Every employer, no matter how big or small, needs to be aware of new hires reporting – which is directly related to child support collection.
Collecting child benefit is a top priority for federal and state governments. Both entities often work together to implement child support enforcement programs, including: revenue retention orders. Another joint effort is reporting new employees.
What is rental reporting?
New hire reporting is a process that requires employers to submit information about new and rehired workers to the state.
New hire reporting is regulated by the Federal Reconciliation of Personal Responsibility and Employment Opportunities Act of 1996 (PRWORA). The Office of Child Support Enforcement (OCSE) is the federal agency that oversees the National Child Support Program and relevant provisions under the PRWORA. In addition, the OCSE works with states and tribes to establish, administer, and administer their child support programs in accordance with federal law.
The new hiring data that employers submit will help child welfare agencies locate non-custodial parents more quickly, as well as quickly issue payment orders to the non-custodial parent’s employer. This includes parents who are not in custody who live in a different state than their children and those who frequently change jobs.
The PRWORA determines the minimum data elements that employers must submit to the designated government agency. Each state may require additional information.
The new hiring data that employers submit will help child welfare agencies locate non-custodial parents more quickly, as well as quickly issue payment orders to the non-custodial parent’s employer.
Is reporting new employees mandatory?
Yes. Any employer who is required by law to provide an employee with a Shape W-4 (for federal income tax withholding purposes) must report on new hires.
Note that the definition of “employer” is the same for both new hire reporting and federal income tax purposes, as Section 3401(d) of the Internal Revenue Code (IRC) defines.
below IRC Section 3401(d), is an employer “every person for whom a person provides or performs a service of any kind, if employee of such person.” In this case IRS common law rules determine whether a person is an employer.
Which persons do you have to report?
You must report new hires on all newly hired employees. The federal definition of a “newly hired employee” is:
- An employee who has not previously been hired by the employer, or
- A rehired employee previously hired by the employer, but terminated for at least 60 consecutive days 60
Federal law does not require you to submit a new employment report for someone who is not an actual employee, such as a independent contractor. However, some states require new hire reporting for independent contractors. So, if your company uses independent contractors, consult your state guidelines to see if you need to file new rental reports for independent contractors.
Who is responsible for reporting new employees?
If you are responsible for paying the employee’s wages, you are generally responsible for submitting the new hiring report. In the case of employment agencies, if that is the employment agency pay wages to the person, then the office is responsible for submitting the new appointment report. But if you shift someone referred by the employment agency, then it is your duty to report new employees about that person.
It can be more complicated if you use a professional employers’ organization (PEO) that takes on many of your HR responsibilities or acts as a co-employer for your employees. The IRS offers: what information about the payroll tax obligations of PEOs and the employers who use them or other third-party payers. But for a nuanced understanding of how the PEO relationship can affect new hires’ reporting obligations, consider seeking expert or legal advice.
If you use a PEO, make sure that the contractual agreement explicitly states who is responsible for reporting new hires.
What information is required for a new employee?
The PRWORA requires all employers to report the following data elements for newly hired employees:
- Name employee
- Employee address
- Citizen service number
- Date of employment (i.e. the date on which the employee begins to provide services for a fee)
- Employer Name
- Employer address
- Federal Employer Identification Number (FEIN)
Be sure to contact the designated state agency for any additional data elements or requirements under state law. While most states adhere to the federal definition of “newly hired employee,” many states define “rehired employee” somewhat differently from federal law. Also, the state’s reporting criteria for independent contractors may differ.
Where and how can employers report new employees?
New hires must be reported to the agency that manages the state reporting program for new employees.
Federal law gives employers three filing methods for reporting newly hired employees:
- First class mail
- Magnetic Tapes
The state may provide additional options, such as email, telephone, fax, or website reporting.
For state-specific information, see the OCSEs State Contact and Program Information matrix, including:
- Contact details of the agency
- Timetable for reporting Report
- Mandatory and optional data elements
- Shipping method:
- Whether the state requires independent contractor reporting?
The new hiring report must be the employee’s Form W-4 or a similar form that you or the state develop.
The new hiring report must be the employee’s Form W-4 or a similar form that you or the state develop. If you choose to report using Form W-4, make sure it is legible. Also make sure to include all required information – including the
- Date of employment of the employee
- Name, address and FEIN . from the employer
If you have employees in more than one state, you can report on new hires in two ways:
- Report each newly hired employee to the individual state in which they work.
- Choose a state where you have employees and report all newly hired employees to that state.
Option 2 is usually the simplest and most cost-effective because you only need to follow the reporting rules for one state.
What happens if you don’t report new hires?
States can impose civil fines on employers who fail to report newly hired employees. However, federal law limits the amount a state can charge for non-compliance; it’s no more than $25 per newly hired employee. The maximum fine is up to $500 per newly hired employee if the employer and employee conspire not to report the information. According to the OSCE website, “States can also impose non-monetary civil penalties under the state law for non-compliance.”
For more information on reporting new hires, see the OSCEs New Hiring Report – Answers to Employer Questions.