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Unemployment Insurance Handbook for Employers (UCB-201-P)
Section 2 - Tax
A transfer of business occurs any time a business activity or business asset is transferred outside of the normal course of doing business.
The usual way that a business is transferred is through a sale, lease, reorganization, merger or consolidation. However, a business can also be transferred through foreclosures, inheritances and bankruptcy.
In any transfer, the transferor is the seller or former owner/operator of the business being transferred and the transferee is the buyer or new owner/operator of the business.
It is not necessary for a transfer to occur directly between the former owner/operator and the new owner/operator. Third parties such as landlords, financial institutions and the courts are often intermediaries for transfers.
Some common situations that ARE NOT a transfer of business:
A transfer of business may have important consequences for your business's UI tax rate and reserve account.
When you transfer or acquire a business, you must let us know within 30 days of the sale/acquisition.
Notice can be done by:
Successorship occurs when all or a portion of the former owner's UI account is transferred to the new owner due to a transfer of all or a portion of the business.
Successorship is:
See: When You Must Take Over the UI Account Experience of the Former Owner/Operator.
When successorship occurs, the employer who has taken over the former owners/operators account is referred to as the "successor".
The employer whose UI account (and business activity) was taken over is referred to as the "predecessor".
The words successorship, successor and predecessor are used in the legal language of the UI law.
If you are acquiring an existing business, you may have a choice as to whether or not you take over the UI experience of the former owner/operator. The following sections give you more information regarding business transfers and taking over the former owners/operators UI account.
The Report of Business Transfer (https://dwd.wisconsin.gov/dwd/forms/ui/uct-115-e.htm) form is the primary form used by the department to obtain information on business transfer. The form is generally requested from both parties. The form can also be used by the new owner/operator to make a written application to take over the UI account of the former owner/operator.
The sections on the forms are numbered and labeled. Following is a brief description of these sections.
This information identifies the new owner or operator who acquired the business. It is important to list the names and ownership percentages of the individuals who currently own or control the business.
When completing the form, if there is some information which you do not know enter "unknown" in the space or leave it blank.
It is necessary that you compare the former ownership with the current ownership and indicate if there are any common owners or any that are related through immediate family. See the examples identified in the questions.
If there is no relationship or common interest at all between the parties, then the new owner/operator should complete Section 5, Option of New Owner/Operator of the form. The new owner/operator can apply to take over the UI experience of the former owner/operator or can decide not to apply. While the application to take over the UI account does not necessarily have to be done when this form is completed, there is a deadline for making a timely application. The deadlines are shown in Section 5.
Indicate whether the transfer was total or partial. If all the former owner's/operator's business activity has been transferred and they will no longer have payroll, the transfer is total. In a total transfer, the former owner/operator must tell us if there will be payroll after the transfer date for closing of accounts and liquidation of assets.
If the former owner/operator will continue to operate some portion of business they operated before the transfer, the transfer is considered partial.
If a transfer occurs between employers that are owned or controlled by similar interests or members of the same immediate family, taking over the UI account experience of the former owner/operator is mandatory.
Some examples are:
If a transfer occurs between employers that are owned and controlled by unrelated interests, taking over the UI account experience of the former owner/operator is optional. To qualify for this option, the new owner/operator must file a written application by the contribution report deadline for the quarter following the quarter in which the transfer occurred.
Application Deadline: | |
---|---|
If date of change is | You must apply by: |
January 1 to March 31 | July 31 |
April 1 to June 30 | October 31 |
July 1 to September 30 | January 31 |
October 1 to December 31 | April 30 |
Because of this application deadline, it is important that employers notify us immediately of transfers and acquisitions of business or assets. Beginning with transfers occurring after 12/31/13, UI will accept an application from an employer up to 90 days after its due date if the transferee satisfies UI that its application was late as a result of excusable neglect.
If you are a new owner/operator of a business but are not taking over the UI account of the former owner/operator, and are not already an employer under the UI law, you become an employer under the Wisconsin UI law as of the date of the transfer.
As a newly covered employer, you will have all other aspects of a new UI employer including:
To obtain more information on business transfers and taking over the UI account of the former owner/operator, contact us at:
Updated: September 14, 2018
Content Contact: UI Tax