How can an acquisition or merger affect my unemployment tax rate?

If a taxpaying employer acquires another business, the acquiring (and in some cases the acquired) employer may have a say (depending upon the state) as to whether a composite rate will be assigned.  Employers should, therefore, review the tax-rate implications of combining the two companies' unemployment tax histories.  You should not just assume that combining the two accounts will be beneficial.  Even if you only acquire a portion of a tax-paying entity, you may benefit by transferring a portion of the organization's unemployment tax history.  Most state unemployment agencies are willing to help you decide whether a transfer of experience is permitted, and some may even advise whether it would be beneficial.

Disclaimer:  The information contained in the examples given on this page is general in nature and is not intended as legal advice.  There are no guarantees that a particular state unemployment adjudicator will rule as others have in the cited examples.  Individuals seeking legal advice concerning the handling of similar matters should consult with their attorney, rather than relying upon the information given.

The purpose of this document is to educate clients and potential clients about unemployment compensation. While some effort has been made to address the many differences in laws and procedures in the 53 different jurisdictions (each of the fifty states plus Puerto Rico, Washington D.C. and the Virgin Islands), the primary purpose of this presentation is to review some basic principles shared by many jurisdictions.