Maine to Eliminate Quarterly Combined Employment Tax Filing and Payment
UPDATE: Draft, separate 2015 electronic reporting specifications are now available for withholding tax and unemployment contributions on the MRS website. The due dates for both Forms 941ME and ME UC-1 will remain unchanged; i.e., the quarterly return and payment of liability will be due by the last day of the month following the end of each quarter. Employers will remit separate payments for unemployment contributions and withheld income taxes, and ACH Debit payments will no longer be accepted through MRS's electronic filing system.
Author: Rena Pirsos, XpertHR Legal Editor
August 15, 2014
Beginning with tax year 2015, Maine Form 941/C1-ME, Combined Filing for Income Tax Withholding and Unemployment Contributions, will be divided into separate forms. The change is the result of collaboration between the Maine Department of Labor (DOL) and Maine Revenue Services (MRS) in order to simplify and improve the employment tax filing process for employers in the state, according to a recent MRS employer notice.
Combined filing for withholding taxes and unemployment contributions has been in place in Maine since 1997. Employers have been required to file and pay over withheld Maine income tax and state unemployment insurance contributions with Form 941/C1-ME. Over the years, employers have complained that the combined filing process is confusing. In addition, MRS reports that the initial benefits of the system have eroded due to the significant increase in electronic filing and payment of state payroll taxes.
The separation of the tax forms and resulting changes in the filing and payment procedures will not affect any tax periods beginning in 2014. The new procedures will only apply to tax periods beginning on or after January 1, 2015.
All withheld taxes will be reported on Form 941ME, Filing for Maine Income Tax Withholding, and all unemployment contributions will be reported on new Form ME UC-1, which has not yet been named or released. Employers will file both Form 941ME and Form ME UC-1 with MRS, which will continue to process the unemployment contribution forms and payments for the DOL.
MRS is also communicating directly with employers, payroll processors and developers of tax software packages regarding the changes, including revised electronic filing specifications that will take effect for the first quarter of 2015. To make the transition as smooth as possible, the DOL and MRS will provide additional information as it becomes available later this year.