Michigan Employer Advisor: April 2024

We Take the Mystery Out of UIA Field Audits of Employer Compliance

Auditors with the Michigan Unemployment Insurance Agency’s (UIA) Field Audit and Employer Compliance Section serve as gatekeepers of the UI tax system by conducting audits, investigations and assisting and educating employers about complying with the law.

An audit serves three main purposes:

1. Ensure wages are properly reported.
2. Determine misclassification and look for hidden or unreported wages.
3. Educate the employer community to comply with the law.

They are conducted in accordance with the Michigan Employment Security Act (MES Act) and UIA Administrative Rules, using requirements within U.S. Department of Labor Tax Performance System (TPS) and Agency Regulations.

The UIA has more than 25 auditors. During an audit, the auditor will review financial and business records to verify ownership, verify payroll, search for misclassified workers and hidden wages, determine taxable wages, reconcile audit findings, assist the employer in laws and regulations and inform the employer of their rights and responsibilities. The auditors will work with the employer to resolve any issues that arise to ensure compliance.

How Audits are Conducted

If selected for audit, you will receive a Notice of Audit letter.

There are two ways UIA will perform an audit:

1. In person: At the employer’s place of business, accountant's/attorney's office, or other designated area. The Notice of Audit letter will include a date and time of the audit as well as contact information for the auditor.
2. Electronic audit: An E-audit allows the employer to upload the requested documents for audit through a secure document portal in MiWAM. The auditor will be able to review the documents and perform the audit and communicate with the employer by phone or email.

Have These Documents Ready

UIA auditors must examine all appropriate documents or records of original entry that are available or maintained by an employer. These will be used to determine whether non-wage payments to acknowledged employees were properly classified and whether those not in covered employment who received payments for services were properly classified.

Non-payroll documents that are reviewed may include the General Ledger, Cash Disbursement Records, Form 1099s, and the employer’s federal income tax return.

If you are an Employee Leasing Companies (ELC), also sometimes known as Professional Employer Organization (PEO), you are required by law to provide additional records which may include Status Questionnaire for Employee Leasing Companies, Disclosure Statement for Employee Leasing/Client Companies with Common Officers / Ownership / Family Members, lists of client entities by the year, and signed copies of the employee leasing contracts.

Under UIA Administrative Rule 115 of Section R42, employers must maintain records for the current year and the prior six years.  

Post-Audit Survey

When the audit is concluded, the auditor will provide a survey link to the employer. The post-audit survey allows the employer to provide feedback that will help management assess and improve our UI audit program. Please complete the survey as soon as possible.

 

By the Numbers

In 2023, UIA auditors:

• Conducted nearly 2,300 employer audits.
• Discovered more than 11,000 misclassified workers.
• Audited over $4 billion in total wages.

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Partnership Will Be Key to Success of New Computer System at the UIA

The success of the rollout of the new computer system at the Michigan Unemployment Insurance Agency (UIA) depends on a strong partnership between the agency and employers.

MiUI, which in 2025 will replace the Michigan Web Account Manager (MiWAM) system, brings many benefits and improvements that will affect employers and third-party administrators.

A strong partnership between the UIA and employers includes seeking your input on the new system and how you use it to for your unemployment insurance needs. The UIA is committed to gathering input throughout the process from agency staff and external stakeholders.  

There are several ways we are communicating MiUI news to the employer community. We are providing regular updates through the monthly Employer Advisor newsletter and the bi-monthly Employer Seminars (next seminar will be held on May 15, 2024). Also through meetings with the UIA Modernization Workgroup, which includes representatives from business organizations among its membership, and special mailings. Watch your inbox!

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New Form Needed for WOTC POA

For employers interested in or already participating in the Work Opportunity Tax Credit (WOTC) program, there is an important change you need to be aware of to continue as a valued partner with the UIA in the federal program.

If you are a WOTC power of attorney (POA), you must submit a Form 9198 to UIA going forward. The Form 9198 replaces the current Form 2848.

• If you have provided a signed copy of the Form 9198 and the WOTC POA is current, you do not need to do anything. UIA will not need new electronic submissions, or WOTC Client Level Reporting through your MiWAM account, if the 9198 has been submitted and is current.
• If your WOTC POA is based on Form 2848, you must submit a signed Form 9198 to the WOTC email box, WOTCUnit@michigan.gov  

 

Why is This Important?

If your WOTC POA is based on an older Form 2848, the UIA will cease the POA relationship after May 31, 2024.

Still Have Questions?

You can email WOTCUnit@Michigan.gov.

UIA provides a webpage, brochure, and videos that will help you to learn more about this program that widens the pool of potential workers so your business can continue to thrive in Michigan.