1. Purpose. To add new definitions, clarify existing definitions and update instructions for completing Form ETA 581, contained in Chapter 2, Section II, of ET Handbook No. 401.
2. Reference. ET Handbook No. 401, 3rd Edition, Change 10; UI Tax Data Validation Software User's Guide and Module 3; ET Handbook No. 407; Unemployment Insurance Program Letter (UIPL) 06-97 (Questions & Answers pertaining to TPS and ETA 581 issues)
3. Background. The Data Validation (DV) program has called attention to certain definitions and instructions contained in Chapter 2, Section II, of Handbook No. 401 that require clarification. Definitions for Active and Inactive Employers, and instructions for Item 14, Number, Newly Established Employers have been revised. Only employers who have been determined to have reached an actual threshold or condition of liability, as set out in state unemployment compensation law, are to be included in the count of employers in Items 1, 2, 3 and 14. Entities assigned an identification number prior to reaching a threshold or condition of liability are not to be counted for ETA 581 report Items 1, 2, 3, and 14.
ETA reporting instructions have long required that an employer be counted as Inactive if no wages are reported in a span of eight consecutive quarters, "which includes the ETA 581 report quarter being reported." Conversely, previous instructions required that an Active Employer must have reported wages in at least one of eight consecutive quarters, "which includes the ETA 581 report quarter." Because the eighth and most recent contribution and wage report (CWR), the CWR covering the ETA 581 report quarter being reported under the old instructions, is not normally received and processed at the end of the ETA 581 report quarter, the eight quarter span has been changed. The change will allow states time to process all of the eight reports prior to making their count of Active Employers at the end of the report quarter. The eight quarters counted for both Active and Inactive Employers have been redefined to be "the eight consecutive calendar quarters, immediately preceding the ETA 581 report quarter." Obviously, new employers assigned an account number within the ETA 581 report quarter are also counted as Active Employers, even though they will have not yet actually reported wages.
As a result of these revisions and revisions contained in Change 10, Questions and Answers (Q and A's) in UIPL 06-97 (referenced above) regarding how employers are counted are no longer valid. A Change UIPL to address this will be issued later.
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4. Revisions. Listed below are the changes that have been made to the definitions and instructions for Form ETA 581:
- In Section E, Definitions, Active Employer has been revised to read, "An 'employer' (single or multi-unit) who has met a specific threshold or condition of liability contained in the state's unemployment compensation law, is currently registered and required to file contribution and wage reports (CWRs), and (except for new employers establishing liability within the 581 report quarter) has reported wages during one or more of the eight consecutive calendar quarters immediately preceding the ETA 581 report quarter.
- The definition for Inactive Employer, Part c, has been revised and an example for clarification has been added. Part "c" of the definition will now read: "... has not reported wages for any of the eight consecutive calendar quarters immediately preceding the ETA 581 report quarter. For these employers the effective date for inactivation shall be the last day of the eighth no-wage quarter (or the first day of the ninth quarter depending on state-specific inactivation procedures)."
As explained previously in Change 10, a "No-wage" quarter means that the employer has either filed a zero-wage report or has not filed a report. Whether or not an employer has been assessed as a result of failure to file CWRs is no longer a factor for inactivation. Emphasis is on reported wages. In order for an account to continue being counted as an Active Employer for ETA 581 purposes, some wages must be reported within the above described eight-quarter period.
Example: Consider an employer who was issued a determination of liability during the fourth quarter of 2000 and reported some wages in the fourth quarter of 2000. However, no wages were reported for the first quarter 2001 through the fourth quarter of 2002 (either because of failure to file required CWRs or "No Payroll" reports). Assume that the fourth quarter 2002, No-Payroll CWR was received and processed timely on January 31, 2003. Under part "c" of the definition of Inactive Employer the employer would become inactive as of 12/31/2002 (or 1/1/2003 depending on state-specific inactivation procedures) and would not be included in the ETA 581 count of Active Employers made on 3/31/2003. Note: This employer would be counted in Item 20, Inactivations/Terminations for the 3/31/2003 ETA 581 report.
- The following definition for the term "Subject Employer" which is used throughout Handbook No. 401 has been added to the list of definitions: "An employing unit which has met a threshold or condition of liability under the state unemployment compensation law; also a liable employer or a covered employer."
- The Note following Section F, Item by Item Instructions, Employer Count has been revised, and an example has been added. The Note will now read: "To obtain an accurate count of the number of employers at the end of the ETA 581 report quarter, a computer program (or other reliable tool) must be used which identifies and counts employers who meet the definitions of active contributory employer (item 1) and active reimbursing employer (item 2)."
Example: For the ETA 581 report quarter ending 3/31/2003, states must count their active employers on 3/31/2003. Employers who either report 'no wages' or fail to file reports or any combination of these, for eight consecutive CWR quarters (see the definition for Inactive Employer) should be excluded from the count. The computer run to make the employer count must be set to count all active contributing and all active reimbursable employers (separately) at the end of the ETA 581 report quarter.
- The instructions for Item 4, Delinquency Cutoff Date, are being revised to be consistent with the definition in section E.9 (E.8 prior to this revision) and will now read: "Enter the date on which employers whose CWRs have not been submitted for the quarter immediately preceding the ETA 581 report quarter were notified of such by the mailing of first delinquency notices."
- Instructions for Item 14, Number, Newly Established Employers are being revised to stress that employers must meet a liability threshold or condition of liability to be counted as a Newly Established Employer. The revised section now reads: "Enter the number of status determinations made during the report quarter based on an employer having met a specific threshold or condition of liability contained in the state's unemployment compensation law which resulted in the establishment of a new account. Exclude those determinations which resulted in the establishment of a new account for a successor employer. Also exclude status determinations for employers who have been assigned account numbers in advance of having met a threshold or condition of liability. Include status determinations which re-established accounts for previously inactivated and/or terminated employers."
- Instructions for Item 20, Inactivations/Terminations are being revised to emphasize that inactivations made automatically by mainframe software based on eight no-wage quarters are to be counted as status determinations and that annual-reporting employers that are terminated are also counted in the quarter in which the inactivation or termination is effective, as opposed to at the end of the calendar year in which the inactivation or termination is effective. This section has been revised to read: "Enter the number of status determinations made during the report quarter that resulted in the inactivation or termination of an account, whether made by a person or automatically made by the system. This number should include all accounts rendered inactive or terminated during the report quarter because no wages were reported for eight consecutive quarters. Annual-reporting employers that are terminated are counted in the quarter in which the inactivation or termination is effective, as opposed to at the end of the calendar year in which the inactivation or termination is effective. Do not include terminations of employers previously inactivated. Refer to Section F.1.Employer Count."
- Item 26, Total Receivables at End of Report Period (Contributory Employers) has been revised to clearly state that the entry in Item 26 should be carried forward to Item 21, Total Receivables at the Beginning of Period on the following report. Item 26 will now read: "Enter the total amount of past due contributions as of the last day of the report quarter. This amount should equal item 21 plus item 22 minus items 23, 24, and 25 and should be carried forward to Item 21, Total Receivables at the Beginning of Period, for the following report."
- Item 38, Total Receivables at End of Report Period (Reimbursing Employers) has been revised to clearly state that the entry in Item 38 should be carried forward to Item 33, Total Receivables at the Beginning of Period on the following report. Item 38 will now read: "Enter the total amount of payments in lieu of contributions that were past due as of the last day of the report quarter. This amount should equal item 33 plus item 34 minus items 35, 36, and 37 and should be carried forward to Item 33, Total Receivables at the Beginning of Period, for the following report."
5. OMB Approval.These reporting instructions are approved by the Office of Management and Budget (OMB) according to the Paperwork Reduction Act of 1995, OMB Approval No. 1205-0178, expiration date: August 31, 2005.
6. Disclosure Statement.Public reporting burden for this collection of information is estimated to average 8.5 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the U.S. Department of Labor, Office of Workforce Security, Room S-4213, 200 Constitution Avenue, N.W., Washington, D.C. 20210 (Paperwork Reduction Project 1205 -0178).
7. Effective Date. These revisions are effective immediately upon issuance.
8. Instructions for Handbook Maintenance.
UI Reports Handbook No. 401, Section II - Fund Management Activity
Remove and Destroy
Chapter 2, ETA 581 Contribution Operations (10/2002), page II-2-1 thru page II-2-21
Chapter 2, ETA 581 Contribution Operations (06/2003), page II-2-1 thru page II-2-22
8. Attachment. Revised 6/2003, Chapter 2, Section II of ET Handbook No. 401.