Section 2765.61  Waiver Of Interest And Penalty For Employers Who Employ Household Workers And Who File Reports And Pay Contributions On An Annual Basis

a)         This Section only applies to an employer who solely employs household workers with respect to whom the employer files federal unemployment taxes using Schedule H (Form 1040) or could file federal unemployment taxes using Schedule H (Form 1040) if the worker or workers were providing services in employment for purposes of the federal unemployment tax.  For purposes of this Section, "household worker" has the meaning ascribed to it for purposes of Schedule H (Form 1040) and includes, but is not limited to, baby-sitters, cleaning people, housekeepers, nannies and maids.

1)         Example:  Joe Smith employs individuals to provide maid services in the private homes of his customers.  For purposes of Schedule H (Form 1040), an employee is considered a household worker only if his or her services are provided in the employer's private home.  This Section does not apply to Joe Smith since he is not eligible to use Schedule H because the services of his employees are not performed in his home.

2)         Example:  Jane Smith is the sole proprietor of a trucking company which employs numerous drivers and office personnel.  She also employs a nannie to care for her child in her home.  This Section does not apply to Ms. Smith because, while the nannie is a household worker for purposes of Schedule H (Form 1040), performing her services in Ms. Smith's private home, Ms. Smith does not solely employ household workers.

3)         Example: George Smith employs a housekeeper who is considered self-employed for purposes of the federal unemployment tax, and whose wages, therefore, are not subject to the federal tax.  However, the services are employment under Illinois' Unemployment Insurance Act [820 ILCS 405].  Since Mr. Smith could have used Schedule H (Form 1040) to file federal unemployment taxes with regard to the housekeeper's services had she not been considered self-employed for purposes of the federal tax, this Section will apply regarding her services.

b)         If an employer to whom this Section applies pays contributions by April 15 of the calendar year immediately following the quarter for which the contributions are due, the Director shall waive any interest imposed on such employer in accordance with Section 1401 of the Act [820 ILCS 405/1401] for failure to comply with Section 1400 of the Act [820 ILCS 405/1400] with respect to that quarter.  However, failure to pay by April 15 will result in the imposition of interest in accordance with Section 1401.  It is not necessary for the employer to apply for such waiver as long as he or she pays contributions, as required by this Section, by April 15 of the calendar year immediately following the quarters for which contributions are due.

Example:  An individual to whom this Section applies intends to pay his contributions on an annual basis and reports his intent to the Director.  However, because he forgets, he does not pay the contributions due until May of the year following the quarters in question.  The Director will not waive any interest, and this individual will be liable for interest as of the dates that the payments were due under Section 1400; e.g., with regard to contributions due for the first quarter of a calendar year, April 30 of that year and not April 15 of the immediately following calendar year.

c)         When an employer to whom this Section applies submits a report of wages paid to household workers with respect to a calendar quarter, along with the report of contributions due with respect to those wages, by the April 15 following the close of that quarter, the Director shall find good cause for waiving any penalties that would otherwise be due with regard to those reports.  When an employer to whom this Section applies does not submit all quarterly reports of wages paid to household workers during the calendar year, along with all quarterly reports of contributions due with respect to those wages, by April 15 of the immediately following calendar year but does so by September 30 of the following calendar year, the Director shall find good cause for waiving the penalties with regard to all of those reports except the latest to remain outstanding as of April 16 of the following calendar year.  Penalties will be calculated in accordance with Section 1402 of the Act [820 ILCS 405/1402] based on the due dates established pursuant to 56 Ill. Adm. Code 2760.125(a)(2).  It is not necessary for the employer to apply for a waiver as long as he or she submits all of the reports, as required by this Section, by September 30 of the calendar year immediately following the quarters for which the reports are due.

1)         Example:  Joe Smith has properly notified the Director that he wishes to submit his quarterly wage and contribution reports annually.  However, he only submits a wage and contribution report for the fourth quarter of 2005 by April 15, 2006.  He submits his reports for the first, second and third quarters of 2005 on May 15, 2006.  The Director will waive the late filing penalties for reports regarding the first, second and fourth quarters of 2005, but a penalty will be imposed for filing the report regarding the third quarter of 2005 late, in the amount provided in Section 1402 of the Act.

2)         Example: Joe Smith has properly notified the Director that he wishes to submit his quarterly wage and contribution reports annually.  However, he only submits his report for the fourth quarter of 2005 by April 15, 2006. He submits his reports for the first, second and third quarters of 2005 on October 1, 2006.  The Director will waive the late filing penalty with regard to the fourth quarter of 2005, but penalties shall be imposed with regard to the reports for the first, second and third quarters of 2005, in the amounts provided in Section 1402 of the Act.

3)         Example: Joe Smith has properly notified the Director that he wishes to submit his quarterly wage and contribution reports annually.  However, he fails to submit his reports for 2005 by April 15, 2006.  He submits his reports for the first, second and third quarters of 2005 on September 15, 2006 but does not submit his report for the fourth quarter of 2005 until October 1, 2006.  Penalties shall be imposed with regard to the reports for all 4 quarters of 2005, in the amounts provided in Section 1402 of the Act.

d)         Notwithstanding any other provisions of this Part to the contrary, an employer to whom this Section applies should notify the Director, in writing, that he or she plans to take advantage of the waivers established under subsections (b) and (c).  The notice will apply to all quarters for which a Determination and Assessment of contributions, penalties or interest due has not become final.  An employer's failure to provide the notice may result in the Department's issuance of statements of account, indicating the employer is delinquent in the filing of wage reports or the payment of contributions, or both, as well as a Notice of Determination and Assessment of delinquent contributions, plus penalties and interest.  If the employer does not protest a Determination and Assessment on a timely basis, pursuant to Section 2200 of the Act [820 ILCS 405/2200], the delinquency indicated in the notice of Determination and Assessment will become a legally final debt of the employer's.

(Source:  Added at 29 Ill. Reg. 13988, effective September 1, 2005)