Members of the MACPA ad hoc Task Force on SUTA enforcement met recently with representatives from the Professional Employer Organizations (PEO) industry. The group, along with MACPA Legislative Advisory Group member Walter S. Koziol, CPA and MACPA President and CEO Peggy Dzierzawski, met to discuss the ongoing allegations of improper enforcement of Michigan “SUTA Dumping” provisions by the Unemployment Insurance Agency (UIA).

SUTA (State Unemployment Tax Act) Dumping, according to the Michigan Employment Securities Act, is “transferring a trade or business, or a part of a trade or business, solely or primarily for the purpose of reducing the contribution rate or reimbursement payments in lieu of contributions required under this act.” [MCL 421.22b(5)(d)].

SUTA Dumping typically occurs when a business transfers payroll out of an existing company or organization to a new or different organization solely or primarily to reduce their unemployment taxes.

The illegal practice has been identified as an escalating problem nationwide by the U.S. Department of Labor, which is helping states with detection and prevention efforts. Michigan claims the illegal tax rate maneuvers are costing the state’s unemployment insurance trust fund between
$62 and $95 million a year in lost tax revenues.

The MACPA’s Executive Committee formed the ad hoc task force earlier this year to look into the effect of alleged improper SUTA enforcement techniques on MACPA members in public accounting, their clients and the numerous members working in industry for PEOs and other entities.

The task force is currently seeking a meeting with officials from UIA to discuss questions and technical inquiries that resulted from the meeting with the PEO industry and attendance at UIA-sponsored seminars on SUTA Dumping.

Additionally, MACPA is looking into the role of the State Auditor General’s office in reviewing the procedures of the UIA. If you have questions regarding this initiative, or would like to provide input to the task force, please contact the MACPA Government Relations Department by e-mail or
phone 248.267.3710.

MACPA will continue to update the membership as this
probe continues.