When contemplating a merger, acquisition, reorganization, or divestiture (“M&A”) transaction, a structured, cohesive plan can assist employers in achieving desired outcomes. Continuing from last month’s ETS Tax Intelligence, which focused on planning for a successful M&A transaction, the third phase of an M&A transaction focuses on implementation of the strategic plan, also referred to as the execution phase. As part of Implementation, meeting state compliance requirements is critical to avoiding interest and penalties. State workforce agencies (“SWAs”) use sophisticated SUTA Dumping Detection Systems (SDDS) to identify unreported employee movements between legal entities. Over 4,500 transactions were flagged in 2015 resulting in almost $40 million in total tax assessments.*
Once the effective date of the M&A transaction has passed, employers must turn focus to executing the strategy developed during Planning/Design:
As part of Implementation, those charged with unemployment claims administration should update their systems to reflect the post-transaction structure. This will help ensure claims continue to be received timely, accurate benefit payments are made to claimants, and benefit charges are assigned to the proper employer.
The compliance requirements associated with an M&A transaction can be complex and time-consuming, especially when employers deal with such events on an irregular basis. Equifax assists employers during the Implementation phase of M&A to meet the burdensome state compliance requirements and utilizing wage base carryover provisions to mitigate employment tax overpayments. For more information, please contact Pete Krieshok at (314) 214-7325 or via e-mail at firstname.lastname@example.org. You can also visit our corporate blog for information on other employment tax matters that might impact your organization.
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*Latest available information from the Employment and Training Administration (U.S. DOL) UI Handbook No. 401, Items 59 and 61 on the ETA 581 reports for CY 2015.
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