Illinois Administrative Code › Title 56 - LABOR AND EMPLOYMENT › Part 2765 - PAYMENT OF UNEMPLOYMENT CONTRIBUTIONS, INTEREST AND PENALTIES › Subpart A - GENERAL PROVISIONS › Section 2765.64 - Consequences When an Employee Leasing Company Has Erroneously Reported Wages and Paid Contributions When the Wages Should Have Been Reported and Contributions Paid by Its Client

Current through Register Vol. 48, No. 28, July 12, 2024
a) When
				wages should have been reported and contributions paid by a client, but the
				wages were erroneously reported and the contributions paid by an employee
				leasing company, the Director shall, upon the joint request of the client and
				the employee leasing company, on a form available from the Director, transfer
				the contributions from the account of the employee leasing company to the
				account of the client, effective as of the dates that the report was submitted
				and the contributions paid by the employee leasing company, respectively. As a
				result, interest shall be due only to the extent that the amount due from the
				client exceeds the amount paid by the employee leasing company.
EXAMPLE: Employee Leasing Company X erroneously reports the
				  wages of certain workers on its Wage Report and pays the contributions due on
				  these wages. It is determined that the wages should have been reported instead
				  by its client, Company Y. The Director shall, upon the joint request of
				  Employee Leasing Company X and Company Y, transfer the payment made by Employee
				  Leasing Company X to the credit of Company Y. The wages reported by the leasing
				  company for Company Y's workers will also be credited to Company Y. As a
				  result, Company Y will only owe additional contributions due, if any, to the
				  extent that the amount due from it exceeds the amount paid by the employee
				  leasing firm. To the extent that the payment by the employee leasing company
				  was untimely or not sufficient to cover the amount due, interest shall accrue.
				  If the amount paid by the employee leasing company exceeds the amount due from
				  Company Y, Company Y may file a request for an adjustment or a refund of the
				  overpayment to the extent and within the time allowed by Section 2201 of the
				  Act.
b) Upon proper
				application of the client, on a form available from the Director, when wages
				should have been reported and contributions paid by a client, but the wages
				were erroneously reported and the contributions paid by an employee leasing
				company and the client presents evidence that the employee leasing company is
				no longer in business in Illinois and that the client was unable to obtain the
				assistance of the employee leasing company in complying with the requirements
				of subsection (a), the Director shall transfer available contributions from the
				account of the employee leasing company to the account of the client, effective
				as of the dates that the report was submitted and the contributions paid by the
				employee leasing company, respectively. As a result, interest shall be due only
				to the extent that the amount due from the client exceeds the amount paid by
				the employee leasing company and transferred to the client. For purposes of
				determining the amount of wages that should have been reported and
				contributions that should have been paid by the client, the Department shall
				use the amounts stated in any determination and assessment that has become
				final for the relevant quarters or, if none, the amount stated in an audit
				completed by the Department for the relevant quarters or, if none, the amounts
				stated in an amended wage report filed by the client. The Department shall use
				the total wages and wages subject to the payment of contributions stated in the
				determination and assessment, audit or amended wage report to adjust the
				employee leasing company's total wages and wages subject to the payment of
				contributions for each erroneously reported individual. For purposes of this
				subsection, available contributions, with respect to a quarter, means the
				product of the contribution rate used to calculate the amount of contributions
				that the employee leasing company paid for the quarter, multiplied by the wages
				on which the client should have paid contributions for the quarter, except as
				otherwise provided in this subsection. The amount of available contributions
				with respect to a quarter shall not exceed the amount of any credit standing to
				the employee leasing company's account for the quarter, as of the time of the
				application, based on the adjustment pursuant to this subsection with respect
				to the wages on which the client should have reported contributions. Before
				making a transfer pursuant to this subsection, the Department shall notify the
				employee leasing company, by certified mail at its last known address, of its
				intention to make a transfer of contributions pursuant to this subsection. The
				Department shall transfer the contributions unless the employee leasing company
				responds with information that contradicts the information provided by the
				client within 20 days after the date of mailing of the notice. If the employee
				leasing company timely responds with information that contradicts the
				information provided by the client, contributions shall not be transferred
				unless the parties submit a joint request under subsection (a). The notice
				shall not be necessary if the matter has been adjudicated as described in 56
				Ill. Adm. Code 2725, and the employee leasing company was added as a necessary
				party under Section
				2725.237
				of that Part and given proper notice. The total amount of contributions
				transferred from an employee leasing company's account to a client's account
				pursuant to this subsection shall not exceed $1,000,000.
EXAMPLE 1: Employee Leasing Company X erroneously reports the
				  wages of certain workers on its wage report and pays the contributions due on
				  these wages. It is determined that the wages should have been reported instead
				  by its client, Company Y. Y presents evidence that X is no longer in business
				  and that there is no one who could agree to the joint transfer of
				  contributions. The Director shall transfer any available contributions. If the
				  amount of contributions available in the account of X is insufficient to cover
				  the amount of contributions owed by Y, Y must pay the unpaid contribution
				  balance, with interest, itself.
EXAMPLE 2: Employee Leasing Company X erroneously reports the
				  wages of certain workers on its wage report and pays the contributions due on
				  these wages. At the time, X's contribution rate was 1%, which resulted in $100
				  in contributions owed. It is determined that the wages should have been
				  reported instead by its client, Company Y. Y presents evidence that X is no
				  longer in business and that there is no one who could agree to the joint
				  transfer of contributions. Y's contribution rate for the year was 6%, which
				  will result in $600 in contributions owed by Y. Upon proper application of Y,
				  the Director shall transfer the $100 in available contributions from the
				  account of X to the account of Y. Y must pay the $500 in unpaid contributions,
				  with interest, itself.
EXAMPLE 3: Employee Leasing Company A had agreements with
				  Employers B, C and D for A to assume responsibility for personnel management of
				  workers leased to each of B, C and D during the year 2016. Company A reported
				  the identity of its clients B and C to the Department, as required by 56 Ill.
				  Adm. Code
				  2732.306,
				  but failed to report the identity of its client D. B, C and D each had one
				  leased worker performing services for them; each leased worker was paid $10,000
				  in the first quarter of 2016. A's contribution rate for 2016 was 5%. Company A
				  timely reported to the Department the wages of the leased workers providing
				  services to B, C and D. According to the report submitted by A, A owed a total
				  of $1,500 in contributions for the first quarter of 2016. However, A made
				  payments to the Department totaling only $1,200. For 2016, B, C and D each had
				  a contribution rate of 3.75 %. In 2017, it is discovered that A failed to
				  report D's identity to the Department and, therefore, D remained liable for the
				  payment of contributions regarding its leased worker. D presents evidence that
				  A is no longer in business in Illinois and that there is no one who could agree
				  to the joint transfer of contributions. Under subsection (b), the amount of
				  contributions available for transfer to D's account cannot exceed the amount of
				  the credit standing to A's account for the quarter, as of the time of the
				  application, based on the adjustment with respect to the wages on which D
				  should have reported contributions due. The amount necessary to pay the
				  contributions owed by A for the first quarter of 2016 is $1,000 (5% x $20,000).
				  So even though D owes a total of $375 in contributions for 2016 (3.75% x
				  $10,000), there is only $200 in available contributions to transfer to D's
				  account ($1,200 - $1,000). D must pay the additional $175, plus interest,
				  itself.
c) When multiple
				applications have been submitted under subsection (b), the applications shall
				be processed in the order in which the applications were received.
d) When multiple applications have been
				submitted under subsection (b), available contributions shall be transferred,
				as they become available, to the account that submitted the application that
				created the available contributions.
EXAMPLE: Employee Leasing Company A had agreements with
				  Employers B, C and D for A to assume responsibility for personnel management of
				  workers leased to each of B, C and D during the year 2016. Company A did not
				  report the identity of B, C or D to the Department, as required by 56 Ill. Adm.
				  Code 2732.306. B, C and D each had one leased worker performing services for
				  them; each leased worker was paid $10,000 in the first quarter of 2016. A's
				  contribution rate for 2016 was 5%. Company A timely reported to the Department
				  the wages of the leased workers providing services to B, C and D. According to
				  the report submitted by A, A owed a total of $1,500 in contributions. However,
				  A made payments to the Department totaling only $500. For 2016, B, C and D also
				  had contribution rates of 5%. In 2017, it is discovered that A failed to report
				  D's identity to the Department and, therefore, D remained liable for the
				  payment of contributions regarding its leased worker. D presents evidence that
				  A is no longer in business in Illinois and that there is no one who could agree
				  to the joint transfer of contributions. Under subsection (b), the amount of
				  contributions available for transfer to D's account cannot exceed the amount of
				  the credit standing to A's account for the quarter, as of the time of the
				  application, based on the adjustment with respect to the wages on which D
				  should have reported contributions due. At the time of D's application, the
				  Department was not aware of A's relationship to B and C, or A's failure to
				  report its relationship with B and C, and there was no credit standing to A's
				  account. At the time of D's application, it appeared that the employee leasing
				  company should have paid contributions of $1,000 for the first quarter of 2016.
				  Since A paid only $500, there are no funds available to transfer to D.
				  Subsequently, the Department discovers A's relationship with C, and the fact
				  that the relationship was not properly reported to the Department, as required
				  by 56 Ill. Adm. Code 2732.306. C's wages are removed from A's account, but
				  still, there are no contributions available to transfer to C's account. At the
				  time of C's application, it appears that A owes $500 in contributions for the
				  first quarter of 2016. Since that is all A paid for the quarter, there is no
				  credit standing to its account. Subsequently, the Department discovers A's
				  relationship with B, and the fact that the relationship was not properly
				  reported to the Department, as required by 56 Ill. Adm. Code 2732.306. B's
				  wages are removed from A's account, which creates a credit balance of $500 in
				  A's account. The available balance will transfer to the account of
				  B.