A new, automated software system has helped the Louisiana Workforce Commission collect nearly $1.2 million in improperly avoided unemployment insurance taxes, penalties and interest so far this year.
The statewide system is the first of its kind in the United States, according to the Workforce Commission. The system uses automation and predictive modeling to help spot possible violations of the State Unemployment Tax Act.
“Having the technology to do the data-mining and analysis previously done manually has greatly enhanced our capability to go after those who are shortchanging the state,” said Curt Eysink, LWC executive director, in a news release. “Identifying potential SUTA dumping cases and investigating them used to take about two weeks per case, and now it only takes about two hours.”
The Workforce Commission already has collected more money from SUTA dumping this year than it did in the previous five.
From 2006 to 2010, the department collected a little over $1 million in unpaid taxes plus penalties and interest.
Employers who don’t pay the unemployment insurance tax when it’s due face a maximum penalty of up to 25 percent of the amount owed and 1 percent monthly interest, according to the department.
The new detection system helps identify several ways in which unemployment taxes can be improperly avoided, including:
• A business with a large payroll and a high experience rating — a history of high unemployment claims and therefore higher unemployment insurance taxes — transfers its payroll to a corporate shell that has a low tax rate.
• A new corporation is registered, and a small payroll is reported each year until a low tax rate is achieved. Once the low tax rate is attained, large payroll amounts from a related corporation are transferred into the lower-rated account.
• A new or existing employer acquires a business with a high tax rate and fails to properly notify LWC of the acquisition.
The Workforce Commission is advising employers to familiarize themselves with the statutes on unemployment taxes.
“We are absolutely ramping up the agency’s efforts to address SUTA dumping. Making sure all employers pay their fair share — no more, no less — is good for all legitimate businesses and for the business climate in Louisiana,” Eysink said.