Liability for Missouri Unemployment Tax

This section contains explanations of when an entity becomes liable for Missouri unemployment tax. The conditions for liability are not identical to those of the Federal Unemployment Tax Act (FUTA), federal and state withholding, and social security tax. Scroll down to see the text of this section, or choose a topic to go directly to your area of interest.

• Becoming Liable
  • Types of Liability
  • Criteria for Liability
• Voluntary Election of Coverage

Becoming Liable

Employing units do not automatically become liable for Missouri unemployment tax when they hire a worker. However, most employing units become liable in the regular course of their business by meeting one or more of the criteria for liability. The criteria are different for different types of liability.

There are three categories of workers:

1. Agricultural
2. Domestic
3. All other workers ("General Business")

An employing unit may become liable to report workers who do one kind of work and still not have to report other categories of workers. The only exception is that an employing unit which becomes liable to report the wages of agricultural workers must also report general business workers.

Even though it may not be currently liable, each employing unit or potential employing unit is required to file a Report to Determine Liability Status to furnish the Division of Employment Security with information as to its business operation, worker employment and wage payments.  An employing unit may provide the same information via the Internet at Online Business Registration. <-- Register for Business Taxes Here

An employer is liable for all employment it has during the entire year in which liability was incurred and continues to be liable for following years until its liability is terminated.

Types of Liability

When an employing unit is determined to be responsible for providing unemployment insurance coverage for their workers, the employing unit is required to pay a quarterly payroll tax. An employing unit may become liable for providing coverage for their workers under any of the five following categories:

• Governmental Entities including Indian Tribes
• Nonprofit Organizations described in Section 501(c)(3) of the Internal Revenue Code
• Employers of Domestic (household) Workers
• Employers of Agricultural Workers
• General Business Employers (those that fall into none of the other categories)

Criteria for Liability

Churches and Religious Orders are exempt from unemployment insurance coverage.  Any workers they have are therefore not reportable for unemployment tax purposes.  See Required Notice to Non-Covered Workers.

Governmental Entity
A governmental entity becomes liable when it:

• Employs a worker, regardless of the amount of wages paid or number of weeks the worker is employed, or
• Is determined to be a successor to a liable Missouri employer.

Nonprofit 501(c)(3) Organization
A nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code becomes liable if it:

• Employs four or more workers for some portion of a day in 20 different weeks, or
• Is determined to be a successor to a liable Missouri employer.

Employers of Domestic (household) Workers
An employer of a domestic or household worker in a private home or college sorority or fraternity becomes liable when it:

• Pays $1,000 in cash wages in a calendar quarter, or
• Becomes liable under the Federal Unemployment Tax Act (FUTA) and employs a worker in Missouri, or
• Is determined to be a successor to a liable Missouri employer.

Employers of Agricultural Workers
An agricultural employer becomes liable when it:

• Has 10 or more workers in 20 different weeks, or
• Pays $20,000 in cash wages in a calendar quarter, or
• Becomes liable under the Federal Unemployment Tax Act (FUTA) as an agricultural employer and employs an agricultural worker in Missouri, or
• Is determined to be a successor to a liable Missouri employer.

General Business Employer (employer that does not fall into another category)
A general business employer becomes liable when it:

• Pays $1,500 in wages (cash and in-kind) in a calendar quarter, or
• Has an employee in some portion of a day in each of 20 different weeks, or
• Becomes liable under the Federal Unemployment Tax Act (FUTA) and employs a worker in Missouri, or
• Is determined to be a successor to a liable Missouri employer.

Voluntary Election of Coverage

Any employing unit that does not have sufficient employment or wages to become liable under the foregoing conditions may elect to become an employer subject to the Law and to cover workers for unemployment insurance. If approved by the Division, such an election would go into effect on the first day of the quarter in which the election is made and must continue in effect for at least two complete calendar years. Upon written approval, all services performed for this employing unit are considered employment, including workers who would otherwise be excluded.

To voluntarily apply for coverage, an employer should send a request in writing to the Division at:

Missouri Division of Employment Security
Employer Liability Unit
Attn.: Voluntary Election of Coverage
P.O. Box 59
Jefferson City MO 65104-0059