When two or more related corporations concurrently employ the same individual but compensate that individual through only one of the corporations, it’s a "common paymaster” relationship.

The total unemployment insurance contributions due are determined as if the individual has one employer—the common paymaster. The common paymaster is responsible for filing tax returns and issuing W-2s. However, when all related corporations pay the employee, each corporation is liable for unemployment insurance contributions.

South Carolina recognizes a common paymaster when all the following conditions exist:

• All corporations involved in a common paymaster relationship must be related. That is, they have some form of common ownership such as parent-subsidiary or are connected through stock ownership, board members, corporate officers, or employees.
  
• The corporation designated as the common paymaster must be an existing corporation and not newly established for that purpose.
  
• Any individual receiving wages through a common paymaster must be performing concurrent employment for two or more related corporations, one of which is designated a common paymaster.
  
• Pursuant to Treasury Regulation Section 307-7701-2, Parent-Subsidiary Legal Entities and Disregarded Entities cannot report their employee wages through a common paymaster.

 

The Federal Unemployment Tax Act imposes a 6.2 percent excise tax (percentage can change yearly) on every employer’s total employment wages paid during a calendar year. Under the Federal Act, the employer gets credit against the federal tax in the amount of contributions he paid into the unemployment fund under state unemployment insurance law.

Notice to All S.C. Employers Regarding FUTA Increase in 2010

 

Most employers, with the exception of agricultural and domestic employers, and non-profit organizations, are considered liable under DEW Law if the following requirements are met:

Employer has at least one employee in covered employment for some portion of a day in each of (20) different weeks within either the current or the preceding calendar year;
OR
Employer has paid wages of $1,500 or more to employees in covered employment in any calendar quarter within either the current or the preceding calendar year.
OR
Employer acquires all or a portion of another liable business.

 

Agricultural employers are considered liable under DEW law if meeting the following requirements:

Employer has paid wages of $20,000 or more in any calendar quarter in either the current or preceding calendar year;
OR
Employer employed (10) or more individuals on any day in each of (20) different weeks in either the current or preceding calendar year.

 

Domestic employers are considered liable under DEW law if the following requirements are met:

Employer has paid wages of $1,000.00 or more in any calendar quarter in the current or preceding calendar year.

 

State Agency accounts are automatically liable and considered a "Reimbursable Employer."

 

Counties, Cities, and Political Subdivisions do not have to meet weeks and/or money provisions; these employing units are determined liable with at least (1) employee and has the option to elect to become "Reimbursable" by completing a Form UCE-155, Election to Become Reimbursable.

 

Nonprofit organizations are liable if meeting the following requirements:

The organization had four (4) or more individuals in employment for twenty (20) different weeks within the current or preceding calendar year.

Nonprofit organizations must provide a copy of IRS Code 501-C-3 Exempt Letter; if exemption letter is not provided, the organization is established as a "regular" employer. The organization has the option to elect to become Reimbursable by completing Form UCE-155, Election to Become Reimbursable.

 

Reimbursable Employers have two options regarding reimbursements:

Payments of benefits charged on a quarterly basis;
OR
Payment of 2% of the quarterly taxable payroll with an adjustment payment as required, at the end of the calendar year.

If option (1) above is selected, the reimbursable employer must provide DEW the ability to repay as follows:

Surety bond, money deposit or other securities that equals total wages of (1) year x 5.4%;
OR
Financial statement with $2 million in assets. The surety bond must cover a period of (2) years as required by law and shall be renewed with the approval of the Commission.

 

An employer who is determined not liable under stated DEW law may elect, with the exception of agricultural and domestic employers, to become liable. Form UCE-154, Election to Become an Employer, must be completed. The Employer is liable from the beginning date of employment in the year the election request is completed.

 

Employer Quarterly Contribution & Wage Report/Computation of Excess Wages