Pursuit's Take
In 2000, a DOL-commissioned study estimated states lose $200 million in Unemployment Insurance (UI) tax receipts annually due to employers misclassifying workers as contractors. In 2014, states reported employers owed $31 million in additional taxes based on the states’ State Unemployment Tax Act (SUTA) “dumping” investigations. SUTA dumping occurs when an employer avoids paying higher taxes by inappropriately transferring all or some of its employees to a new or existing employer with a lower UI tax rate.
ETA did not provide adequate oversight to assist states’ efforts to curtail SUTA tax avoidance practices.