Look Me in the Eye

When you register a corporation in the state of Texas, you are sent a notice that you must register with the Texas Workforce Commission so they can assign you an account number and start collecting unemployment tax from you. Having owned other businesses in Texas I wasn't surprised when I got the notice.

What did surprise me was the message I got when I completed the online form.

"Not Liable: Not Required to Register

Based upon the information provided, this employer is not liable for state unemployment taxes under the Texas Unemployment Compensation Act. Since you chose not to pay taxes for this employer voluntarily, registering as an employer with the Texas Workforce Commission is not required at this time. For additional information, contact....."

Maybe the laws had changed. Maybe you no longer had to pay the tax if the owner is the only employee. I didn't know. Who chooses to pay taxes voluntarily? I didn't know. Why would I need additional information? This seemed pretty clear. But I did know that I would be wise to print this page because I suspected this would come back to bite me on the butt.

Sure enough, after I paid the federal unemployment tax - and by the way I had to pay the feds more because I hadn't paid the state anything - along comes someone from the state wondering why I didn't register.

"Because your website said I didn't have to." I pulled the notice that I'd printed back on March 30, 2011 at 3:53 PM and read it to her.

She didn't care. If I paid the feds, then I would have to pay the state. I offered to send her a copy of the page that said I was not required to register, noting that it didn't mention that I might need to try registering again if certain criteria were met. She told me I could have chosen to pay the taxes voluntarily and avoided the problem. (Really???!!! Who voluntarily pays taxes that aren't required?? Not me! I pay what I owe and no more.) She sent me paperwork to complete and I promptly sent it back. The next thing I got was a bill for two years worth of taxes along with a bill for late payment interest. I paid the taxes but I really took exception to the late payment portion of the bill.

The fact that we have to pay unemployment tax is an irritation. Mark is the only employee of Yellow Hat Inspections and he is also the owner. Do you think they're going to pay him unemployment benefits if he shuts down the business? They might, but I doubt it. But to charge me interest because I filed late when I was relying on the accuracy of their website is just wrong.

I explained this over the phone and in writing to several people at the Texas Workforce Commission. Finally one of them responded that no one at the TWC had the authority to issue an abatement of the interest - which they assured me was only interest and that no penalty had been assessed. (I still felt penalized.) If I wanted that money back I would have to file a request for a hearing. Fine. I wanted someone to look me in the eye and tell me that this was my fault.

The hearing was granted but it was going to be over the phone. Rats! It's really easy to blow someone off over the phone. Much more difficult if you have to look them in the eye (which is what I wanted). Anyway, the hearing was last Thursday. I figured it would be over in fifteen minutes. ("Request denied! Next!") But it went on for an hour and fifteen minutes. I struggled to hear the moderator, but we managed to get through it. I presented the reasons why I think they should give me back the penalty. They reminded me that it was interest rather than penalty and only countered that they were 'not authorized' to return the money.

As I understand it, decisions are not made at the time of the hearing. Apparently the whole thing is reviewed  by someone who is too busy and important to show up at the hearing and that person makes the decision. (You can't look that person in the eye, either.) This process takes an additional four to six weeks.

There are a couple of things in my favor:

1. When the moderator asked how much I owe right now the TWC rep said "zero".
   
2. When the moderator asked if I had failed to file in a timely manner since the initial filing, the answer was "no".

But there's one big thing that's not in my favor. "They" are a government agency and they make their own rules which rarely have anything to do with exercising judgement or a sense of fairness.

So whether I get my "penalty" abated is anyone's guess right now. I'm guessing they'll keep it. After all, $79.09 means a great deal to a poor state like Texas! But if they keep it, I hope they use it for something sensible, like updating their registration website to reflect reality.