Wage Reporting: Need to Know
Transfers
Selling and Acquiring Businesses
Buying, selling, transferring, or reorganizing a business will likely impact the Indiana unemployment insurance account, and must be reported within thirty (30) days of the change. Via UPLINK / E S S web application or by filing SF46800 (SUTA Account Termination or Transfer Request) which can be downloaded from https://www.in.gov/dwd/2406.htm.
Please note: Predecessor and Disposer mean the same thing as does Successor and Acquirer.
There are 2 types of transfers:
General Transfers
Acquisitions based on the continuation of all or a part of an existing trade or business from the previous owner to the new owner. If the organization intends to acquire all or part of an existing Indiana business and to use the acquired assets in the operation of the business, then file an intent to acquire notice with DWD no less than five (5) days prior to the expected transfer date. Once this notice has been filed, the organization is allowed limited access to information regarding the proposed disposer’s experience balance and standing with DWD.
Mandatory Transfers
Reorganizations or transfers of assets including employees between entities that do not require that DWD believe that the transfer has resulted in a continuation of all or part of the prior business operations. If assets are commonly owned, managed, or controlled by parties at the time of the transfer, DWD is required by the Act to transfer a like amount of experience balance and to rate the parties by blending the experience balance as immediately as possible to the transfer event.
Note: For transfers meeting these criteria during the first quarter of the year, the rate blending is retroactive to the first day of the year. If the transfer does not occur during the first quarter the blended rate is effective as of the first day of the following calendar year. |
Transfers of Indiana Operations (Ind. Code ยง 22-4-7-2(a-b))
DWD will determine the transfer is a partial successorship in the following circumstances:
- A distinct and separate (segregable) portion of an organization, trade, or business operating as an employing unit in Indiana is acquired (purchased, leased, or taken control of by any means); or
- All or part of the workforce of the business is transferred to a new entity or between existing employing units in Indiana and the transfer results in a partial continuation of the disposer’s business.
Complete transfers may occur in special circumstances, like bankruptcies. The majority of transfers will be held as partial. If the transfer looks to potentially be complete, it will be held as partial at 99.9%. |
DWD will determine successorship. The employer can protest if they disagree with the determination.
If the business is determined to be a successor, it will receive the appropriate wage base credit amount for the wages reported by the predecessor. The previous owner must transfer a proportionate amount of the experience balance and the merit rate based on the portion of the business being transferred.
The new owner must notify DWD via E S S or complete State Form 2837. This notice is required even if the new owner already has a SUTA number.
The prior owner must notify DWD via E S S or complete State Form 46800. Notice from both employers is due to DWD no more than 30 days after the transfer date.
Failure to notify DWD will result in DWD deciding the portion of the transfer based on the best information reasonably available to DWD. Usually, this means that DWD will use the amount of wages transferred to determine the percentage of business transferred. DWD can use any percentage for the change between 0.01 and 99.99 depending on the information available.
If the new owner is an existing employer prior to the transfer occurring, the owner's merit rate will be retained until the following calendar year. If the new owner is not an existing employer prior to the transfer occurring, the owner inherits the rate of the predecessor.
Important! – there can be serious costs for not reporting a transfer to DWD. Always report transfers to DWD, even if the business does not think DWD should hold a transfer under the Act. A determination of transfer can be protested by the disposer or the acquirer if the employer does not believe that a continuation of business has occurred. The business has fifteen (15) days from the date that DWD sends the determination notice to protest in writing. |
DWD is required to detect and hold successorships between Indiana employing units even if the parties to the transfer do not report that a transfer occurred. DWD will use the internet, press releases, wage record movement, employee interviews, and the continuation of identity (such as an acquirer using Facebook, telephone numbers, websites, YELP listings, Better Business Bureau account, physical address, or other non-tangible assets of the disposer) as the basis for determining that the parties have failed to report a required transfer. Failure to report a transfer can result in a retroactive increase in the merit rate of the acquirer which means that they will be assessed additional contributions, interest, penalties, surcharge (when applicable), and penalty rates as required.
Failure to Report Penalties
DWD has up to four years from the date on which the transfer occurred to make a determination and can assess interest retroactively for all four years at 1% per month. Interest will continue to accrue from the point in time of the assessment of additional contribution, until all the contribution has been paid.
A retroactive rate increase will also result in an underpayment penalty of 10% of the additional contribution due. This is a one-time penalty for each quarter/year affected by the late determination.
If DWD determines that the employer intentionally failed to report a transfer, and there is evidence of substantial common ownership, management, or control between the predecessor and successor, civil penalties can be applied.
If DWD can show that the acquirer knew that they were required to report, then they can go back more than four years and add another 50% penalty for the intentional failure. Thus, failing to report can be a costly error for the employer. When in doubt, report and let DWD determine if any conditions apply to the business. |
