Taxable Wage Calculation - When calculating the taxable wages for a contribution report
in the year of the reorganization, a reorganized employer makes the calculation for each
employee based on wages paid to the employee before and after the reorganization.
Out-of-State Transfers - Employers transferring all or part of their business from another
state to Maryland may be eligible to transfer their experience rate to Maryland. Contact the
Employer Call Center at 410-949-0033 for more information.
NOTE: When calculating the taxable wages for the contribution reports in the year of the
transfer from another state, an employer should make the calculation for each employee
based on wages paid to the employee before and after the transfer.
WITHHOLDING/FALSIFYING TRANSFER OF EXPERIENCE RATING INFORMATION
The law provides for penalties if an employer knowingly withholds or provides false
information regarding the transfer of experience rating. If an employer is penalized under
the Maryland Annotated Code, Labor and Employment, Section 8-614, the employer is
assigned the highest tax rate in the year of the violation and in each of the next three
years. If the employer is already at the highest tax rate for any year, or if the amount of the
increase is less than 2% for that year, a 2% penalty rate is assigned.
An employer who knowingly violates the law regarding successorship is guilty of a
misdemeanor and, on conviction, is subject to imprisonment of up to one year, a fine up to
$10,000, or both. The law also provides for civil and criminal penalties against a person
who is not the employer if the person violates, attempts to violate, or knowingly advises an
employer in a manner that causes the employer to withhold or provide false information
regarding the transfer of experience rating. This individual is subject to a civil penalty of
up to $5,000, may be found guilty of a misdemeanor and, on conviction, would be subject
to up to one year of imprisonment, a fine of up to $10,000, or both.
Transfer of Experience Rates - An employer will often acquire its business from a previous
owner or reorganize a business. The effect of these transactions on the employer’s
contribution rate is summarized below.
1. New Employing Unit Acquired Business - When a new business entity is formed and it
acquires assets, employees, a business, an organization, or trade from another
employer, the new business entity is classified as a successor employer. If there is any
common ownership, management, or control between the successor employer and the
former employer (predecessor), the predecessor’s tax rate and experience rating is
transferred to the successor. If there is no common ownership, management, or control
with the predecessor employer, the experience rating is not transferred and the new
business entity is assigned a new account rate.
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