Everything employers need to know about paying Oklahoma unemployment insurance taxes.
If your small company employs people in Oklahoma, you must pay the Oklahoma unemployment insurance (UI) tax. The UI tax pays for unemployment insurance programs for qualifying workers. In Oklahoma, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.
Varied states have different UI tax policies and rates. Here are the fundamental guidelines for Oklahoma’s UI tax.
It should be noted that in Oklahoma, the UI tax is often referred to as the unemployment compensation tax.
Become a member of the Employment Security Commission.
You must register your small company with the Oklahoma Employment Security Commission as an Oklahoma employer (OESC). Following registration, you will be granted a UI tax account number if your firm becomes liable for UI tax. You may open an account with OESC either online or in person. Use the EZ Tax Express website to register online. Use Form OES-1, Application for Oklahoma UI Tax Account Number, to register on paper. Blank forms may be downloaded from the OESC website’s Forms section. There is no cost to register your company with IDES.
You will need a federal employer identification number to open an Oklahoma 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
If you are a for-profit employer in Oklahoma, you are typically required to pay state unemployment taxes if you fulfill any of the following criteria:
You pay $1,500 in wages in a calendar quarter, you employ one or more people for any part of a week for any 20 weeks in a calendar year, or you purchase substantially all of another UI-taxable firm.
These are the same standards that govern liability under the Federal Unemployment Tax Act (FUTA). Different restrictions apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
One piece of good news is that state UI tax payments are often deductible from FUTA taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. In Oklahoma, this amount, known as the taxable wage base, fluctuates year after year. It has varied from roughly $13,000 to around $20,000 during the previous decade.
The state UI tax rate for new employers, commonly called as the standard commencing tax rate, varies from year to year. It has consistently been between 1% and 2.4% throughout the previous decade. Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.
Check the OESC’s online table for current and historical pay bases and tax rates.
Submit UI Tax Reports and Payments Quarterly
UI tax reports and payments are required in Oklahoma on the last day of the month after the end of the calendar quarter. In other words, payments and reports
Your reports must be submitted online. Make use of the EZ Tax Express website. (There is no longer a paper form of the quarterly filing, Form OES-3, Employer’s Quarterly Contribution Report.) You may pay online with Electronic Funds Transfer (EFT) or by cheque by printing a remittance voucher.
If you do not file, you will face a penalty.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment claims in a visible location for all workers. Employees may be eligible to UI benefits if they leave their job or work less than full time, according to the poster, which also includes basic information on how to make an unemployment claim. Form OES-44, Notice to Workers, is available for download from the Labor Law Posters section of the OESC website and satisfies all legal requirements.
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.
Further Information
This page simply covers the most fundamental aspects of Oklahoma UI taxes. Check the IRS and OESC websites for the most up-to-date information to avoid potential fines for errors. Unemployment Insurance: An Employer’s Guide to Unemployment Insurance Compensation, Employer UI Taxes, Benefit Wage Charges, New Hire Reporting, and More, published by OESC, is also available for download on the OESC website. Employers must also pay federal unemployment insurance, state and federal withholding taxes, and record new employees, in addition to state unemployment insurance.