Delinquent employers are assigned a delinquency contribution rate that is 3 percent higher than the rate which they would otherwise be assigned. The 3 percent delinquency rate factor is assigned to employers who fail or refuse to:
- file all required registration documents; and/or
- file all required quarterly UC tax returns; and/or
- pay all contributions, interest, and/or penalties due through the second quarter of the year prior to the calendar year for which the contribution rate is being calculated.
The delinquency contribution rate assigned to delinquent employers is adjusted by the solvency measures applicable to the particular year. The delinquency contribution rate is the sum of the Basic Rate (Reserve Ratio Factor + Benefit Ratio Factor + State Adjustment Factor) + 3 percent (3%) + the Solvency Measures (Surcharge Adjustment + Additional Contributions + Interest Factor, if applicable).
Full payment of a delinquent balance or entering into a payment plan can save an employer approximately $300 per year per employee depending on the solvency measures in effect.
Late Filing Interest and Penalty: Interest charges on delinquent contributions and penalty charges on delinquent reports are separate and distinct. If you are unable to pay a quarterly report in full on the due date, you can avoid penalty charges if the report is filed on time. An employer who fails to file its UC Quarterly Tax Report when due must pay a penalty of 15 percent of the total amount of contributions due, with a minimum of $125 and a maximum of $450.
Interest charges will continue to accrue on any unpaid contributions balance until it is paid in full. The interest rate is set annually by the Secretary of Revenue, unless it is less than the 9 percent minimum for 2006-2017 or the 12 percent minimum established beginning with the calendar year 2018.
Non-Compliance Filing Penalty: Employers are required to electronically file quarterly UC tax and wage reports through the Unemployment Compensation Management System (UCMS). Employers who are unable to comply with the electronic filing requirement must file a waiver request form. Employers without a Department-approved waiver whose reports are not filed electronically will be charged a penalty equal to 15 percent of the total contributions payable, with a minimum of $125 and a maximum of $450. To access UCMS, visit www.uctax.pa.gov
Non-Compliance Payment Penalty: Payments of contributions, reimbursement of benefit charges, interest, and/or penalties are required to be remitted electronically through UCMS if the total liability for a payment period is, or at any point was, $5,000 or more, and the employer does not have a Department-approved waiver on file. Failure to make payment electronically will result in a penalty equal to the greater of $25 or 10 percent of the remittance amount, up to a maximum of $500.
Dishonored Remittance Penalty: A penalty is charged to anyone who provides a check or payment by electronic transfer to the Department of Labor & Industry that is subsequently dishonored by the financial institution upon which it is drawn. The dishonored remittance penalty is 10 percent of the remittance amount, up to a maximum of $1,000, with a minimum of $25 per occurrence.
Failure to timely file UC tax and wage reports results in missing wage information for employees who file for UC benefits. This results in additional work and delays for both employers and former employees.
Payment of state UC taxes when due will maximize the employer's Federal Unemployment Tax (FUTA) credit on its federal tax returns. If an employer pays its state UC taxes for prior years on or before February 10th, it is entitled to a credit of 5.4 percent against the FUTA tax, which is usually 6.0 percent of the first $7,000 of each employee's annual wages. Any questions about FUTA should be addressed to the Internal Revenue Service.
Under section 304 of the PA UC Law, UCTS may issue a Notice of Assessment to an employer to establish liability for amounts believed due.
Failure to pay UC tax obligations can result in the filing of liens against the employer and officers and agents of the employer. A lien secures UCTS' interest in an employer's assets when tax debt is not paid. Additionally, as a result of Executive Order 2021-06, Worker Protection and Investment, dated October 21, 2021, the liened delinquency information may be subject to posting on the Department of Labor and Industry's Non-Compliance List website.
A Writ of Execution is a legal process initiated through the county court system and filed with the county sheriff to attach assets or property covered by a lien.
When an employer fails to make full payment to the PA UC Fund, UCTS may issue a Writ of Execution against assets held indirectly through third parties such as bank accounts and accounts receivable. A sheriff's sale could also be scheduled as a result of a Writ of Execution. A sheriff's sale liquidates property covered by a lien. This could include real estate, inventory, equipment, vehicles, or other assets.
Willful failure to comply to file UC tax reports and pay UC contributions can result in criminal prosecution under Section 802 of the PA UC Law.
Federal Law permits states to recover certain UC debts from federal income tax refunds under the Treasury Offset Program (TOP), which is administered by the United States Department of the Treasury.
An injunction is a judicial order that restrains a person or business from continuing to operate. Under PA UC Law, the Department may seek judgment from the courts to enjoin employers from continuing to do business in Pennsylvania.