Michigan’s Unemployment Insurance Agency is in the news again; and again it’s not good news.
In a report released yesterday, state auditor Doug Ringler says that the state is still not collecting unemployment insurance taxes properly. The audit accuses the agency of being lax in collecting unemployment taxes from employers and pursuing employers who improperly sought to evade unemployment taxes. According to the Auditor General’s office, the state still is not aggressively trying to collect taxes from delinquent employers by going to court or using other methods.
This report is a follow up of an audit conducted in 2012 that found the same deficiency.
For example, the audit states the agency doesn’t do a good job of contacting employers who are behind on their taxes. The report says the agency didn’t pursue civil judgments against any of eight employers the auditor reviewed for which civil judgment work orders were generated. The agency didn’t issue required notices to seven of ten employers reviewed, and as of May 31, 2016, those seven employers had delinquent taxes totaling nearly $231,000.
In another example, Michigan’s Unemployment Insurance Agency did not pursue civil judgments against all eight employers reviewed for which civil judgment work orders were generated. As of May 31, 2016, these eight employers had delinquent state unemployment taxes, interest, and penalties totaling $68,273, individually ranging from $2,059 to $18,529.
In its response to the audit, the unemployment agency says it agrees and will comply with the recommendations.
This news comes on the heels of last month’s decision by the State Legislature to balance its budget with $10 million being transferred from the unemployment insurance system’s “contingent fund.” The agency also is being accused of falsely penalizing thousands for unemployment benefits fraud.
Last week, Unemployment Insurance Agency director, Sharon Moffett-Massey, was removed from her position.
Nonprofits have options
The above probably worries many Michigan employers. Except some 501(c)(3) organizations may have less to worry about. 501(c)(3)s do not have to pay state unemployment insurance taxes and are less reliant on the system. Many Michigan nonprofits could save as much as 30 percent on their unemployment cost by opting out of the unemployment insurance tax system – an advantage provided to them by the IRS. Doing so affords nonprofits unique avenues that allow them to strategically handle unemployment claims administration and unemployment insurance taxes in ways that for-profits can only dream about.
Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.