur and if you only have those types of employees, you can apply to file annually and it is on our website and it's form seven A and it's an application to file annually as to what is called a domestic employers so there is the possibility that you can file annually but only if you only have domestic employees and you have to reply and get approved by the department before you are allowed to do that. >> If we never had an employee does one need to file? No. If you do not have an employee, you don't need to file an whole purpose of the system of course is to keep track of employees and their wages so that if a claim for benefits is on file the information will be there so that they can make the decision and award benefits but if you don't have an employee know. I just want to add though that if you are a corporate officer, you need to remember that you are an employee. So with that slight idea to keep in mind, if you have no employees you don't need to file but in some cases such as an officer of the corporation you are by law an employee so you have to file. Next question. I have until one business day before July 31 to file and pay the reemployment tax. Is this correct? >> You can file your return the last day but if you file electronically it does have to be done on the business day prior to what we call the final due date. So if [Indiscernible] if you are paying on [Indiscernible] the day before. Assuming those are those business days. That is something to be aware of because sometimes people are not aware of that. That you can't file electronically but you can the very last day because you don't want it not to get tough on time and I want to add that if you are issued a penalty, in this instance or any instance, if it doesn't cost anything to request a waiver of the penalty and if you can show good reason you need to submit a request to weigh the penalty in writing and tell us your good reason if you have good reason the penalty could be waived. Can we download the RT dash six ? That is available on our website for downloading and we generally -- we have allowed about 100,000 now a quarter and we have approximately 430,000 employers to file electronically so you can download the form and fill in the blank and then you just fill it out in the way we have gone over in this webinar in the Social Security numbers. If the sole employee of a business is a parent, is it still required for the company to apply for reemployment tax account and then file your return. If the employee is exempt then I don't believe that the employer would have to register because they would not be employer because the individual would be exempt. If they are a sole proprietor or partnership. It depends on the organizational structure of the business. Do I need to report employees that only work for me for 3 to 4 weeks? >> If you have determined to be an employer by either the 20 weeks on the calendar year or the $1500 in wages in the quarter you should be reporting all employees. Irrespective of the amount . As I said earlier don't think this only include full-time employees. It includes all employees including part-time employees. They may not earn enough to file a claim for benefit but they still need to be reported for the Department of revenue . Our next question comes in from Sonia regarding churches. Are all employees exempt with unemployment tax? >> Yes. You will hear me perhaps shuffling through some paperwork to try to find the exact site and it is generally exempts and let me take a look at it and maybe you can ask the next question. She has a part two. Could you repeat about the minimum of employees. When I reach this number in order to pay the RT six online. If you have had 10 or more employees in the previous quarter. That is only what you are required. If you want to file you have one employee go ahead and file electronically. If there is no requirements to -- you could file no matter what employment you have you can file electronically. We encourage employers to file electronically. If you have 10 employees or more in that fiscal year. But that is only does it have to. Anyone could and we definitely encourage people to do that. The next question comes in from Candace. What is the difference between reemployment and unemployment. It's the same. Federally it's an is referred to as unemployment. And other state sometimes do as well. In 2012 our legislature renamed it reemployment assistance program and they just renamed it and so we call it reemployment tax but all other states that I know of in the federal government refer to it as unemployment and they are one and the same. >> I did just find the answer and I confirm that yes any employee of the church's exempt. They don't have to report. They are not covered by reemployment so they don't have to be reported. Jody and Michael, we have time for one more question. This last question comes in from David. Are there any wage tax breaks for hiring disabled individuals? >> The Department of revenue does not have any tax breaks in that situation. I don't know if other state agencies may have in the Department of economic opportunity might have some tax break for starting a business but I don't know of any other kind you are describing except the Department of revenue does not . >> Jody and Michael cuddles her all the questions that we have time for today. So ladies and gentlemen, on behalf of SCORE and the Florida Department of revenue services, we would like to think you all so much for attending today's live webinar. A brief survey will launch just as soon as we log off and we appreciate if you take a few moments to complete the survey and tell us your thoughts and your suggestions so in closing I would like to give a thank you to Jody Burke and Michael Metz for presenting today. We wish you a wonderful day, and we look forward to seeing you next time. Thank you, everyone. Take care. >> [Event concluded] ................
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