Employers in Maine should be aware of all they need to know about paying unemployment insurance taxes.
If your small company employs people in Maine, you must pay the Maine unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Maine, the state unemployment insurance levy is simply one of numerous taxes that companies must pay.
Varied states have different UI tax policies and rates. Here are the fundamentals of Maine’s UI tax.
Become a member of the Department of Labor (and Maine Revenue Services)
As a Maine employer liable to unemployment insurance tax, your small company must open a Maine UI tax account with the Maine Department of Labor (DOL). You create your account by concurrently registering your company with the DOL and Maine Revenue Services (MRS), either online or on paper. Use the Maine Employer Registration Internet System (MERIS) on the DOL website to register online. MERIS enables you to apply for a withholding tax account number if you are simultaneously applying for a UI tax account. You may also register for sales and service provider taxes using the internet method. Use the state’s Registration Form to register on paper (Maine Revenue Services and Department of Labor Application for Tax Registration). Blank forms with comprehensive instructions are available for download from the DOL’s Tax Publications and Forms department. There is no charge to register your company for UI tax reasons.
You will need a federal employer identification number to set up your Maine UI tax account (EIN). You may get an EIN by visiting IRS.gov. In most cases, if you apply online, you will obtain your EIN very instantly.
Unemployment Insurance Tax Liability Regulations
As a Maine employer, you are normally responsible for the state’s unemployment insurance levy if you:
pay a worker $1,500 or more in gross earnings in a calendar quarter, or pay a person for labor done at any time of day in each of the calendar year’s 20 weeks.
Different restrictions apply to agricultural laborers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
Wage Structure and Tax Rates
Maine has mandated UI taxes on the first $15,000 of each employee’s salary for many years. However, this figure, known as the taxable wage base, is subject to change.
The UI tax rate for new employers, which was previously 2.60%, is likewise susceptible to change. Depending on “experience,” established employers are liable to a lower or higher tax than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.
The Federal Unemployment Tax Act allows you to credit state unemployment insurance payments against your federal taxes (FUTA).
File UI Tax Returns and Payments on Time
UI tax reports and payments in Maine are due 30 days after the end of each calendar quarter. In other words, UI tax returns are due on the following dates:
First-quarter reports and payments are due on or before April 30.
Returns and payments for the second quarter are due on or before July 31.
Third-quarter returns and payments are due by 10/31, while fourth-quarter returns and payments are due by 1/31.
If a payment is due on a Saturday, Sunday, or legal holiday, the deadline is moved to the next business day.
Unless you have been given a hardship waiver by the DOL, you must submit UI tax returns and payments online (not covered here). You may utilize the Maine Employers Electronic Tax Reporting System to file electronically (MEETRS). You may also use the MRS Internet filing application to file electronically (Maine I-file).
If you pay by check, you must print and provide a payment voucher. Larger employers must pay by Electronic Funds Transfer (EFT). Other employers may make payments electronically using EFT or an Automated Clearing House (ACH). MRS’s EZ Pay system allows you to make payments online.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment insurance in a visible location for all workers. The poster explains how an employee may make a claim for unemployment benefits, as well as the fundamental qualifying conditions. You may get a poster that fits the legal standards (Form Me. I-1) from the DOL’s Tax Publications and Forms area.
Employees should not be misclassified as independent contractors.
Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.
Using Payroll Service Providers
You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.