Transfer of employer accounts
When someone buys a business, they take on that business's unemployment insurance history and any money it owes. This means the new owner's tax rate for unemployment is based on the old owner's record. If a business is bought mainly just to get a lower tax rate, that trick does not work — the new owner gets the standard new-business rate instead. Anyone who cheats or tries to cheat the system on purpose faces higher tax rates or fines up to $5,000.
288.110. of employer accounts — — , how treated — penalties — definitions. — 1. Any individual, type of organization or which has acquired substantially all of the business of an employer, excepting in any such case any retained by such employer incident to the of the employer's obligations, and in respect to which the finds that immediately after such change such business of the is continued without interruption solely by the , shall stand in the position of such predecessor employer in all respects, including the predecessor's , actual and , annual s, and for current or , interest and penalties. If two or more individuals, organizations, or employing units acquired at approximately the same time substantially all of the business of an employer (excepting in any such case any assets retained by such employer incident to the liquidation of his obligations) and in respect to which the division finds that immediately after such change all portions of such business of the predecessor are continued without interruption solely by such successors, each such individual, organization, or employing unit shall stand in the position of such predecessor with respect to the share of the predecessor's separate account, actual contribution and benefit experience and annual payroll as determined by the portion of the predecessor's applicable to the portion of the business acquired, and each such individual, organization or employing unit shall be for current or delinquent contributions, interest and penalties of the predecessor in the same relative proportion. Further, any successor under this section which was not an employer at the time the acquisition occurred shall pay for the balance of the current at the same as the contribution rate of the predecessor whether such rate is more or less than two and seven-tenths percent, provided there was only one predecessor or there were only predecessors with identical rates. If the predecessors' rates were not identical, the division shall calculate a rate as of the date of acquisition applicable to the successor for the of the rate year, which rate shall be based on the combined experience of all predecessor employers. In the event that any successor was, prior to an acquisition, an employer, and there is a difference in the contribution rate established for such applicable to any acquired or acquiring employer, the division shall make a recalculation of the contribution rate applicable to any successor employer based upon the combined experience of all predecessor and successor employers as of the date of the acquisition, unless the date of the acquisition is other than the first day of the . If the date of any such acquisition is other than the first day of the calendar quarter, the division shall make the recalculation of the rate on the first day of the next calendar quarter after the acquisition. When the date of the acquisition is other than the first day of a calendar quarter, the successor employer shall use its rate for the calendar quarter in which the acquisition was made. The revised contribution rate shall apply to after the rate recalculation. For this purpose a different from July first may be established. When the division has determined that a successor or successors stand in the position of a predecessor employer, the predecessor's liability shall be terminated as of the date of the acquisition.
2. If an employer transfers its trade or business, or a portion thereof, to another employer and at the time of the transfer there is substantially common ownership, management, or control of the two employers, then the unemployment experience attributable to the transferred trade or business shall be transferred to the employer to whom such business is so transferred. The rates and liabilities of both employers shall be recalculated and made effective under this section.
3. Whenever any individual, type of organization, or employing unit is not an employer under this chapter at the time it acquires the trade or business of an employer, the unemployment experience of the acquired business shall not be transferred to such individual, organization, or employing unit if the division finds that such individual, organization, or employing unit acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, such individual, organization, or employing unit shall be the applicable new employer rate under section 288.090. In determining whether the business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the division shall use objective factors which may include the cost of acquiring the business, whether the individual, organization, or employing unit continued the business enterprise of the acquired business, how long such business enterprise was continued, or whether a substantial number of new employees were hired for performance of duties unrelated to the business activity conducted prior to acquisition.
4. (1) If an individual, organization, or employing unit violates or attempts to violate this section or any other of this chapter related to determining the of a contribution rate, or if an individual, organization or employing unit knowingly advises another individual, organization, or employing unit in a manner that results in a violation of such provision, the individual, organization, or employing unit shall be subject to the following penalties:
(a) If the individual, organization, or employing unit is an employer under this chapter, then for the current year and the three rate years immediately following this rate year, such employer's shall be the maximum base rate applicable to such type of employer, or the employer's current base rate plus two percent, whichever is greater;
(b) If the individual, organization, or employing unit is not an employer under this chapter, such individual, organization, or employing unit shall be subject to a of not more than five thousand dollars. Any such fine shall be deposited in the special established under section 288.310.
(2) In addition to the imposed by this , any violation of this section may be under section 288.395.
5. For purposes of this section, the following terms mean:
(1) "Base rate", the employer's contribution rate as determined by section 288.090, subsection 1, 2, or 3 of section 288.120, or section 288.126, or a federal base rate assignment;
(2) "Knowingly", having actual knowledge of or acting with deliberate ignorance or for the prohibition involved;
(3) "Violates or attempts to violate", includes, but is not limited to, intent to invade, , or .
6. The division shall establish procedures to identify the transfer or acquisition of a business for purposes of this section.
7. This section shall be interpreted and applied in such a manner as to meet the minimum requirements contained in any guidance or regulations issued by the United States of Labor.
Tap any gold-underlined word to see what it means.
Red section numbers link to that law.
Source & history notes
(L. 1951 p. 564 § 288.120, A.L. 1965 p. 420, A.L. 2004 H.B. 1268 & 1211, A.L. 2005 H.B. 500 & 533) Effective 1-01-06 (1954) Where home furnishing company sold entire furnishing business and same was continued without interruption by purchaser, account was properly transferred notwithstanding seller retained accounts receivable of a value in excess of the value of the furniture business and continued to exist for the purpose of collecting the accounts. Union-May-Stern Co. v. Industrial Commission (A.), 273 S.W.2d 766. (1963) Motor truck carrier acquired, within meaning of this section, substantially all business of predecessor where it took over assets and liabilities under an agreement to purchase with a temporary rental agreement, and under a temporary operating authority granted by I.C.C. and used, for a year and a half, its equipment as well as its certificate of authority and hired all its former employees, although the purchase agreement was subsequently disapproved by the I.C.C. Chief Freight Lines Co. v. Industrial Commission (A.), 366 S.W.2d 48. (1978) Literal interpretation of statute would cause unreasonable result, thus where publishing company which transferred its radio and television facilities to wholly owned subsidiary, subsidiary could properly succeed to parent company's unemployment contribution tax rate, notwithstanding company did not "acquire" newspaper from third party as required. KSD/ KSD-TV, Inc. v. Labor Indust. Rel., Etc. (Mo.), 562 S.W.2d 346. (1996) Section applies to both voluntary and involuntary acquisitions. Division of Employment Security v. Taney County District R-III, 922 S.W.2d 391 (Mo.banc).
Legal information, not legal advice. Always confirm with the official source at revisor.mo.gov.