Who needs to pay PA SUI tax?? (Pittsburgh, Penn: 2015, insurance)

[Yuquy]

Who of the following does need to pay PA's SUI* tax?

• Full year resident of PA, First part of year worked for a PA employer, second part worked in a reciprocal state for an employer of that state
• Full year resident of PA, Worked all year for a PA employer
• Full year resident of PA, Worked all year in a reciprocal state for an employer of that state

* SUI = State Unemployment Insurance

[Hopes]

1 pays PA SUI for the first $8000 earned, then pays the reciprocal state the difference if the reciprocal state's is higher.

2 pays PA SUI.

3 pays reciprocal state SUI.

multistate employment tax <<<<scroll to the bottom

Unlike income taxes that are paid where the employee lives, unemployment tax is paid where the employee works.

[Hopes]

FYI: That $8000 was based on 2012. It's $8500 for 2013. And it goes up each year.

Pennsylvania State Tax, Unemployment and Payroll Tax | Payroll-Taxes.com

[greg42]

The wage base stuff is for the employer paid SUI. Wage bases are common to all employer paid unemployment payroll taxes (states and FUTA) I've ever dealt with. Unless you are the employer you don't need to concern yourself too much with this part.

PA currently has an employee withholding portion as well, unusual in the states I've dealt with. That really small percentage is not subject to a wage base. Anyone employed in PA will have it withheld from their paycheck. This portion has an on again, off again component to it. In the 20 years I've lived here I saw it get added, then removed, then added again, and now it's going down again. It's 0.08% of gross wages in 2012, 0.07% in 2013. Yes 7/100ths of one percent.

[Hopes]

Originally Posted by greg42

The wage base stuff is for the employer paid SUI. Wage bases are common to all employer paid unemployment payroll taxes (states and FUTA) I've ever dealt with. Unless you are the employer you don't need to concern yourself too much with this part.

PA currently has an employee withholding portion as well, unusual in the states I've dealt with. That really small percentage is not subject to a wage base. Anyone employed in PA will have it withheld from their paycheck. This portion has an on again, off again component to it. In the 20 years I've lived here I saw it get added, then removed, then added again, and now it's going down again. It's 0.08% of gross wages in 2012, 0.07% in 2013. Yes 7/100ths of one percent.

You're saying that what I posted is accurate except there is no $8,500 cap for employee payments, right? That means, Option 1 will instead be the employee pays both states during the time period of working in each state regardless of how much they earn.

I wonder if the OP is an employee or an employer.

[greg42]

Originally Posted by Hopes

You're saying that what I posted is accurate except there is no $8,500 cap for employee payments, right? That means, Option 1 will instead be the employee pays both states during the time period of working in each state regardless of how much they earn.

Let me think a bit differently and more thoroughly than earlier. Employer SUI is a variable rate based on the employer. The rate is set anew at the beginning of each year. The more employees you terminate and have been collecting unemployment while having your company as part of their base years, the higher your rate will be.

There are not to my knowledge any mechanisms for mid-year transfers of the wage base in the employer-paid SUI. As soon as you take on a new employee, even if it's July, they have an $8500 wage base. If said employee quits and goes to another employer in October, they start a new wage base at the new employer. That would be true whether the new employer is in state or out of state. SUI is an EMPLOYER tax. (FWIW FUTA would work the same way. If employee works 4 different places, whether in a row or at the same time, each one has a separate state and federal wage base for that employee.)

Residence is not a concern because this is an employer tax and is thus due based on where the employee WORKS. Doesn't matter where the company is based either. Wherever the office/facility/whatever that serves as the employee's base is where the SUI is paid by the employer.

So, given the scenarios in the OP:

1. Each of the employers pays SUI to the respective states where the employee worked. PA employer withholds 0.08%/0.07% from employee pay. Other state may not have equivalent employee withholding.
2. Employer pays SUI to PA and deducts and remits the employee withholding.
3. Employer pays SUI to state where employee worked. If said state has some kind of employee withholding it will be withheld and remitted to that state.

In no case is the employee directly responsible that I can see. I am not an expert on this at all, but all the PA stuff says the employer is responsible for the withholding. There are typically penalties for not remitting it. Official PA state info for employers regarding unemployment compensation (UC), including the tax info: Employer UC Services

If you are self-employed and pay yourself a wage you are likely responsible for all these.

That's as far as I can tell anyway. I'm not sure where reciprocity comes into play. I think that's only for collecting UC benefits, not for the taxing.

[Hopes]

Employees do pay a small percentage of SUI in PA. I think we're into semantics here.

The employer pays a bigger percentage with a wage base limit. Employees pay .08, .07 on gross.

State Unemployment Insurance (SUI):

Wage base is $8,000 for 2012, $8,500 in 2013, $8,750 in 2014, $9,000 in 2015, $9,500 for 2016, $9,750 in 2017, $10,000 in 2018 and after per S.B. 1310 signed in June, 2012.

Rates range from 2.677% to 10.8236% for 2012
New employers use 3.703% for 2012 and 3.6785% for 2013 except construction employers who pay 10.2626%.

Employee rate -.08% for 2012 decreasing to .07% for 2013 is withheld from gross wages. This tax is to be remitted to the Department

Pennsylvania State Tax, Unemployment and Payroll Tax | Payroll-Taxes.com

But you're right, part of the trick question in Option 1 is that the employee works for different employers. I initially answered the question based on it being the same employer. Both employers have to pay in each state, but does the employee? The answer would be yes. The employee pays in both states, because the employee's portion is based on gross wages, not the $8500 limit. Reciprocal comes into play only if the employee works for the same employer for the whole year but their work ends up being in a different state for a part of the year. So the answer to Option 1 stays the same---the employee pays in both states but you clarified that only if both states have an employee withholding for unemployment insurance. I read the OP scenario to assume that both states have unemployment insurance employee tax.

We're basically on the same page. You're being literal with "directly responsible." If the tax is withheld by the employer, it's still the employee paying it and I think that's what the OP was asking. Then again, who knows. The OP's initial question is worded weirdly "who of the following does need to pay PA SUI tax?" The OP doesn't define "who."

[greg42]

Originally Posted by Hopes

Employees do pay a small percentage of SUI in PA. Not trying to argue. You're more current than me on payroll, but I've see it our paystubs!

Yes employees pay it but not directly. It is part of the UC tax mandate on employers. If the employer did not withhold it at all/enough, the employer will be at fault. It won't be like income tax where if you haven't had enough withheld the state will come directly to the employee for the balance. At least, that is how I read it.

Originally Posted by Hopes

The employer pays a bigger percentage. Employees pay .08, .07. What's not clear to me based on your previous post is if the employee is cut off at the base wage amounts or if those limits are just for the employer.

If you go to the right section of the link above it says specifically that the wage base doesn't apply to the employee withholding.

Originally Posted by Hopes

But you're right, part of the trick question in Option 1 is that the employee works for different employers. I initially answered the question based on it being the same employer. Both employers have to pay in each state, but does the employee? The answer would be yes. The employee pays in both states, because the employee's portion is based on gross wages, not the $8500 limit. Reciprocal comes into play only if the employee works for the same employer for the whole year but their work ends up being in a different state for a part of the year. So the answer to Option 1 stays the same---the employee pays in both states but you clarified that only if both states have an employee withholding for unemployment insurance. I read the OP scenario to assume that both states have unemployment insurance employee tax.

If both states have employee withholding, then employee "pays" in both states yes. It's always based on the amount of wages IN THE STATE. So it doesn't matter if job is simultaneous with two employers or two separate employers one after the other.

You do bring up interesting point of same employer with same employee switching states. I'm sure we've done this at some point once or twice. But, I still don't think there is any credit given by the new state for wage base in previous state. The wage bases can be wildly different. PA has been $8000 for years. We've had states with $13000 wage bases. Obviously the rates will be quite different. It would be difficult to reconcile this.

[Hopes]

Originally Posted by greg42

You do bring up interesting point of same employer with same employee switching states. I'm sure we've done this at some point once or twice. But, I still don't think there is any credit given by the new state for wage base in previous state. The wage bases can be wildly different. PA has been $8000 for years. We've had states with $13000 wage bases. Obviously the rates will be quite different. It would be difficult to reconcile this.

This is where the reciprocal agreements apply. It was in the link I posted earlier in the thread.

If an employee is transferred from one state to another while working for the same employer with the same EIN, the employer can apply the state unemployment taxable wage base to the other state. This applies to all states except for Minnesota. For example, an employee works in Pennsylvania and makes $9,000. The employer transfers the employee to Maryland where he makes $20,000. Pennsylvania’s wage base is $8,000 and the employer pays tax on the first $8,000 the employee earns in Pennsylvania. When the employee is transferred to Maryland, the employer pays Maryland unemployment tax on the first $500 earned [in Maryland,] because Maryland’s wage base is $8,500 ($8,500 Maryland wage base - $8,000 Pennsylvania wage base).

multistate employment tax, Pittsburgh, PA, Columbus, OH

[greg42]

Originally Posted by Hopes

This is where the reciprocal agreements apply. It was in the link I posted earlier in the thread.

Huh. Well, it's a wonder the states don't all jack the wage base through the roof then in order to capture some of that.