Question

I am new at my company and recently learned that we have not been filing the required new-hire reports with the (Massachusetts) Department of Revenue. What is the best procedure to fix this problem?

Answer

A little background on the scope and intent of the New-Hire Reporting Program. The law came into effect in 1993. The intent of the law is to require all employers to report anyone who receives wages or income to ensure that the commonwealth can recoup unpaid child support or other legal obligations from the employee.

If you’re an employer, you must report:

• All newly hired employees who work in Massachusetts.
• Employees who are returning to work after being off the payroll for 30 or more days.
• Employees who retire and will get retirement payments.
• Employees who file workers-compensation claims.

If you’re a payor of income, you must also report all newly engaged independent contractors who are paid $600 or more during the year.

If you’re an insurance company, you must report

• Anyone who receives periodic payments under annuity contracts, disability income policies and life insurance policies.

If the employer uses a payroll company, the first step should be to clarify whether the payroll company is submitting the New-Hire report information to the Department of Revenue (DOR). If the payroll company is responsible, seek verification of compliance with the law.

When to report

Information must be reported to the DOR within 14 days.

Penalties

The penalty for failing to report is up to $25 for each employee, independent contractor or other recipient of periodic payments who is not reported or is inaccurately reported.

The penalty is $500 when the failure to file is the result of a conspiracy (agreement) between the employer, payor of income or insurance company and the employee, independent contractor or other recipient of periodic payments not to report the individual or to report inaccurate information.

The entire law is discussed in more detail at this link.

What to do?

We relayed this question to the Department of Revenue and received the following information.

The employer should immediately file any back New-Hire reports using the DOR’s MassTaxConnect link available here and follow the prompts. Click on the “More” tab, then choose the “Submit Files” panel and select “Report New Hires.”

If any penalties result, the next step is to seek an abatement. The employer should have some reasoned explanation as to why the situation occurred and what steps the company has taken to prevent it occurring in the future.

DOR may be able to help the employer walk through the abatement process.

Finally, employers using the Hire Now program want to be attentive to the need to comply with this program lest failure to do so jeopardize the Hire Now payment.

AIM members wishing to learn more about this program or any other human resources issue may call the Employer Hotline at 800-470-6277.