Professional Employer Organization
LLC Electing to be Treated as a Corporation
A "Temporary Help Company" is defined as a leasing company or temporary help service which contracts with clients or customers to supply individuals to perform services for the client or customer and which both under contract and in fact:
A Temporary Help Company is the employer of the individual who the company engages in employment to perform service for a client or customer of the company.
Officers of a client corporation can not be employees of the Temporary Help Company. They must be reported separately under the client’s own UI accounts.
Professional employer organization means any person who contracts to provide the non-temporary, ongoing employee workforce of more than one client under contract, the majority of whose clients are not under the same ownership, management, or control as the person other than through the terms of the contract , and in fact:
a. Common Paymaster
A common paymaster of a group of related corporations is any member thereof that pays concurrent employees of itself and one or more of the related corporations and is responsible for keeping the payroll records with respect to those concurrently employed individuals.
b. Concurrent Employment
Concurrent employment means the existence of an employment relationship between an individual and two or more corporations at the same time.
c. Related Corporations
Corporations are related for the entire calendar quarter if, at any time in that quarter, they satisfy any of the following four tests:
(1) The corporations are members of a controlled group of corporations.
(2) If the corporations do not issue stock, either 50% or more of one corporation's governing body are members of the other corporation's governing body, or holders of 50% or more of the voting power to select such members are concurrently the holders of more than 50% of that power in respect to the other corporation.
(3) Fifty percent or more of one corporation's officers are concurrently officers of the other corporation.
(4) Thirty percent or more of one corporation's employees are concurrently employees of the other corporation.
d. Payrolling
Payrolling is the practice of one entity reporting the wages and paying the UI tax on employees, who are directed and controlled by another entity. This practice is not allowed under the Wisconsin Unemployment Insurance Law.
2. Qualifying Requirements
Employers paying any wages through a common paymaster should report those wages through the common paymaster. To qualify as a common paymaster the following requirements must be met:
The corporations must be related, and
There must be concurrent employment of one or more employees by the paymaster and one or more of the related corporations; and the paymaster corporation is responsible for keeping the payroll records with respect to concurrently employed individuals.
Any of the concurrently employing related corporations could be designated as the common paymaster. The common paymaster reports the wages of the employees that work concurrently with it and one or more of the other related corporations.
If any of the above conditions are not met, then each employing unit (separate corporation) must report their own employment under their own UI account.
(Return to Top)When your employee performs services in Wisconsin and some other state, the employee will be covered and reportable to Wisconsin if one of four tests specified in Section 108.02(15) of the statutes applies. The four tests used by Wisconsin are:
1. Localization
Your employee's services are in covered employment and "localized" in Wisconsin if all or most of the services are performed in this state with only isolated, incidental or temporary services performed outside of Wisconsin.
2. Base of Operations
If the first test does not apply, your employee's total services are covered employment in Wisconsin if some of their services are performed in this state and their "base of operations" is in Wisconsin. (Base of operations is interpreted as the place of more or less permanent nature from which your employee starts work, to which your employee customarily returns and to which you may direct instructions to your employee. It may be a branch office or the employee's residence.)
3. Place of Direction and Control
If the first two tests do not apply, your employee's total services are covered employment in Wisconsin if some of their services are performed in Wisconsin and the place from which you exercise general direction and control over the employee is in Wisconsin.
4. Residence of Employee
If the first three tests do not apply, your employee's total services are covered employment in Wisconsin if some of their services are performed in this state and their residence is in Wisconsin.
If, after applying all these tests you find a particular individual's services not covered in Wisconsin, you may elect to cover them in Wisconsin by filing a reciprocal agreement between Wisconsin and the other state involved. Certain states will not approve such an election if the individual has residence in that state and provides some services in that state.
Similar tests appear in the unemployment insurance laws of a majority of the states in an effort to avoid conflicts and overlapping coverage between states. However, differences in interpretation do exist among a few states.
Certain employment of United States citizens working for American employers in foreign lands (except Canada) may also be reportable for unemployment purposes to this state. Also, aliens working in Wisconsin are reportable for Unemployment Insurance purposes.
(Return to Top)If your business legal entity is an LLC and you have elected to file as a corporation with the IRS, you must inform this department of that and provide written documentation showing that election. Remember, by making this election, you must report and pay unemployment tax on all wages, including the LLC members. This is critical to avoid any certification problems between your State and Federal unemployment taxes.
If you have questions regarding Unique Reporting Situations, contact us at:
E-mail: taxnet@dwd.wisconsin.gov
or
Telephone: (608) 261-6700
Deaf, hearing or speech-impaired callers may reach us through WI TRS.
If you have any questions regarding Unique Reporting Situations, contact us at:
E-mail: taxnet@dwd.wisconsin.gov
or
Telephone: (608) 261-6700
Deaf, hearing or speech-impaired callers may reach us through WI TRS.
Updated: January 23, 2009