New York Nixes Unemployment Fraud

Hey, what do you know? The state of New York has got SUTA Dumping on its mind. As I explained a bit earlier, it was actually the federal government that got all of the states thinking about ways to prevent this form of unemployment insurance tax evasion. In fact, it was our current president, President George Bush, who signed the SUTA Dumping Prevention Act of 2004.

It was actually legislation last year in New York that brought the Empire State up to snuff with this presidential directive. The new laws in the state effectively prohibit all forms of SUTA dumping, and makes it so that any employers or their tax and financial advisers who participate in SUTA dumping to be tracked and punished.

As we know, SUTA dumping can occur when employer set up fraudulent companies in order to write off, essentially, employees and lower their unemployment insurance tax rates. However, SUTA dumping can occur any time that the whole experience based tax rating system is abused in order to give employers a better experience rating and thus lower tax rates.

In New York, a penalty can could be as much as 10 percent of the employer’s taxable wages in the last full year, or up to $10,000—whichever is the higher figure. When it comes to tax or financial advisors who are willingly advising their clients to participate in SUTA dumping, the penalty for them is that they can face a penalty of as much as $10,000. What’s more, violators of the New York anti-SUTA dumping law could expect to be charged with a Class E felony. That is not a misdemeanor. That’s felonies were talking about, folks.

And as New York State Department of Labor folks like to say, they have ways of detecting SUTA dumping. They also encourage others to report suspected SUTA dumping to their Unemployment Insurance Fraud Control Unit.