Employment Law -- Employee

What Are Reimbursing Accounts?

Governmental employers and 501(c)(3) nonprofit organizations are eligible to report as reimbursing accounts. Reimbursing employers do not pay quarterly unemployment tax, but instead reimburse the division for the cost of any benefits which are chargeable to them. The filing of quarterly reports for wage information purposes is still required.

An eligible employer may choose to either reimburse or to become a taxpaying account. There are both advantages and disadvantages to the reimbursement method. Although it can save money for organizations with stable employment, it can also result in large and unexpected benefit costs.